Johnson and Johnson 2015 Annual Report Download - page 39

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While the Company continues to do business in Greece, the Company closely monitors the economic situation. As of
January 3, 2016, the Company’s Greek subsidiaries represented 0.3% and 0.4% of the Company’s consolidated assets
and revenues, respectively.
The Company is exposed to fluctuations in currency exchange rates. A 1% change in the value of the U.S. Dollar as
compared to all foreign currencies in which the Company had sales, income or expense in 2015 would have increased or
decreased the translation of foreign sales by approximately $340 million and income by $90 million.
The Company faces various worldwide health care changes that may continue to result in pricing pressures that include
health care cost containment and government legislation relating to sales, promotions and reimbursement of health care
products.
Changes in the behavior and spending patterns of purchasers of health care products and services, including delaying
medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing health
care insurance coverage, as a result of the current global economic downturn, may continue to impact the Company’s
businesses.
The Company also operates in an environment increasingly hostile to intellectual property rights. Firms have filed
Abbreviated New Drug Applications or Biosimilar Biological Product Applications with the FDA or otherwise challenged
the coverage and/or validity of the Company’s patents, seeking to market generic or biosimilar forms of many of the
Company’s key pharmaceutical products prior to expiration of the applicable patents covering those products. In the event
the Company is not successful in defending the patent claims challenged in the resulting lawsuits, generic or biosimilar
versions of the products at issue will be introduced to the market, resulting in the potential for substantial market share and
revenue losses for those products, and which may result in a non-cash impairment charge in any associated intangible
asset. There is also a risk that one or more competitors could launch a generic or biosimilar version of the product at issue
following regulatory approval even though one or more valid patents are in place. For further information, see the
discussion on “REMICADE®Related Cases” and “Litigation Against Filers of Abbreviated New Drug Applications” in
Note 21 to the Consolidated Financial Statements.
Legal Proceedings
Johnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability,
intellectual property, commercial and other matters; governmental investigations; and other legal proceedings that arise
from time to time in the ordinary course of business.
The Company records accruals for loss contingencies associated with these legal matters when it is probable that a
liability will be incurred and the amount of the loss can be reasonably estimated. The Company has accrued for certain
litigation matters and continues to monitor each related legal issue and adjust accruals for new information and further
developments in accordance with Accounting Standards Codification (ASC) 450-20-25. For these and other litigation
and regulatory matters currently disclosed for which a loss is probable or reasonably possible, the Company is unable to
estimate the possible loss or range of loss beyond the amounts already accrued. Amounts accrued for legal contingencies
often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and
assumptions. The ability to make such estimates and judgments can be affected by various factors, including whether
damages sought in the proceedings are unsubstantiated or indeterminate; scientific and legal discovery has not
commenced or is not complete; proceedings are in early stages; matters present legal uncertainties; there are significant
facts in dispute; or there are numerous parties involved.
In the Company’s opinion, based on its examination of these matters, its experience to date and discussions with counsel,
the ultimate outcome of legal proceedings, net of liabilities accrued in the Company’s balance sheet, is not expected to
have a material adverse effect on the Company’s financial position. However, the resolution of, or increase in accruals for,
one or more of these matters in any reporting period may have a material adverse effect on the Company’s results of
operations and cash flows for that period.
See Note 21 to the Consolidated Financial Statements for further information regarding legal proceedings.
Johnson & Johnson 2015 Annual Report •27