UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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| ☑ | | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the quarterly period ended April 3, 20222, 2023
or
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| ☐ | | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from to |
Commission file number 1-3215
Johnson & Johnson
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| New Jersey | | 22-1024240 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
(Address of principal executive offices)
Registrant’s telephone number, including area code (732) 524-0400
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
| Large accelerated filer | ☑ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ | | |
If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
| | | | | | | | |
| Title of each class | Trading Symbol | Name of each exchange on which registered |
| Common Stock, Par Value $1.00 | JNJ | New York Stock Exchange |
| 0.650% Notes Due May 2024 | JNJ24C | New York Stock Exchange |
| 5.50% Notes Due November 2024 | JNJ24BP | New York Stock Exchange |
| 1.150% Notes Due November 2028 | JNJ28 | New York Stock Exchange |
| 1.650% Notes Due May 2035 | JNJ35 | New York Stock Exchange |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
On April 22, 2022, 2,631,401,80421, 2023, 2,598,734,075 shares of Common Stock, $1.00 par value, were outstanding.
JOHNSON & JOHNSON AND SUBSIDIARIES
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and Johnson & Johnson'sJohnson’s other publicly available documents contain “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Management and representatives of Johnson & Johnson and its subsidiaries (the Company) also may from time to time make forward-looking statements. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and other words of similar meaning in conjunction with, among other things: discussions of future operations, expected operating results, financial performance; impact of planned acquisitions and dispositions; impact and timing of restructuring initiatives including associated cost savings and other benefits; the Company'sCompany’s strategy for growth; product development activities; regulatory approvals; market position and expenditures.
Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of the Company'sCompany’s control. Investors should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, the Company’s actual results and financial condition could vary materially from expectations and projections expressed or implied in its forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements. Risks and uncertainties include, but are not limited to:
Risks Related to Product Development, Market Success and Competition
•Challenges and uncertainties inherent in innovation and development of new and improved products and technologies on which the Company’s continued growth and success depend, including uncertainty of clinical outcomes, additional analysis of existing clinical data, obtaining regulatory approvals, health plan coverage and customer access, and initial and continued commercial success;
•Challenges to the Company’s ability to obtain and protect adequate patent and other intellectual property rights for new and existing products and technologies in the United States and other important markets;
•The impact of patent expirations, typically followed by the introduction of competing generic, biosimilar or other products and resulting revenue and market share losses;
•Increasingly aggressive and frequent challenges to the Company’s patents by competitors and others seeking to launch competing generic, biosimilar or other products and increased receptivity of courts, the United States Patent and Trademark Office and other decision makers to such challenges, potentially resulting in loss of market exclusivity and rapid decline in sales for the relevant product sooner than expected;
•Competition in research and development of new and improved products, processes and technologies, which can result in product and process obsolescence;
•Competition to reach agreement with third parties for collaboration, licensing, development and marketing agreements for products and technologies;
•Competition based on cost-effectiveness, product performance, technological advances and patents attained by competitors; and
•Allegations that the Company’s products infringe the patents and other intellectual property rights of third parties, which could adversely affect the Company’s ability to sell the products in question and require the payment of money damages and future royalties.
Risks Related to Product Liability, Litigation and Regulatory Activity
•Product efficacy or safety concerns, whether or not based on scientific evidence, potentially resulting in product withdrawals, recalls, regulatory action on the part of the United States Food and Drug Administration (or international counterparts), declining sales, reputational damage, increased litigation expense and share price impact;
•The impact, including declining sales and reputational damage, of significant litigation or government action adverse to the Company, including product liability claims and allegations related to pharmaceutical marketing practices and contracting strategies;
•The impact of an adverse judgment or settlement and the adequacy of reserves related to legal proceedings, including patent litigation, product liability, personal injury claims, securities class actions, government investigations, employment and other legal proceedings;
•Increased scrutiny of the healthcare industry by government agencies and state attorneys general resulting in investigations and prosecutions, which carry the risk of significant civil and criminal penalties, including, but not limited to, debarment from government business;
•Failure to meet compliance obligations in compliance agreements with governments or government agencies, which could result in significant sanctions;
•Potential changes to applicable laws and regulations affecting United States and international operations, including relating to: approval of new products; licensing and patent rights; sales and promotion of healthcare products; access to, and reimbursement and pricing for, healthcare products and services; environmental protection; and sourcing of raw materials;
•Compliance with local regulations and laws that may restrict the Company’s ability to manufacture or sell its products in relevant markets, including requirements to comply with medical device reporting regulations and other requirements such as the European Union’s Medical Devices Regulation;
•Changes in domestic and international tax laws and regulations, increasing audit scrutiny by tax authorities around the world and exposures to additional tax liabilities potentially in excess of existing reserves; and
•The issuance of new or revised accounting standards by the Financial Accounting Standards Board and regulations by the Securities and Exchange Commission.
Risks Related to the Company’s Strategic Initiatives, Healthcare Market Trends and the Planned Separation of the Company’s Consumer Health Business
•Pricing pressures resulting from trends toward healthcare cost containment, including the continued consolidation among healthcare providers and other market participants, trends toward managed care, the shift toward governments increasingly becoming the primary payers of healthcare expenses, significant new entrants to the healthcare markets seeking to reduce costs and government pressure on companies to voluntarily reduce costs and price increases;
•Restricted spending patterns of individual, institutional and governmental purchasers of healthcare products and services due to economic hardship and budgetary constraints;
•Challenges to the Company’s ability to realize its strategy for growth including through externally sourced innovations, such as development collaborations, strategic acquisitions, licensing and marketing agreements, and the potential heightened costs of any such external arrangements due to competitive pressures;
•The potential that the expected strategic benefits and opportunities from any planned or completed acquisition or divestiture by the Company may not be realized or may take longer to realize than expected;
•The potential that the expected benefits and opportunities related to past and ongoing restructuring actions may not be realized or may take longer to realize than expected;
•The Company’s ability to consummate the planned separation of the Company’s Consumer Health business on a timely basis or at all;
•The Company’s ability to successfully separate the Company’s Consumer Health business and realize the anticipated benefits from the planned separation; and
•The New Consumer Health Company’s ability to succeed as a standalone publicly traded company.
