1
00:00:02,440 --> 00:00:12,720
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:12,960 --> 00:00:16,079
Speaker 2: Well. One stockra following this morning is Johnson and Johnson,

3
00:00:16,120 --> 00:00:19,520
Speaker 2: the pharma giants first quarter profit it beat Wall Street's estimates,

4
00:00:19,560 --> 00:00:22,599
Speaker 2: but it slightly narrowed its adjusted profit guidance for the

5
00:00:22,640 --> 00:00:24,560
Speaker 2: rest of the year. Join me now. I am thrilled

6
00:00:24,600 --> 00:00:26,599
Speaker 2: to say we have Joe Wolk is Johnson and Johnson

7
00:00:26,680 --> 00:00:30,280
Speaker 2: Executive vice president and chief financial officer, and let's start

8
00:00:30,440 --> 00:00:33,120
Speaker 2: with that guidance. That adjusted profit guidance for the year

9
00:00:33,240 --> 00:00:35,440
Speaker 2: narrowing to a range of ten dollars and fifty seven

10
00:00:35,520 --> 00:00:38,440
Speaker 2: cents to ten dollars and seventy two cents a share.

11
00:00:38,479 --> 00:00:41,560
Speaker 2: Your earlier forecast had been for ten dollars fifty five

12
00:00:41,640 --> 00:00:44,760
Speaker 2: to ten dollars seventy five cents a share. Why the

13
00:00:44,880 --> 00:00:45,680
Speaker 2: narrow range?

14
00:00:47,240 --> 00:00:47,960
Speaker 3: Good morning, Katie.

15
00:00:47,960 --> 00:00:49,519
Speaker 4: It's great to be here with you, and thanks for

16
00:00:49,520 --> 00:00:50,920
Speaker 4: your interest in Johnson and Johnson.

17
00:00:51,320 --> 00:00:54,800
Speaker 3: We had a really strong first quarter, very encouraged.

18
00:00:54,360 --> 00:00:56,120
Speaker 4: That we'll be able to meet the guidance that we

19
00:00:56,200 --> 00:00:59,440
Speaker 4: outlined in January. Really, with the passage of one quarter,

20
00:00:59,480 --> 00:01:02,200
Speaker 4: we see risks. So what we did from an operational

21
00:01:02,200 --> 00:01:05,319
Speaker 4: perspective is really just take out and raise the floor

22
00:01:05,720 --> 00:01:08,360
Speaker 4: on our earnings per sure as well as our sales guidance.

23
00:01:08,600 --> 00:01:09,840
Speaker 3: From that perspective, there is a.

24
00:01:09,840 --> 00:01:13,640
Speaker 4: Little bit of a FX headwind that we're encountering now,

25
00:01:13,840 --> 00:01:15,360
Speaker 4: so we kind of end up pretty much at the

26
00:01:15,360 --> 00:01:18,240
Speaker 4: same midpoint for each piece, But the parts that we

27
00:01:18,280 --> 00:01:22,039
Speaker 4: can control with respect to our business is very much

28
00:01:22,360 --> 00:01:24,560
Speaker 4: in hand and we're very comfortable with where we're at.

29
00:01:24,560 --> 00:01:27,240
Speaker 4: For the full year, we saw seven point six percent

30
00:01:27,319 --> 00:01:31,280
Speaker 4: growth for the enterprise, really bolstered by pharmaceuticals growing at

31
00:01:31,360 --> 00:01:35,440
Speaker 4: eight point three percent, medtech growing at six point three percent,

32
00:01:35,560 --> 00:01:38,880
Speaker 4: So as well as that has progressed for the near term,

33
00:01:39,200 --> 00:01:42,880
Speaker 4: we're really emboldened by just the number of clinical milestones

34
00:01:42,880 --> 00:01:46,240
Speaker 4: that we hit throughout the quarter. Specifically in pharmaceuticals, we

35
00:01:46,319 --> 00:01:51,360
Speaker 4: had five approvals regulatory approvals, three more filings for approval,

36
00:01:51,360 --> 00:01:53,800
Speaker 4: and a number of data readouts in very important areas

37
00:01:53,840 --> 00:01:58,080
Speaker 4: like multiple mile LOOMA, lung cancer, all sort of colitis

38
00:01:58,760 --> 00:02:00,520
Speaker 4: as well as SASS.

