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Item 7. Management’s Discussion and Analysis of Results of Operations
and Financial Condition
Organization and Business Segments
Description of the Company and Business Segments
Johnson & Johnson and its subsidiaries (the Company) have approximately 127,100 employees worldwide engaged in the
research and development, manufacture and sale of a broad range of products in the health care field. The Company
conducts business in virtually all countries of the world with the primary focus on products related to human health and
well-being.
The Company is organized into three business segments: Consumer, Pharmaceutical and Medical Devices. The
Consumer segment includes a broad range of products used in the baby care, oral care, skin care, over-the-counter
pharmaceutical, women’s health and wound care markets. These products are marketed to the general public and sold
both to retail outlets and distributors throughout the world. The Pharmaceutical segment is focused on five therapeutic
areas, including immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases.
Products in this segment are distributed directly to retailers, wholesalers, hospitals and health care professionals for
prescription use. The Medical Devices segment includes a broad range of products used in the orthopaedic, surgery,
cardiovascular, diabetes care and vision care fields which are distributed to wholesalers, hospitals and retailers, and used
principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics.
The Executive Committee of Johnson & Johnson is the principal management group responsible for the strategic
operations and allocation of the resources of the Company. This Committee oversees and coordinates the activities of the
Consumer, Pharmaceutical and Medical Devices business segments.
In all of its product lines, the Company competes with companies both locally and globally, throughout the world.
Competition exists in all product lines without regard to the number and size of the competing companies involved.
Competition in research, involving the development and the improvement of new and existing products and processes, is
particularly significant. The development of new and innovative products, as well as protecting the underlying intellectual
property of the Company’s product portfolio, is important to the Company’s success in all areas of its business. The
competitive environment requires substantial investments in continuing research. In addition, the development and
maintenance of customer demand for the Company’s consumer products involves significant expenditures for advertising
and promotion.
Management’s Objectives
The Company manages within a strategic framework with Our Credo as the foundation. The Company believes that our
strategic operating principles: being broadly based in human health care, managing the business for the long term, having
a decentralized management approach, and being committed to our people and values, are crucial to successfully meeting
the demands of the rapidly evolving markets in which we compete. To this end, management is focused on our long-term
strategic growth drivers: creating value through innovation, expanding our global reach with a local focus, excellence in
execution and leading with purpose.
The Company is broadly based in human health care, and is committed to creating value by developing accessible, high
quality, innovative products and services. New products introduced within the past five years accounted for approximately
25% of 2015 sales. In 2015, $9.0 billion, or 12.9% of sales, was invested in research and development, reflecting
management’s commitment to delivering new and differentiated products and services to meet evolving health care needs
and sustain the Company’s long-term growth.
Our diverse businesses with more than 250 operating companies located in 60 countries are the key drivers of the
Company’s success. Maintaining the Company’s decentralized management approach, while at the same time leveraging
the extensive resources of the enterprise, positions the Company well to innovate, execute strategic plans and reach
markets globally, as well as address the needs and challenges of the local markets.
In order to remain a leader in health care, the Company strives to maintain a purpose-driven organization and is committed
to developing global business leaders who can achieve these growth objectives. Businesses are managed for the long-
term in order to sustain market leadership positions and enable growth, which provides an enduring source of value to our
shareholders.
Our Credo unifies all Johnson & Johnson employees in achieving these objectives, and provides a common set of values
that serve as the foundation of the Company’s responsibilities to patients, consumers and health care professionals,
10 •Johnson & Johnson 2015 Annual Report