Risks Related to Economic Conditions, Financial Markets and Operating Internationally
•The risks associated with global operations on the Company and its customers and suppliers, including foreign governments in countries in which the Company operates;
•The impact of inflation and fluctuations in interest rates and currency exchange rates and the potential effect of such fluctuations on revenues, expenses and resulting margins;
•Potential changes in export/import and trade laws, regulations and policies of the United States and other countries, including any increased trade restrictions or tariffs and potential drug reimportation legislation;
•The impact on international operations from financial instability in international economies, sovereign risk, possible imposition of governmental controls and restrictive economic policies, and unstable international governments and legal systems;
•The impact of global public health crises and pandemics, including the novel coronavirus (COVID-19) pandemic;pandemics;
•Changes to global climate, extreme weather and natural disasters that could affect demand for the Company’s products and services, cause disruptions in manufacturing and distribution networks, alter the availability of goods and services within the supply chain, and affect the overall design and integrity of the Company’s products and operations; and
•The impact of armed conflicts and terrorist attacks in the United States and other parts of the world, including social and economic disruptions and instability of financial and other markets.
Risks Related to Supply Chain and Operations
•Difficulties and delays in manufacturing, internally, through third-party providers or otherwise within the supply chain, that may lead to voluntary or involuntary business interruptions or shutdowns, product shortages, withdrawals or suspensions of products from the market, and potential regulatory action;
•Interruptions and breaches of the Company’s information technology systems or those of the Company’s vendors, which could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory action;
•Reliance on global supply chains and production and distribution processes that are complex and subject to increasing regulatory requirements that may adversely affect supply, sourcing and pricing of materials used in the Company’s products; and
•The potential that the expected benefits and opportunities related to restructuring actions contemplated for the global supply chain may not be realized or may take longer to realize than expected, including due to any required approvals from applicable regulatory authorities.
Investors also should carefully read the Risk Factors described in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2022,1, 2023, for a description of certain risks that could, among other things, cause the Company’s actual results to differ materially from those expressed in its forward-looking statements. Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.
Part I — FINANCIAL INFORMATION
Item 1 — FINANCIAL STATEMENTS
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited; Dollars in Millions Except Share and Per Share Data)
| | | April 3, 2022 | | January 2, 2022 | | April 2, 2023 | | January 1, 2023 |
| ASSETS | ASSETS | ASSETS |
| Current assets: | Current assets: | | | | | Current assets: | | | | |
| Cash and cash equivalents | | $ | 10,463 | | | 14,487 | | |
| Cash and cash equivalents (Note 4) | | Cash and cash equivalents (Note 4) | | $ | 19,170 | | | 14,127 | |
| Restricted cash (Note 4) | | Restricted cash (Note 4) | | 7,695 | | | — | |
| Marketable securities | Marketable securities | | 19,925 | | | 17,121 | | Marketable securities | | 5,443 | | | 9,392 | |
| Accounts receivable, trade, less allowances for doubtful accounts and credit losses $234 (2021, $230) | | 15,594 | | | 15,283 | | |
| Accounts receivable, trade, less allowances $207 (2022, $203) | | Accounts receivable, trade, less allowances $207 (2022, $203) | | 16,350 | | | 16,160 | |
| Inventories (Note 2) | Inventories (Note 2) | | 10,990 | | | 10,387 | | Inventories (Note 2) | | 12,809 | | | 12,483 | |
| Prepaid expenses and other | Prepaid expenses and other | | 3,452 | | | 3,701 | | Prepaid expenses and other | | 2,921 | | | 3,132 | |
| | Total current assets | Total current assets | | 60,424 | | | 60,979 | | Total current assets | | 64,388 | | | 55,294 | |
| Property, plant and equipment at cost | Property, plant and equipment at cost | | 47,702 | | | 47,679 | | Property, plant and equipment at cost | | 50,367 | | | 49,253 | |
| Less: accumulated depreciation | Less: accumulated depreciation | | (29,001) | | | (28,717) | | Less: accumulated depreciation | | (30,193) | | | (29,450) | |
| Property, plant and equipment, net | Property, plant and equipment, net | | 18,701 | | | 18,962 | | Property, plant and equipment, net | | 20,174 | | | 19,803 | |
| Intangible assets, net (Note 3) | Intangible assets, net (Note 3) | | 44,420 | | | 46,392 | | Intangible assets, net (Note 3) | | 47,448 | | | 48,325 | |
| Goodwill (Note 3) | Goodwill (Note 3) | | 34,935 | | | 35,246 | | Goodwill (Note 3) | | 45,575 | | | 45,231 | |
| Deferred taxes on income (Note 5) | Deferred taxes on income (Note 5) | | 9,936 | | | 10,223 | | Deferred taxes on income (Note 5) | | 8,817 | | | 9,123 | |
| Other assets | Other assets | | 9,939 | | | 10,216 | | Other assets | | 9,567 | | | 9,602 | |
| Total assets | Total assets | | $ | 178,355 | | | 182,018 | | Total assets | | $ | 195,969 | | | 187,378 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | Current liabilities: | Current liabilities: | | | | | Current liabilities: | | | | |
