Johnson and Johnson 2008 Annual Report Download - page 39

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION 37
and PREZISTA®, for once-daily dosing as part of HIV combination
therapy in treatment-naïve adults and traditional approval as a
twice-daily dose for use in treatment-experienced adult patients in
the U.S. Outside the U.S., the European Commission granted full
approval of PREZISTA® in combination with ritonavir and other anti-
retroviral medicinal products for the treatment of HIV-1 infection,
and extended the indication to include all treatment-experienced
adult patients.
The Company submitted applications for regulatory approval of
four additional compounds in 2008. Golimumab, a monthly subcu-
taneous treatment for adults with active forms of rheumatoid arthri-
tis, psoriatic arthritis and ankylosing spondylitis, was filed in the U.S.
and European Union. In the U.S., filings were submitted for rivaroxa-
ban, an oral, once-daily anticoagulant for the prevention of deep
vein thrombosis (DVT) and pulmonary embolism (PE) in patients
undergoing hip or knee replacement surgery, carisbamate, for the
adjunctive treatment of partial-onset seizures in patients 16 years
of age and older, and trabectedin, known as YONDELIS® outside the
U.S., administered in combination with DOXIL® (doxorubicin HCl
liposome injection) for the treatment of women with relapsed
ovarian cancer.
Pharmaceutical segment sales in 2007 were $24.9 billion,
an increase of 6.9% over 2006, with 4.3% of this change due to
operational growth and the remaining 2.6% increase related to the
positive impact of currency fluctuations. U.S. Pharmaceutical seg-
ment sales were$15.6billion, an increase of 3.4%. International
Pharmaceutical segment sales were $9.3 billion, an increase of
13.3%, which included 5.9% of operational growth and 7.4%
related to the positive impact of currency fluctuations.
MEDICAL DEVICES AND DIAGNOSTICS SEGMENT
The Medical Devices and Diagnostics segment achieved sales of
$23.1 billion in 2008, representing an increase of 6.4% over the
prior year, with operational growth of 3.5% and 2.9% due to a
positiveimpact from currency fluctuations. U.S. sales were $10.5 bil-
lion, an increase of 1.0%. International sales were $12.6 billion, an
increase of 11.3%, with 5.8% from operations and a positive
currency impact of 5.5%.
The DePuy franchise achieved sales of $5.0 billion in 2008,
an 8.8% increase over prior year. This growth was primarily due to
DePuy’s orthopaedic joint reconstruction products, including the
hip and knee product lines. Additionally, new product launches in
the Mitek sports medicine product line contributed to the growth.
The Ethicon Endo-Surgery franchise achieved sales of $4.3 bil-
lion in 2008, an 11.8% increase over prior year. This growth was
mainly driven by the HARMONIC® technology business due to the
success of newly launched products and the underlying strength of
the technology. Additional contributors to the growth were the
REALIZE® Gastric Band in the U.S. and endoscopy products outside
the U.S.
The Ethicon franchise achieved sales of $3.8 billion in 2008, a
6.6% increase over prior year. This was a result of growth in the
hemostasis, meshes and biosurgical product lines.
Sales in the Cordis franchise were $3.1 billion, a decline of
8.5% over 2007. The decline reflects lower sales of the CYPHER®
Sirolimus-eluting Coronary Stent due to increased global compe-
tition. The decline was partially offset by the performance of the
Biosense Webster and neurovascular businesses.
The Diabetes Care franchise achieved sales of $2.5 billion in
2008, a 6.8% increase over prior year. This growth was driven by
sales in the Animas business due to new product launches and
sales growth in the ULTRA® product lines outside the U.S.
The Vision Care franchise achieved sales of $2.5 billion in
2008, a 13.2% increase over prior year. Sales of ACUVUE®
OASYS™, 1-DAY ACUVUE® MOIST™, and ACUVUE® OASYS™
for ASTIGMATISM were the major contributors to this growth.
The Ortho-Clinical Diagnostics franchise achieved sales of
$1.8 billion in 2008, an 8.0% increase over prior year resulting from
growth in both immunohematology and immunodiagnostics products.
The Medical Devices and Diagnostics segment achieved sales
of $21.7 billion in 2007, representing an increase over prior year of
7.2%, with operational growth of 3.9% and 3.3% due to a positive
impact from currency fluctuations. U.S. sales were $10.4 billion, an
increase of 3.2%. International sales were $11.3 billion, an increase
of 11.1%, with 4.6% from operations and a positivecurrency impact
of 6.5%.
Analysis of Consolidated Earnings
Before Provision for Taxes on Income
Consolidated earnings before provision for taxes on income
increased by $3.6 billion to $16.9 billion in 2008 as compared to
the $13.3 billion earned in 2007. Contributing to the $3.6 billion
increase in 2008 werelower in-process research and development
charges of $0.6billion, higher income from divestitures of $0.5 bil-
lion and higher litigation gains of $0.5 billion versus restructuring
charges of $0.7 billion and the write-down of the NATRECOR®
intangible asset of $0.7 billion recorded in 2007. The decrease in
2007 of 8.9% over the $14.6 billion in 2006 was primarily due
to restructuring charges and the write-down of the NATRECOR®
intangible asset in 2007. As a percent to sales, consolidated earn-
ings beforeprovision for taxes on income in 2008 was 26.5% versus
21.7% in 2007. The sections that follow highlight the significant
components of the changes in consolidated earnings before
provision for taxes on income.
Major Medical Devices and Diagnostics Franchise Sales*:
%Change
_____________________
(Dollars in Millions) 2008 2007 2006 ’08 vs. ’07 ’07 vs. ’06
DEPUY® $ 4,989 4,587 4,105 8.8% 11.7
ETHICON ENDO-SURGERY® 4,286 3,834 3,376 11.8 13.6
ETHICON® 3,840 3,603 3,223 6.6 11.8
CORDIS® 3,135 3,425 4,088 (8.5) (16.2)
Diabetes Care 2,535 2,373 2,074 6.8 14.4
Vision Care 2,500 2,209 1,879 13.2 17.6
ORTHO-CLINICAL DIAGNOSTICS® 1,841 1,705 1,538 8.0 10.9
Total $23,126 21,736 20,283 6.4% 7.2
* Prior year amounts have been reclassified to conform to current presentation.