Johnson and Johnson 2011 Annual Report Download - page 31

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 29
During 2011, the Company received several regulatory approvals
including: U.S. approval for two indications for XARELTO® (rivaroxa-
ban), an anti-coagulant co-developed with Bayer HealthCare, the
first one for the prevention (prophylaxis) of deep vein thrombosis
(DVT) which may lead to a pulmonary embolism (PE) in people
undergoing knee or hip replacement surgery, and the second one to
reduce the risk of stroke and systemic embolism in patients with non-
valvular atrial fibrulation; EDURANT® (rilpivirine), in both the U.S.
and the European Union (EU), for HIV in treatment-naïve patients;
INCIVO® (telaprevir), in the EU for the treatment of hepatitis C virus;
and ZYTIGA® (abiraterone acetate), in the U.S. and EU, for the treat-
ment of metastic castration-resistant prostate cancer. In addition,
the FDA approved additional indications for REMICADE® (inflix-
imab), for the treatment of moderately to severely active ulcerative
colitis in pediatric patients, and NUCYNTA®ER (tapentadol)
extended-release tablets, an oral analgesic, for the management of
moderate to severe chronic pain in adults.
The Company submitted New Drug Applications (NDAs) to
the FDA seeking approval for the use of XARELTO® (rivaroxaban),
an oral anticoagulant, to reduce the risk of thrombotic cardio-
vascular events in patients with Acute Coronary Syndrome, and for
NUCYNTA®ER (tapentadol) extended-release tablets, an oral
analgesic, for the management of neuropathic pain associated with
diabetic peripheral neuropathy in adults.
Pharmaceutical segment sales in 2010 were $22.4 billion, a
decrease of 0.6% from 2009, with an operational decline of 1.0%
and a positive currency impact of 0.4%. U.S. sales were $12.5 billion,
a decrease of 4.0%. International sales were $9.9 billion, an
increase of 4.2%, which included 3.4% operational growth and a
positive currency impact of 0.8%.
MEDICAL DEVICES AND DIAGNOSTICS SEGMENT
The Medical Devices and Diagnostics segment achieved sales of
$25.8 billion in 2011, representing an increase of 4.8% over the prior
year, with operational growth of 1.7% and a positive currency impact
of 3.1%. U.S. sales were $11.4 billion, a decrease of 0.4% as com-
pared to the prior year. International sales were $14.4 billion, an
increase of 9.2% over the prior year, with operational growth of
3.4% and a positive currency impact of 5.8%.
The DePuy franchise achieved sales of $5.8 billion in 2011, a
4.0% increase over the prior year. This growth was primarily due to
sales of Mitek sports medicine and trauma product lines, and newly
acquired products from Micrus. The growth was partially offset by
lower sales of knees and hips in the U.S. due to increased competi-
tion, continued pricing pressure, a softer market and the impact of
the DePuy ASR™ Hip recall.
The Ethicon Endo-Surgery franchise achieved sales of $5.1 billion
in 2011, a 6.8% increase over the prior year. Growth was attributable
to increased sales of Advanced Sterilization and HARMONIC® prod-
uct lines, and outside the U.S., the Endo Mechanical product line.
Additionally, sales of newly acquired products from SterilMed con-
tributed to the growth. Total growth was negatively impacted by the
divestiture of the Breast Care business in the third quarter of 2010.
The Ethicon franchise achieved sales of $4.9 billion in 2011,
an 8.2% increase over the prior year. Emerging market growth
in sutures, newly launched products ETHICON PHYSIOMESH® and
ETHICON SECURESTRAP™, and growth in the biosurgical, Women’s
Health and Urology and Acclarent product lines contributed to the
increase in sales.
The Vision Care franchise achieved sales of $2.9 billion in 2011,
an 8.8% increase over the prior year. Contributors to the growth
were 1-DAY ACUVUE® and astigmatism lenses.
The Diabetes Care franchise achieved sales of $2.7 billion in
2011, a 7.4% increase over the prior year. The growth was primarily
due to sales in the OneTouch® product line.
Sales in the Cardiovascular Care franchise were $2.3 billion, a
decline of 10.3% versus the prior year. Sales were impacted by the
Company’s decision to exit the drug-eluting stent market and lower
sales of endovascular products due to increased competition. Sales
for drug-eluting stents were approximately 11% and 25% of the total
Cardiovascular Care franchise sales in 2011 and 2010, respectively.
The decline in sales was partially offset by strong growth in
Biosense Webster, the Company’s electrophysiology business.
The Ortho-Clinical Diagnostics franchise achieved sales of
$2.2 billion in 2011, a 5.4% increase over the prior year. The growth
was primarily attributable to the strength of the VITROS® 5600 and
3600 Analyzers, partially offset by lower sales in donor screening.
The Medical Devices and Diagnostics segment achieved sales
of $24.6 billion in 2010, representing an increase of 4.4% over the
prior year, with operational growth of 3.4% and a positive currency
impact of 1.0%. U.S. sales were $11.4 billion, an increase of 3.6%
over the prior year. International sales were $13.2 billion, an increase
of 5.0% over the prior year, with growth of 3.0% from operations
and a positive currency impact of 2.0%.
Analysis of Consolidated Earnings
Before Provision for Taxes on Income
Consolidated earnings before provision for taxes on income
decreased by $4.5 billion to $12.4 billion in 2011 as compared to
$16.9 billion in 2010, a decrease of 27.1%. The decrease was primarily
due to costs associated with product liability and litigation expenses,
the impact of the OTC and DePuy ASR™ Hip recalls and the restruc-
turing expense related to the Cardiovascular Care business. Addi-
tionally, investment spending, the fee on branded pharmaceutical
Major Medical Devices and Diagnostics Franchise Sales:
% Change
(Dollars in Millions) 2011 2010 2009 ’11 vs. ’10 ’10 vs. ’09
DEPUY® $ 5,809 5,585 5,372 4.0% 4.0
ETHICON ENDO-SURGERY® 5,080 4,758 4,492 6.8 5.9
ETHICON® 4,870 4,503 4,122 8.2 9.2
Vision Care 2,916 2,680 2,506 8.8 6.9
Diabetes Care 2,652 2,470 2,440 7.4 1.2
Cardiovascular Care* 2,288 2,552 2,679 (10.3) (4.7)
ORTHO-CLINICAL DIAGNOSTICS® 2,164 2,053 1,963 5.4 4.6
Total $25,779 24,601 23,574 4.8% 4.4
* Previously referred to as CORDIS®