| Loans and notes payable | Loans and notes payable | | $ | 4,297 | | | 3,766 | | Loans and notes payable | | $ | 17,979 | | | 12,771 | |
| Accounts payable | Accounts payable | | 9,309 | | | 11,055 | | Accounts payable | | 9,909 | | | 11,703 | |
| Accrued liabilities | Accrued liabilities | | 13,006 | | | 13,612 | | Accrued liabilities | | 11,204 | | | 11,456 | |
| Accrued rebates, returns and promotions | Accrued rebates, returns and promotions | | 12,972 | | | 12,095 | | Accrued rebates, returns and promotions | | 14,784 | | | 14,417 | |
| Accrued compensation and employee related obligations | Accrued compensation and employee related obligations | | 2,098 | | | 3,586 | | Accrued compensation and employee related obligations | | 2,231 | | | 3,328 | |
| Accrued taxes on income (Note 5) | Accrued taxes on income (Note 5) | | 1,708 | | | 1,112 | | Accrued taxes on income (Note 5) | | 4,266 | | | 2,127 | |
| Total current liabilities | Total current liabilities | | 43,390 | | | 45,226 | | Total current liabilities | | 60,373 | | | 55,802 | |
| Long-term debt (Note 4) | Long-term debt (Note 4) | | 28,851 | | | 29,985 | | Long-term debt (Note 4) | | 34,928 | | | 26,888 | |
| Deferred taxes on income (Note 5) | Deferred taxes on income (Note 5) | | 6,424 | | | 7,487 | | Deferred taxes on income (Note 5) | | 4,417 | | | 6,374 | |
| Employee related obligations (Note 6) | Employee related obligations (Note 6) | | 8,739 | | | 8,898 | | Employee related obligations (Note 6) | | 6,665 | | | 6,767 | |
| Long-term taxes payable (Note 5) | Long-term taxes payable (Note 5) | | 5,745 | | | 5,713 | | Long-term taxes payable (Note 5) | | 4,296 | | | 4,306 | |
| Other liabilities | Other liabilities | | 10,497 | | | 10,686 | | Other liabilities | | 14,421 | | | 10,437 | |
| Total liabilities | Total liabilities | | $ | 103,646 | | | 107,995 | | Total liabilities | | $ | 125,100 | | | 110,574 | |
| Commitments and Contingencies (Note 11) | Commitments and Contingencies (Note 11) | | 0 | | 0 | Commitments and Contingencies (Note 11) | |
| Shareholders’ equity: | Shareholders’ equity: | | | | | Shareholders’ equity: | | | | |
| Common stock — par value $1.00 per share (authorized 4,320,000,000 shares; issued 3,119,843,000 shares) | Common stock — par value $1.00 per share (authorized 4,320,000,000 shares; issued 3,119,843,000 shares) | | $ | 3,120 | | | 3,120 | | Common stock — par value $1.00 per share (authorized 4,320,000,000 shares; issued 3,119,843,000 shares) | | $ | 3,120 | | | 3,120 | |
| Accumulated other comprehensive income (loss) (Note 7) | Accumulated other comprehensive income (loss) (Note 7) | | (13,757) | | | (13,058) | | Accumulated other comprehensive income (loss) (Note 7) | | (12,626) | | | (12,967) | |
| Retained earnings | | 124,380 | | | 123,060 | | |
| Less: common stock held in treasury, at cost (490,459,000 and 490,878,000 shares) | | 39,034 | | | 39,099 | | |
| Retained earnings and Additional paid-in capital | | Retained earnings and Additional paid-in capital | | 124,558 | | | 128,345 | |
| Less: common stock held in treasury, at cost (521,519,000 and 506,246,000 shares) | | Less: common stock held in treasury, at cost (521,519,000 and 506,246,000 shares) | | 44,183 | | | 41,694 | |
| Total shareholders’ equity | Total shareholders’ equity | | 74,709 | | | 74,023 | | Total shareholders’ equity | | 70,869 | | | 76,804 | |
| Total liabilities and shareholders' equity | | $ | 178,355 | | | 182,018 | | |
| Total liabilities and shareholders’ equity | | Total liabilities and shareholders’ equity | | $ | 195,969 | | | 187,378 | |
See Notes to Consolidated Financial Statements
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited; Dollars & Shares in Millions Except Per Share Amounts)
| | | | | Fiscal First Quarter Ended | | | Fiscal First Quarter Ended |
| | April 3,
2022 | | Percent
to Sales | | April 4,
2021 | | Percent
to Sales | | April 2,
2023 | | Percent
to Sales | | April 3,
2022 | | Percent
to Sales |
| Sales to customers (Note 9) | Sales to customers (Note 9) | | $ | 23,426 | | | 100.0 | % | | $ | 22,321 | | | 100.0 | % | Sales to customers (Note 9) | | $ | 24,746 | | | 100.0 | % | | $ | 23,426 | | | 100.0 | % |
| Cost of products sold | Cost of products sold | | 7,598 | | | 32.4 | | | 7,063 | | | 31.7 | | Cost of products sold | | 8,395 | | | 33.9 | | | 7,598 | | | 32.4 | |
| Gross profit | Gross profit | | 15,828 | | | 67.6 | | | 15,258 | | | 68.3 | | Gross profit | | 16,351 | | | 66.1 | | | 15,828 | | | 67.6 | |
| Selling, marketing and administrative expenses | Selling, marketing and administrative expenses | | 5,938 | | | 25.4 | | | 5,432 | | | 24.3 | | Selling, marketing and administrative expenses | | 6,138 | | | 24.8 | | | 5,938 | | | 25.4 | |
| Research and development expense | Research and development expense | | 3,462 | | | 14.8 | | | 3,178 | | | 14.2 | | Research and development expense | | 3,563 | | | 14.4 | | | 3,462 | | | 14.8 | |
| In-process research and development | In-process research and development | | 610 | | | 2.6 | | | — | | | — | | In-process research and development | | 49 | | | 0.2 | | | 610 | | | 2.6 | |
| Interest income | Interest income | | (22) | | | (0.1) | | | (15) | | | (0.1) | | Interest income | | (235) | | | (1.0) | | | (22) | | | (0.1) | |
| Interest expense, net of portion capitalized | Interest expense, net of portion capitalized | | 10 | | | 0.0 | | | 63 | | | 0.3 | | Interest expense, net of portion capitalized | | 215 | | | 0.9 | | | 10 | | | 0.0 | |