39
00:02:00,880 --> 00:02:02,559
Speaker 3: And on the medtech side, we did.

40
00:02:02,440 --> 00:02:05,920
Speaker 4: Receive ce mark approval for pulse field dobilation in our

41
00:02:06,200 --> 00:02:11,160
Speaker 4: market leading electrophysiology category. So we're very active deploying capital.

42
00:02:11,160 --> 00:02:13,200
Speaker 4: As you might have read a few days ago, we

43
00:02:13,240 --> 00:02:17,359
Speaker 4: did announce a plan to acquire Shockwave Medical that complements

44
00:02:17,400 --> 00:02:20,760
Speaker 4: the Ambrex acquisition we closed earlier. This quarter, we increased

45
00:02:20,760 --> 00:02:24,239
Speaker 4: our dividend for the sixty second consecutive year, and we

46
00:02:24,320 --> 00:02:27,000
Speaker 4: maintained our commitment to a level of R and D

47
00:02:27,120 --> 00:02:29,919
Speaker 4: investment above the peer set at sixteen point six percent

48
00:02:29,919 --> 00:02:30,400
Speaker 4: of sales.

49
00:02:30,560 --> 00:02:32,280
Speaker 2: Right, So, a lot to get into there, but it's

50
00:02:32,320 --> 00:02:34,160
Speaker 2: a fair point when it comes to guidance. If you

51
00:02:34,520 --> 00:02:36,560
Speaker 2: raised the floor, but you also lowered the ceiling, you

52
00:02:36,680 --> 00:02:38,919
Speaker 2: end up in kind of the same place. But when

53
00:02:38,919 --> 00:02:40,960
Speaker 2: it comes to the guidance, just to meditate on that

54
00:02:41,040 --> 00:02:44,080
Speaker 2: a little bit longer. I believe last year this time

55
00:02:44,160 --> 00:02:48,320
Speaker 2: you called out the guidance as being characteristically conservative. How

56
00:02:48,360 --> 00:02:51,120
Speaker 2: would you describe the current guidance that you delivered today?

57
00:02:51,800 --> 00:02:54,040
Speaker 3: Yeah, I would say it's comfortable right now, Katie.

58
00:02:54,040 --> 00:02:55,840
Speaker 4: If you think about what we delivered in the first

59
00:02:55,880 --> 00:02:58,680
Speaker 4: quarter relative to consensus on the street, we beat by

60
00:02:58,800 --> 00:03:01,239
Speaker 4: six or seven cents depending on what source you use,

61
00:03:01,880 --> 00:03:04,880
Speaker 4: and we're supplying about three cents with the rays and

62
00:03:04,919 --> 00:03:06,240
Speaker 4: the operational performance.

63
00:03:07,280 --> 00:03:08,920
Speaker 3: The reason we're hedging our bets a.

64
00:03:08,919 --> 00:03:11,960
Speaker 4: Little bit, to say, is just because of the clinical

65
00:03:12,000 --> 00:03:14,400
Speaker 4: advancements I mentioned that happened in the first quarter.

66
00:03:14,960 --> 00:03:17,239
Speaker 3: Being so early in the year, I want to give.

67
00:03:17,120 --> 00:03:21,360
Speaker 4: Our scientists every opportunity to advance the pipeline even further,

68
00:03:21,880 --> 00:03:25,480
Speaker 4: find new molecules, new therapies that could impact patients and

69
00:03:25,480 --> 00:03:29,440
Speaker 4: therefore improve the long term performance profile of Johnson and Johnson.

