Johnson and Johnson 2011 Annual Report Download - page 3

CHAIRMAN’S LETTER 1
Throughout our annual report this year, you’ll read
about how Johnson & Johnson is bringing meaningful
innovation to our patients and customers, and making
a difference in their lives in a personal way—from
Brünhilde Wecker, who made a full recovery from her stroke
thanks to our new blood clot retrieval and removal device,
to our own Bill Hait, an oncologist whose vision and insights
helped accelerate the approval of a wholly new treatment for
prostate cancer.
These stories remind us why health care is such a rewarding
endeavor. They excite me about the future of Johnson & Johnson.
Over the past few years, we have navigated steadily through a
series of significant challenges, keeping a long-term perspective,
maintaining a disciplined approach to
managing our investments for growth and
our portfolio of broadly based businesses,
and staying true to our operating model and
values. We have turned the corner on a
particularly difficult period.
In 2011, the year Johnson & Johnson
celebrated its 125th anniversary, we
returned to sales growth, launched a
number of innovative new products to
address unmet health care needs across the
globe, and advanced our pipelines, which
today are among the best in the industry.
We strengthened our product portfolios
and leadership positions in many areas,
including immunology, oncology, surgical
devices and emerging markets. And we
focused on scientific innovation to maintain
or build share in other key growth markets.
We are delivering meaningful innovations in health care and
building a more agile company to seize market opportunities.
All the while, we’ve remained committed to Our Credo and the
long-held values that have enabled us to succeed now for decades.
Though we continue to face difficult and uncertain
macroeconomic conditions, our ongoing investments have us
well positioned to grow and increase our market leadership in
one of the most important and rewarding industries in the world
while delivering sustainable growth for our shareholders.
OUR FIVE-YEAR JOURNEY
Several years ago, we set out to build on our strong foundation
and sustain our track record of growth, even as we prepared to
address a daunting challenge: the patent expirations for two of
our major drugs, RISPERDAL® (risperidone) and TOPAMAX®
(topiramate). Together, these products had combined peak-year
sales of more than $6 billion. We also prepared ourselves for
other market issues to which we had a good line of sight.
Additional developments could not be as easily foreseen:
CHAIRMAN’S LETTER
To Our Shareholders
the severe economic decline; the tightening of consumer
spending and health care budgets; over-the-counter (OTC)
product quality issues at McNeil Consumer Healthcare and
the recall of the DePuy ASR™ Hip System.
Our company was severely tested.
In managing through this stretch, we relied heavily on the resolve
of our people and on our time-tested business model: our broad
base in health care, our decentralized management structure,
managing for the long term and the values set forth in Our Credo.
We made necessary restructurings to our business to manage
our cost structure, simplify our operations, and ensure the most
efficient use of our capital for the long-term benefit of patients
and shareholders.
Our management team and employees
took critical actions to preserve the core
values and strengths of our business.
We remained committed to retaining the
trust of our patients and customers, taking
responsibility and instituting new measures
to ensure that our products live up to the
high quality standards that our customers
expect and deserve.
As 2011 came to a close, we moved through
a turning point. The headwinds from patent
expirations, tough portfolio choices, litigation
matters and OTC product quality issues had
been, or were being, addressed.
At the same time, our continued
investments in research and development
(R&D), equaling nearly $37 billion over the
past five years, yielded nine major approvals
for new pharmaceutical products in the
United States—including STELARA® (ustekinumab) and SIMPONI®
(golimumab) in immunology; PREZISTA® (darunavir) and
INTELENCE® (etravirine) in HIV; ZYTIGA® (abiraterone acetate) in
oncology; and XARELTO® (rivaroxaban) in cardiovascular disease.
The emphasis we place on R&D has also led to exciting
innovations in our Medical Devices and Diagnostics (MD&D) and
Consumer platforms, such as contact lenses, electrophysiology,
advanced energy, biosurgicals, oral care and skin care.
We have replenished or advanced our pipelines with new
technologies, like the Fibrin Pad for hemostasis, as well as
compounds like canagliflozin for diabetes and bapineuzumab for
Alzheimer’s disease.
With our focus on financial discipline, capital has been
returned to shareholders in the form of dividends and share
repurchases. Capital has also been used for important long-term
investments in strategic alliances and acquisitions like Pfizer
Consumer Healthcare and Beijing Dabao Cosmetics Company, Ltd.
in the Consumer business; Crucell N.V. and Elan Corporation plc
in our Pharmaceuticals business; and the pending acquisition
WILLIAM C. WELDON
Chairman, Board of Directors, and
Chief Executive Officer