| Other (income) expense, net | Other (income) expense, net | | (102) | | | (0.4) | | | (882) | | | (3.9) | | Other (income) expense, net | | 7,228 | | | 29.2 | | | (102) | | | (0.4) | |
| Restructuring (Note 12) | | 70 | | | 0.3 | | | 53 | | | 0.2 | | |
| Earnings before provision for taxes on income | | 5,862 | | | 25.0 | | | 7,429 | | | 33.3 | | |
| Provision for taxes on income (Note 5) | | 713 | | | 3.0 | | | 1,232 | | | 5.5 | | |
| NET EARNINGS | | $ | 5,149 | | | 22.0 | % | | $ | 6,197 | | | 27.8 | % | |
| Restructuring | | Restructuring | | 130 | | | 0.6 | | | 70 | | | 0.3 | |
| Earnings/(Loss) before provision for taxes on income | | Earnings/(Loss) before provision for taxes on income | | (737) | | | (3.0) | | | 5,862 | | | 25.0 | |
| Provision for/(Benefit from) taxes on income (Note 5) | | Provision for/(Benefit from) taxes on income (Note 5) | | (669) | | | (2.7) | | | 713 | | | 3.0 | |
| NET EARNINGS/(LOSS) | | NET EARNINGS/(LOSS) | | $ | (68) | | | (0.3) | % | | $ | 5,149 | | | 22.0 | % |
| | NET EARNINGS PER SHARE (Note 8) | | | | | | | | | |
| NET EARNINGS/(LOSS) PER SHARE (Note 8) | | NET EARNINGS/(LOSS) PER SHARE (Note 8) | | | | | | | | |
| Basic | Basic | | $ | 1.96 | | | | | $ | 2.35 | | | | Basic | | $ | (0.03) | | | | | $ | 1.96 | | | |
| Diluted | Diluted | | $ | 1.93 | | | | | $ | 2.32 | | | | Diluted | | $ | (0.03) | | | | | $ | 1.93 | | | |
| | AVG. SHARES OUTSTANDING | AVG. SHARES OUTSTANDING | | | | | | | | | AVG. SHARES OUTSTANDING | | | | | | | | |
| Basic | Basic | | 2,629.2 | | | | | 2,631.6 | | | | Basic | | 2,605.5 | | | | | 2,629.2 | | | |
| Diluted | Diluted | | 2,666.5 | | | | | 2,672.7 | | | | Diluted | | 2,605.5 | | | | | 2,666.5 | | | |
See Notes to Consolidated Financial Statements
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; Dollars in Millions)
| | | Fiscal First Quarter Ended | | | Fiscal First Quarter Ended | | |
| | April 3, 2022 | | April 4, 2021 | | | April 2, 2023 | | April 3, 2022 | | |
| | Net earnings | $ | 5,149 | | | 6,197 | | | |
| Net earnings/(loss) | | Net earnings/(loss) | $ | (68) | | | 5,149 | | | |
| | Other comprehensive income (loss), net of tax | Other comprehensive income (loss), net of tax | | | Other comprehensive income (loss), net of tax | | |
| Foreign currency translation | Foreign currency translation | (554) | | | 276 | | | Foreign currency translation | (181) | | | (554) | | | |
| | Securities: | Securities: | | | Securities: | | |
| Unrealized holding gain (loss) arising during period | Unrealized holding gain (loss) arising during period | (13) | | | — | | | Unrealized holding gain (loss) arising during period | 17 | | | (13) | | | |
| Reclassifications to earnings | Reclassifications to earnings | — | | | — | | | Reclassifications to earnings | — | | | — | | | |
| | Net change | Net change | (13) | | | — | | | Net change | 17 | | | (13) | | | |
| | Employee benefit plans: | Employee benefit plans: | | | Employee benefit plans: | | |
| Prior service cost amortization during period | Prior service cost amortization during period | (53) | | | (41) | | | Prior service cost amortization during period | (35) | | | (53) | | | |
| Gain (loss) amortization during period | Gain (loss) amortization during period | 217 | | | 274 | | | Gain (loss) amortization during period | (33) | | | 217 | | | |
| | Net change | Net change | 164 | | | 233 | | | Net change | (68) | | | 164 | | | |
| | Derivatives & hedges: | Derivatives & hedges: | | | Derivatives & hedges: | | |
| Unrealized gain (loss) arising during period | Unrealized gain (loss) arising during period | (195) | | | (522) | | | Unrealized gain (loss) arising during period | 570 | | | (195) | | | |
| Reclassifications to earnings | Reclassifications to earnings | (101) | | | (73) | | | Reclassifications to earnings | 3 | | | (101) | | | |
| Net change | Net change | (296) | | | (595) | | | Net change | 573 | | | (296) | | | |
| | Other comprehensive income (loss) | Other comprehensive income (loss) | (699) | | | (86) | | | Other comprehensive income (loss) | 341 | | | (699) | | | |
| | Comprehensive income | Comprehensive income | $ | 4,450 | | | 6,111 | | | Comprehensive income | $ | 273 | | | 4,450 | | | |
|
See Notes to Consolidated Financial Statements
| | |
The tax effects in other comprehensive incomeincome/(loss) for the fiscal first quarter were as follows for 20222023 and 2021,2022, respectively: Foreign Currency Translation: $145$234 million and $319$145 million; Securities: $5 million and $3 million in 2022;million; Employee Benefit Plans: $19$22 million and $66$19 million; Derivatives & Hedges: $78$154 million and $157$78 million. |
|
|
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited; Dollars in Millions)
Fiscal First Quarter Ended April 3, 20222, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Retained
Earnings | | Accumulated
Other
Comprehensive
Income | | Common Stock
Issued Amount | | Treasury
Stock
Amount |
| Balance, January 2, 2022 | $ | 74,023 | | | 123,060 | | | (13,058) | | | 3,120 | | | (39,099) | |
| Net earnings | 5,149 | | | 5,149 | | | — | | | — | | | — | |
| Cash dividends paid ($1.06 per share) | (2,787) | | | (2,787) | | | — | | | — | | | — | |
| Employee compensation and stock option plans | 600 | | | (1,042) | | | — | | | — | | | 1,642 | |
| Repurchase of common stock | (1,577) | | | — | | | — | | | — | | | (1,577) | |
| | | | | | | | | |
| Other comprehensive income (loss), net of tax | (699) | | | — | | | (699) | | | — | | | — | |