70
00:03:29,639 --> 00:03:30,760
Speaker 3: So that's how we're thinking about it.

71
00:03:30,800 --> 00:03:33,120
Speaker 4: There's no concerns from our end, So I would say

72
00:03:33,400 --> 00:03:36,920
Speaker 4: if last year was responsibly cautious, I would say this year,

73
00:03:37,080 --> 00:03:38,840
Speaker 4: we're comfortable with where we're at right now.

74
00:03:38,960 --> 00:03:40,920
Speaker 2: Well, let's talk a little bit about the pipeline and

75
00:03:40,960 --> 00:03:43,840
Speaker 2: the portfolio because I want to talk about Solara. So

76
00:03:43,960 --> 00:03:46,520
Speaker 2: revenue there, it came in below estimates out of course,

77
00:03:46,640 --> 00:03:50,520
Speaker 2: is your best selling psoriasis drug. It's expected to decline

78
00:03:50,680 --> 00:03:54,760
Speaker 2: further this year as biosimilar competition enters the mix. What

79
00:03:54,920 --> 00:03:57,720
Speaker 2: in your portfolio, what in your pipeline has the best

80
00:03:57,800 --> 00:03:59,680
Speaker 2: chance of replacing that revenue.

81
00:04:00,080 --> 00:04:02,280
Speaker 4: Well, Katie, you know the good news is it's already

82
00:04:02,280 --> 00:04:05,640
Speaker 4: been replaced. So darz Alex for multiple myeloma this quarter

83
00:04:05,720 --> 00:04:09,080
Speaker 4: became the largest Johnson and Johnson product, replacing Stillara.

84
00:04:09,160 --> 00:04:10,640
Speaker 3: So Stillar is an important product.

85
00:04:10,760 --> 00:04:14,360
Speaker 4: About seventy five percent of our sales actually are for

86
00:04:14,480 --> 00:04:18,119
Speaker 4: patients who experience inflammatory ballel disease, and only about twenty

87
00:04:18,120 --> 00:04:20,720
Speaker 4: five percent are related to psariasis.

88
00:04:20,720 --> 00:04:21,279
Speaker 3: At this point.

89
00:04:21,320 --> 00:04:24,640
Speaker 4: We have Trenfaya that grew at twenty eight percent in

90
00:04:24,680 --> 00:04:25,080
Speaker 4: the quarter.

91
00:04:25,400 --> 00:04:27,560
Speaker 3: We had our leader for prostate.

92
00:04:27,160 --> 00:04:32,040
Speaker 4: Cancer that grew in the twenty percent plus category. So

93
00:04:32,080 --> 00:04:35,119
Speaker 4: we're very comfortable that the assets that will really carry

94
00:04:35,160 --> 00:04:37,800
Speaker 4: us through the balance of this decade are already in

95
00:04:37,920 --> 00:04:41,400
Speaker 4: place to really make up for the loss of exclusivity

96
00:04:41,440 --> 00:04:46,479
Speaker 4: that you referenced with respect to Stillara. The pipeline is burgeoning.

97
00:04:46,520 --> 00:04:49,240
Speaker 4: As I mentioned non small cell lung cancer. We have

98
00:04:49,440 --> 00:04:53,839
Speaker 4: a ribervent compound there which is off.

99
00:04:53,640 --> 00:04:55,920
Speaker 3: To a good start. Tech Valley, which is a.