| Balance, April 3, 2022 | $ | 74,709 | | | 124,380 | | | (13,757) | | | 3,120 | | | (39,034) | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Retained
Earnings and Additional paid-in capital | | Accumulated
Other
Comprehensive
Income | | Common Stock
Issued Amount | | Treasury
Stock
Amount |
| Balance, January 1, 2023 | $ | 76,804 | | | 128,345 | | | (12,967) | | | 3,120 | | | (41,694) | |
| Net earnings/(loss) | (68) | | | (68) | | | — | | | — | | | — | |
| Cash dividends paid ($1.13 per share) | (2,942) | | | (2,942) | | | — | | | — | | | — | |
| Employee compensation and stock option plans | 295 | | | (777) | | | — | | | — | | | 1,072 | |
| Repurchase of common stock | (3,537) | | | — | | | — | | | — | | | (3,537) | |
| Other | (24) | | | — | | | — | | | — | | | (24) | |
| Other comprehensive income (loss), net of tax | 341 | | | — | | | 341 | | | — | | | — | |
| Balance, April 2, 2023 | $ | 70,869 | | | 124,558 | | | (12,626) | | | 3,120 | | | (44,183) | |
| | | | | | | | | |
Fiscal First Quarter Ended April 3, 2022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Retained
Earnings and Additional paid-in capital | | Accumulated
Other
Comprehensive
Income | | Common Stock
Issued Amount | | Treasury
Stock
Amount |
| Balance, January 2, 2022 | $ | 74,023 | | | 123,060 | | | (13,058) | | | 3,120 | | | (39,099) | |
| | | | | | | | | |
| Net earnings | 5,149 | | | 5,149 | | | — | | | — | | | — | |
| Cash dividends paid ($1.06 per share) | (2,787) | | | (2,787) | | | — | | | — | | | — | |
| Employee compensation and stock option plans | 600 | | | (1,042) | | | — | | | — | | | 1,642 | |
| Repurchase of common stock | (1,577) | | | — | | | — | | | — | | | (1,577) | |
| | | | | | | | | |
| Other comprehensive income (loss), net of tax | (699) | | | — | | | (699) | | | — | | | — | |
| Balance, April 3, 2022 | $ | 74,709 | | | 124,380 | | | (13,757) | | | 3,120 | | | (39,034) | |
| | | | | | | | | |
Fiscal First Quarter Ended April 4, 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Retained
Earnings | | Accumulated
Other
Comprehensive
Income | | Common Stock
Issued Amount | | Treasury
Stock
Amount |
| Balance, January 3, 2021 | $ | 63,278 | | | 113,890 | | | (15,242) | | | 3,120 | | | (38,490) | |
| | | | | | | | | |
| Net earnings | 6,197 | | | 6,197 | | | — | | | — | | | — | |
| Cash dividends paid ($1.01 per share) | (2,659) | | | (2,659) | | | — | | | — | | | — | |
| Employee compensation and stock option plans | 542 | | | (920) | | | — | | | — | | | 1,462 | |
| Repurchase of common stock | (1,438) | | | — | | | — | | | — | | | (1,438) | |
| | | | | | | | | |
| Other comprehensive income (loss), net of tax | (86) | | | — | | | (86) | | | — | | | — | |
| Balance, April 4, 2021 | $ | 65,834 | | | 116,508 | | | (15,328) | | | 3,120 | | | (38,466) | |
| | | | | | | | | |
See Notes to Consolidated Financial Statements
JOHNSON & JOHNSON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; Dollars in Millions)
| | | | | Fiscal Three Months Ended | | | Fiscal Three Months Ended |
| | April 3,
2022 | | April 4,
2021 | | April 2,
2023 | | April 3,
2022 |
| CASH FLOWS FROM OPERATING ACTIVITIES | CASH FLOWS FROM OPERATING ACTIVITIES | | | | | CASH FLOWS FROM OPERATING ACTIVITIES | | | | |
| Net earnings | | $ | 5,149 | | | 6,197 | | |
| Net (loss)/earnings | | Net (loss)/earnings | | $ | (68) | | | 5,149 | |
| Adjustments to reconcile net earnings to cash flows from operating activities: | Adjustments to reconcile net earnings to cash flows from operating activities: | | | | | Adjustments to reconcile net earnings to cash flows from operating activities: | | | | |
| Depreciation and amortization of property and intangibles | Depreciation and amortization of property and intangibles | | 1,769 | | | 1,894 | | Depreciation and amortization of property and intangibles | | 1,880 | | | 1,769 | |
| Stock based compensation | Stock based compensation | | 278 | | | 307 | | Stock based compensation | | 306 | | | 278 | |
| | Asset write-downs | Asset write-downs | | 610 | | | 14 | | Asset write-downs | | 426 | | | 610 | |
| | Net gain on sale of assets/businesses | Net gain on sale of assets/businesses | | (168) | | | (580) | | Net gain on sale of assets/businesses | | (8) | | | (168) | |
| | Deferred tax provision | Deferred tax provision | | (926) | | | (730) | | Deferred tax provision | | (1,543) | | | (926) | |
| Credit losses and accounts receivable allowances | Credit losses and accounts receivable allowances | | 6 | | | (13) | | Credit losses and accounts receivable allowances | | 1 | | | 6 | |
| Changes in assets and liabilities, net of effects from acquisitions and divestitures: | Changes in assets and liabilities, net of effects from acquisitions and divestitures: | | | | | Changes in assets and liabilities, net of effects from acquisitions and divestitures: | | | | |
| Increase in accounts receivable | Increase in accounts receivable | | (427) | | | (1,604) | | Increase in accounts receivable | | (54) | | | (427) | |
| Increase in inventories | Increase in inventories | | (600) | | | (695) | | Increase in inventories | | (524) | | | (600) | |
| Decrease in accounts payable and accrued liabilities | Decrease in accounts payable and accrued liabilities | | (2,817) | | | (2,336) | | Decrease in accounts payable and accrued liabilities | | (2,572) | | | (2,817) | |
| Decrease in other current and non-current assets | | 995 | | | 2,522 | | |
| Increase/(Decrease) in other current and non-current liabilities | | 110 | | | (902) | | |
| (Increase)/Decrease in other current and non-current assets | | (Increase)/Decrease in other current and non-current assets | | (915) | | | 995 | |