100
00:04:55,800 --> 00:05:00,960
Speaker 4: Bispecific antibody for multiple myeloma, really blew up expectations in

101
00:05:01,000 --> 00:05:03,560
Speaker 4: the quarter. So we have a number of assets in

102
00:05:03,600 --> 00:05:06,440
Speaker 4: the stable, if you will, that are already on track

103
00:05:06,560 --> 00:05:09,560
Speaker 4: and approved and on market to replace Stillara once the

104
00:05:09,600 --> 00:05:12,120
Speaker 4: loss of exclusivity starts to hit. And I will remind

105
00:05:12,160 --> 00:05:14,719
Speaker 4: folks to the loss of exclusivity on Stillara is not

106
00:05:15,240 --> 00:05:17,760
Speaker 4: a drop off a cliff type of an event. If

107
00:05:17,760 --> 00:05:20,120
Speaker 4: you look at some of the competitors out there who

108
00:05:20,200 --> 00:05:26,440
Speaker 4: had similar biologics and went generic or biosimilar, they did

109
00:05:26,480 --> 00:05:30,200
Speaker 4: not experience a dramatic drop in revenue, and we expect

110
00:05:30,200 --> 00:05:31,720
Speaker 4: pretty much the same with Stillara.

111
00:05:31,800 --> 00:05:33,640
Speaker 3: These are really critical diseases.

112
00:05:33,640 --> 00:05:36,320
Speaker 4: When you think about all sort of colitis Crohn's disease,

113
00:05:37,120 --> 00:05:40,640
Speaker 4: patients and physicians are kind of reluctant to jump off

114
00:05:40,680 --> 00:05:43,320
Speaker 4: those therapies when they're working so well for such severe disease.

115
00:05:43,600 --> 00:05:46,119
Speaker 2: I also want to talk about cardiology because you mentioned,

116
00:05:46,200 --> 00:05:49,400
Speaker 2: of course that acquisition acquisition of shock Wave for about

117
00:05:49,480 --> 00:05:53,120
Speaker 2: thirteen billion dollars earlier this month. How do you see

118
00:05:53,160 --> 00:05:56,400
Speaker 2: that fitting into the car cardiology portfolio? And also I

119
00:05:56,400 --> 00:05:58,479
Speaker 2: do want to talk about the dilution, because there's a

120
00:05:58,520 --> 00:06:02,200
Speaker 2: ten cent dilution into twenty twenty four seventeen cents in

121
00:06:02,279 --> 00:06:04,760
Speaker 2: twenty twenty five. What made you comfortable with that?

122
00:06:05,360 --> 00:06:09,600
Speaker 4: Yeah, So in terms of the Shockwave opportunity, we're really

123
00:06:09,600 --> 00:06:12,599
Speaker 4: excited about it. We think it goes very nicely and

124
00:06:12,600 --> 00:06:16,320
Speaker 4: it's complementary to the presence and market leadership that we

125
00:06:16,400 --> 00:06:19,920
Speaker 4: have in electrophysiology through our BioSense Webster unit and then

126
00:06:19,960 --> 00:06:22,280
Speaker 4: an acquisition we made and completed at the end of

127
00:06:22,320 --> 00:06:26,799
Speaker 4: twenty twenty two, known as Abiomed for heart failure, World's

128
00:06:26,800 --> 00:06:33,040
Speaker 4: smallest pump. Shockwave is a different space within interventional cardiology,

129
00:06:33,200 --> 00:06:35,760
Speaker 4: but it really complements the portfolio. It's in a high

130
00:06:35,760 --> 00:06:39,599
Speaker 4: growth market, good margins, so it fits very nicely into

131
00:06:40,480 --> 00:06:42,680
Speaker 4: as an asset that Johnson and Johnson can use our

132
00:06:42,720 --> 00:06:46,400
Speaker 4: global footprint as well as our expertise in other areas

133
00:06:46,440 --> 00:06:50,119
Speaker 4: of cardiology to hopefully explit expand that platform even further.

134
00:06:50,800 --> 00:06:53,680
Speaker 4: With respect to the dilution, it really comes down to financing.

135
00:06:54,400 --> 00:06:57,160
Speaker 4: If you think about as you were just with your

136
00:06:57,200 --> 00:07:02,480
Speaker 4: prior guest talking about for longer with respect to rates, well,

137
00:07:02,480 --> 00:07:05,640
Speaker 4: we have significant cash balances and there's an opportunity cost

138
00:07:06,080 --> 00:07:09,640
Speaker 4: to using cash that we thought maybe going the debt

139
00:07:09,720 --> 00:07:12,880
Speaker 4: route would be a little bit more advantageous from that perspective,

140
00:07:13,040 --> 00:07:15,280
Speaker 4: given our triple A credit rating, the cash flow that

141
00:07:15,320 --> 00:07:17,720
Speaker 4: we generate year in, year out.

142
00:07:17,880 --> 00:07:19,320
Speaker 3: So we're currently evaluating that.

143
00:07:19,360 --> 00:07:21,280
Speaker 4: We have to hear from the regulators first on the

144
00:07:21,280 --> 00:07:23,800
Speaker 4: Shockwave acquisition, and then we'll go out to the capital

145
00:07:23,840 --> 00:07:25,640
Speaker 4: markets in the termine the best way to finance that.

146
00:07:26,040 --> 00:07:27,880
Speaker 2: And Joe, I only have about a minute left with you,

147
00:07:27,920 --> 00:07:29,560
Speaker 2: but let's talk about the future here, because in the

148
00:07:29,600 --> 00:07:32,600
Speaker 2: notes you sent over to my producers, you write that

149
00:07:32,680 --> 00:07:35,920
Speaker 2: our strong balance sheet will continue to enable flexible investment

150
00:07:35,960 --> 00:07:39,880
Speaker 2: of capital into a combination of organic and inorganic growth.

151
00:07:39,880 --> 00:07:42,200
Speaker 3: Are there more M and A type deals.

152
00:07:41,920 --> 00:07:42,600
Speaker 2: In your future?

153
00:07:43,400 --> 00:07:45,360
Speaker 3: Possibly, Katie. You know, we're always looking.

154
00:07:45,440 --> 00:07:47,640
Speaker 4: Somebody asked me earlier this morning, you know, are you

155
00:07:47,640 --> 00:07:50,600
Speaker 4: guys done? And we really can't commit to being done

156
00:07:50,800 --> 00:07:52,760
Speaker 4: or not done. What we can commit to is that

157
00:07:52,800 --> 00:07:55,760
Speaker 4: we're always looking. If you look over Johnson and Johnson's

158
00:07:55,840 --> 00:07:57,960
Speaker 4: history over the last twenty five years, about forty percent

159
00:07:57,960 --> 00:08:00,400
Speaker 4: of our growth comes from inorganic means.

160
00:08:01,200 --> 00:08:02,200
Speaker 3: So we're always looking.

161
00:08:02,240 --> 00:08:04,600
Speaker 4: We look through the lens of having that strategic fit,

162
00:08:04,680 --> 00:08:09,720
Speaker 4: so a scientific capability, commercial expertise, perhaps it is the

163
00:08:09,720 --> 00:08:14,120
Speaker 4: global footprint, and then layering on obviously the financial returns.

164
00:08:14,240 --> 00:08:17,840
Speaker 4: Are we earning enough to compensate shareholders for the risk

165
00:08:17,880 --> 00:08:20,520
Speaker 4: that we're bearing on their behalf and if it fits

166
00:08:20,520 --> 00:08:22,120
Speaker 4: into the long term for Johnson and Johnson.

167
00:08:22,400 --> 00:08:23,320
Speaker 3: That's how we view it.

168
00:08:23,360 --> 00:08:26,520
Speaker 4: We don't say that we're done or we're just getting started.

169
00:08:26,560 --> 00:08:28,560
Speaker 4: We're always constantly looking, all.

170
00:08:28,520 --> 00:08:31,160
Speaker 2: Right, Joe really enjoyed this conversation. Hope to speak to

171
00:08:31,160 --> 00:08:33,680
Speaker 2: you next quarter. Our thanks, of course to Joe walk

172
00:08:33,760 --> 00:08:36,360
Speaker 2: He is the CFO of Johnson and Johnson