| Increase in other current and non-current liabilities | | Increase in other current and non-current liabilities | | 6,328 | | | 110 | |
| | NET CASH FLOWS FROM OPERATING ACTIVITIES | NET CASH FLOWS FROM OPERATING ACTIVITIES | | 3,979 | | | 4,074 | | NET CASH FLOWS FROM OPERATING ACTIVITIES | | 3,257 | | | 3,979 | |
| | CASH FLOWS FROM INVESTING ACTIVITIES | CASH FLOWS FROM INVESTING ACTIVITIES | | | | | CASH FLOWS FROM INVESTING ACTIVITIES | | | | |
| Additions to property, plant and equipment | Additions to property, plant and equipment | | (607) | | | (677) | | Additions to property, plant and equipment | | (863) | | | (607) | |
| Proceeds from the disposal of assets/businesses, net (Note 10) | Proceeds from the disposal of assets/businesses, net (Note 10) | | 248 | | | 603 | | Proceeds from the disposal of assets/businesses, net (Note 10) | | 40 | | | 248 | |
| Acquisitions, net of cash acquired (Note 10) | Acquisitions, net of cash acquired (Note 10) | | (252) | | | — | | Acquisitions, net of cash acquired (Note 10) | | — | | | (252) | |
| Purchases of investments | Purchases of investments | | (9,018) | | | (5,994) | | Purchases of investments | | (3,774) | | | (9,018) | |
| Sales of investments | Sales of investments | | 6,303 | | | 5,233 | | Sales of investments | | 7,766 | | | 6,303 | |
| Credit support agreements activity, net | Credit support agreements activity, net | | (249) | | | 751 | | Credit support agreements activity, net | | 158 | | | (249) | |
| Other (primarily licenses and milestones) | Other (primarily licenses and milestones) | | (59) | | | (101) | | Other (primarily licenses and milestones) | | (12) | | | (59) | |
| | NET CASH USED BY INVESTING ACTIVITIES | | (3,634) | | | (185) | | |
| NET CASH FROM/(USED BY) INVESTING ACTIVITIES | | NET CASH FROM/(USED BY) INVESTING ACTIVITIES | | 3,315 | | | (3,634) | |
| | CASH FLOWS FROM FINANCING ACTIVITIES | CASH FLOWS FROM FINANCING ACTIVITIES | | | | | CASH FLOWS FROM FINANCING ACTIVITIES | | | | |
| Dividends to shareholders | Dividends to shareholders | | (2,787) | | | (2,659) | | Dividends to shareholders | | (2,942) | | | (2,787) | |
| Repurchase of common stock | Repurchase of common stock | | (1,577) | | | (1,438) | | Repurchase of common stock | | (3,537) | | | (1,577) | |
| Proceeds from short-term debt | Proceeds from short-term debt | | 3,019 | | | 23 | | Proceeds from short-term debt | | 11,094 | | | 3,019 | |
| Repayment of short-term debt | Repayment of short-term debt | | (856) | | | (475) | | Repayment of short-term debt | | (5,388) | | | (856) | |
| Proceeds from long-term debt, net of issuance costs | | — | | | 1 | | |
| Proceeds from long-term debt, net of issuance costs (Note 4) | | Proceeds from long-term debt, net of issuance costs (Note 4) | | 7,674 | | | — | |
| Repayment of long-term debt | Repayment of long-term debt | | (2,132) | | | (1,001) | | Repayment of long-term debt | | (500) | | | (2,132) | |
| Proceeds from the exercise of stock options/employee withholding tax on stock awards, net | Proceeds from the exercise of stock options/employee withholding tax on stock awards, net | | 321 | | | 236 | | Proceeds from the exercise of stock options/employee withholding tax on stock awards, net | | (11) | | | 321 | |
| Credit support agreements activity, net | Credit support agreements activity, net | | (235) | | | 212 | | Credit support agreements activity, net | | (13) | | | (235) | |
| Other | Other | | (138) | | | (24) | | Other | | (239) | | | (138) | |
| | NET CASH USED BY FINANCING ACTIVITIES | | (4,385) | | | (5,125) | | |
| NET CASH FROM/(USED BY) FINANCING ACTIVITIES | | NET CASH FROM/(USED BY) FINANCING ACTIVITIES | | 6,138 | | | (4,385) | |
| | Effect of exchange rate changes on cash and cash equivalents | Effect of exchange rate changes on cash and cash equivalents | | 16 | | | (78) | | Effect of exchange rate changes on cash and cash equivalents | | 28 | | | 16 | |
| Decrease in cash and cash equivalents | | (4,024) | | | (1,314) | | |
| Cash and Cash equivalents, beginning of period | | 14,487 | | | 13,985 | | |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 10,463 | | | 12,671 | | |
| Increase/(Decrease) in cash, cash equivalents and restricted cash | | Increase/(Decrease) in cash, cash equivalents and restricted cash | | 12,738 | | | (4,024) | |
| Cash and Cash equivalents beginning of period | | Cash and Cash equivalents beginning of period | | 14,127 | | | 14,487 | |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | | $ | 26,865 | | | 10,463 | |
| | | Acquisitions | Acquisitions | | Acquisitions | |
| Fair value of assets acquired | Fair value of assets acquired | | $ | 255 | | | — | | Fair value of assets acquired | | $ | — | | | 255 | |
| Fair value of liabilities assumed and noncontrolling interests | | (3) | | | — | | |
| Fair value of liabilities assumed | | Fair value of liabilities assumed | | — | | | (3) | |
| Net cash paid for acquisitions | Net cash paid for acquisitions | | $ | 252 | | | — | | Net cash paid for acquisitions | | $ | — | | | 252 | |
|
See Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — The accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements of Johnson & Johnson and its subsidiaries (the Company) and related notes as contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2022.1, 2023. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented.
Columns and rows within tables may not add due to rounding. Percentages have been calculated using actual, non-rounded figures.
Use of Estimates
The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions including interest rates, inflation, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts COVID-19 as of April 3, 2022 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, inventory and related reserves, accrued rebates and associated reserves, and the carrying value of the goodwill and other long-lived assets along with the Company’s on-going vaccine development and distribution efforts. While there was not a material impact to the Company’s consolidated financial statements as of and for the quarter ended April 3, 2022, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
New Accounting Standards
The Company assesses the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board on the Company's financial statements as well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2023.
Recently Adopted Accounting Standards
ASU 2022-04: Liabilities-Supplier Finance Programs (Topic 405-50) – Disclosure of Supplier Finance Program Obligations
The Company adopted the standard as of the beginning of fiscal year 2023, which requires that a buyer in a supplier finance program disclose additional information about the program for financial statement users.
The Company has agreements for supplier finance programs with third-party financial institutions. These programs provide participating suppliers the ability to finance payment obligations from the Company with the third-party financial institutions. The Company is not a party to the arrangements between the suppliers and the third-party financial institutions. The Company’s obligations to its suppliers, including amounts due, and scheduled payment dates (which have general payment terms of 90 days), are not affected by a participating supplier’s decision to participate in the program.
As of April 2, 2022. 2023, and January 1, 2023, $0.9 billion and $1.0 billion, respectively, were valid obligations under the program. The obligations are presented as Accounts payable on the Consolidated Balance Sheets.
Recently Issued Accounting Standards
Not Adopted as of April 2, 2023
There were no new material accounting standards issued in the fiscal first quarter of 2022 that impacted the Company.
Recently Adopted Accounting Standards
There were no new material accounting standards adopted in the fiscal first quarter of 2022.2023.
Reclassification
Certain prior period amounts have been reclassified to conform to current year presentation.
NOTE 2 — INVENTORIES
| | (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | January 2, 2022 | (Dollars in Millions) | | April 2, 2023 | | January 1, 2023 |
| Raw materials and supplies | Raw materials and supplies | | $ | 1,679 | | | 1,592 | | Raw materials and supplies | | $ | 2,267 | | | 2,070 | |
| Goods in process | Goods in process | | 2,629 | | | 2,287 | | Goods in process | | 1,866 | | | 1,700 | |
| Finished goods | Finished goods | | 6,682 | | | 6,508 | | Finished goods | | 8,676 | | | 8,713 | |
| Total inventories | Total inventories | | $ | 10,990 | | | 10,387 | | Total inventories | | $ | 12,809 | | | 12,483 | |
NOTE 3 — INTANGIBLE ASSETS AND GOODWILL
Intangible assets that have finite useful lives are amortized over their estimated useful lives. The latest annual impairment assessment of goodwill and indefinite lived intangible assets was completed in the fiscal fourth quarter of 2021.2022. Future impairment tests for goodwill and indefinite lived intangible assets will be performed annually in the fiscal fourth quarter, or sooner, if warranted.
| | (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | January 2, 2022 | (Dollars in Millions) | | April 2, 2023 | | January 1, 2023 |
| Intangible assets with definite lives: | Intangible assets with definite lives: | | | | | Intangible assets with definite lives: | | | | |
| Patents and trademarks — gross | Patents and trademarks — gross | | $ | 37,960 | | | 38,572 | | Patents and trademarks — gross | | $ | 44,636 | | | 44,012 | |
| Less accumulated amortization | Less accumulated amortization | | (20,492) | | | (20,088) | | Less accumulated amortization | | (23,512) | | | (22,266) | |
| Patents and trademarks — net | Patents and trademarks — net | | 17,468 | | | 18,484 | | Patents and trademarks — net | | 21,124 | | | 21,746 | |
| Customer relationships and other intangibles — gross | Customer relationships and other intangibles — gross | | 22,910 | | | 23,011 | | Customer relationships and other intangibles — gross | | 23,008 | | | 22,987 | |
| Less accumulated amortization | Less accumulated amortization | | (12,147) | | | (11,925) | | Less accumulated amortization | | (13,211) | | | (12,901) | |
Customer relationships and other intangibles — net(1) | Customer relationships and other intangibles — net(1) | | 10,763 | | | 11,086 | | Customer relationships and other intangibles — net(1) | | 9,797 | | | 10,086 | |
| Intangible assets with indefinite lives: | Intangible assets with indefinite lives: | | | | | Intangible assets with indefinite lives: | | | | |
| Trademarks | Trademarks | | 6,947 | | | 6,985 | | Trademarks | | 6,843 | | | 6,807 | |
Purchased in-process research and development(2) | Purchased in-process research and development(2) | | 9,242 | | | 9,837 | | Purchased in-process research and development(2) | | 9,684 | | | 9,686 | |
| Total intangible assets with indefinite lives | Total intangible assets with indefinite lives | | 16,189 | | | 16,822 | | Total intangible assets with indefinite lives | | 16,527 | | | 16,493 | |
| Total intangible assets — net | Total intangible assets — net | | $ | 44,420 | | | 46,392 | | Total intangible assets — net | | $ | 47,448 | | | 48,325 | |
(1)The majority is comprised of customer relationships
(2)In the fiscal first quarter of 2022, the Company recorded an intangible asset impairment charge of approximately$0.6 billion related to an in-process research and development asset, bermekimab (JnJ-77474462), an investigational drug for the treatment of Atopic Dermatitis (AD) and Hidradenitis Suppurativa (HS). Additional information regarding efficacy of the AD indication became available which led the Company to the decision to terminate the development of bermekimab for AD. The Company acquired all rights to bermekimab from XBiotech, Inc.in the fiscal year 2020.
Goodwill as of April 3, 20222, 2023 was allocated by segment of business as follows:
| | (Dollars in Millions) | (Dollars in Millions) | | Consumer Health | | Pharmaceutical | | MedTech | | Total | (Dollars in Millions) | | Consumer Health | | Pharmaceutical | | MedTech | | Total |
| Goodwill at January 2, 2022 | | $ | 9,810 | | | 10,580 | | | 14,856 | | | 35,246 | | |
| Goodwill at January 1, 2023 | | Goodwill at January 1, 2023 | | $ | 9,184 | | | 10,184 | | | 25,863 | | | 45,231 | |
| Goodwill, related to acquisitions | Goodwill, related to acquisitions | | — | | | — | | | 73 | | | 73 | | Goodwill, related to acquisitions | | — | | | — | | | — | | | — | |
| | Currency translation/Other | Currency translation/Other | | (195) | | | (170) | | | (19) | | | (384) | | Currency translation/Other | | 49 | | | 124 | | | 171 | | * | 344 | |
| Goodwill at April 3, 2022 | | $ | 9,615 | | | 10,410 | | | 14,910 | | | 34,935 | | |
| Goodwill at April 2, 2023 | | Goodwill at April 2, 2023 | | $ | 9,233 | | | 10,308 | | | 26,034 | | | 45,575 | |
*Includes purchase price allocation adjustment for Abiomed
The weighted average amortization period for patents and trademarks is 12 years. The weighted average amortization period for customer relationships and other intangible assets is 21 years. The amortization expense of amortizable intangible assets included in cost of products sold was $1.1$1.2 billion and $1.2$1.1 billion for the fiscal first quarters ended April 3, 20222, 2023 and April 4, 2021,3, 2022, respectively. Intangible asset write-downs are included in Other (income) expense, net.
The estimated amortization expense for approved products, before tax, for the five succeeding years is approximately:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in Millions) | | | | | | |
| 2022 | | 2023 | | 2024 | | 2025 | | 2026 |
| $4,600 | | 4,600 | | 4,400 | | 3,600 | | 3,000 |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in Millions) | | | | | | |
| 2023 | | 2024 | | 2025 | | 2026 | | 2027 |
| $4,800 | | 4,600 | | 3,800 | | 3,200 | | 2,600 |
See Note 10 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.
NOTE 4 — FAIR VALUE MEASUREMENTS
The Company uses forward foreign exchange contracts to manage its exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of future intercompany product and third-party purchases of materials denominated in a foreign currency. The Company uses cross currency interest rate swaps to manage currency risk primarily related to borrowings. Both types of derivatives are designated as cash flow hedges.
Additionally, the Company uses interest rate swaps as an instrument to manage interest rate risk related to fixed rate borrowings. These derivatives are designated as fair value hedges. The Company uses cross currency interest rate swaps and forward foreign exchange contracts designated as net investment hedges. Additionally, the Company uses forward foreign exchange contracts to offset its exposure to certain foreign currency assets and liabilities. These forward foreign exchange contracts are not designated as hedges, and therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities.
The Company does not enter into derivative financial instruments for trading or speculative purposes, or that contain credit risk related contingent features. The Company maintains credit support agreements (CSA) with certain derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. As of April 3, 2022,2, 2023, the cumulative amount of cash collateral paid by the Company under the CSA amounted to $1.1$0.7 billion net, related to net investment and cash flow hedges. On an ongoing basis, the Company monitors counter-party credit ratings. The Company considers credit non-performance risk to be low, because the Company primarily enters into agreements with commercial institutions that have at least an investment grade credit rating. Refer to the table on significant financial assets and liabilities measured at fair value contained in this footnote for receivables and payables with these commercial institutions. As of April 3, 2022,2, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $42.5$44.3 billion, $37.4$36.5 billion and $10.0 billion, respectively. As of January 2, 2022,1, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $45.8$43.3 billion, $37.4$36.2 billion and $10.0$12.4 billion respectively.
All derivative instruments are recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction.
The designation as a cash flow hedge is made at the entrance date of the derivative contract. At inception, all derivatives are expected to be highly effective. Foreign exchange contracts designated as cash flow hedges are accounted for under the forward method and all gains/losses associated with these contracts will be recognized in the income statement when the hedged item impacts earnings. Changes in the fair value of these derivatives are recorded in accumulated other comprehensive income until the underlying transaction affects earnings and are then reclassified to earnings in the same account as the hedged transaction.
Gains and losses associated with interest rate swaps and changes in fair value of hedged debt attributable to changes in interest rates are recorded to interest expense in the period in which they occur. Gains and losses on net investment hedges are accounted for through the currency translation account within accumulated other comprehensive income. The portion excluded from effectiveness testing is recorded through interest (income) expense using the spot method. On an ongoing basis, the Company assesses whether each derivative continues to be highly effective in offsetting changes of hedged items. If and when a derivative is no longer expected to be highly effective, hedge accounting is discontinued.
The Company designated its Euro denominated notes issued in May 2016 with due dates ranging from 2022 to 2035 as a net investment hedge of the Company's investments in certain of its international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.
As of April 3, 2022,2, 2023, the balance of deferred net lossgain on derivatives included in accumulated other comprehensive income was $632$343 million after-tax. For additional information, see the Consolidated Statements of Comprehensive Income and Note 7. The Company expects that substantially all of the amounts related to forward foreign exchange contracts will be reclassified into earnings over the next 12 months as a result of transactions that are expected to occur over that period. The maximum length of time over which the Company is hedging transaction exposure is 18 months, excluding interest rate contracts and net investment hedge contracts. The amount ultimately realized in earnings may differ as foreign exchange rates change. Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative.
The following table is a summary of the activity related to derivatives and hedges for the fiscal first quarters ended in 20222023 and 2021,2022, net of tax:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| April 3, 2022 | April 4, 2021 |
| (Dollars in Millions) | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense |
| | | | | | | | | | |
| | | | | | | | | | |
| The effects of fair value, net investment and cash flow hedging: | | | | | | | | | | |
| Gain (Loss) on fair value hedging relationship: | | | | | | | | | | |
| Interest rate swaps contracts: | | | | | | | | | | |
| Hedged items | $ | — | | — | | — | | (531) | | — | | — | | — | | — | | — | | — | |
| Derivatives designated as hedging instruments | — | | — | | — | | 531 | | — | | — | | — | | — | | — | | — | |
| | | | | | | | | | |
| Gain (Loss) on net investment hedging relationship: | | | | | | | | | | |
| Cross currency interest rate swaps contracts: | | | | | | | | | | |
| Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing | — | | — | | — | | 45 | | — | | — | | — | | — | | 40 | | — | |
| Amount of gain or (loss) recognized in AOCI | — | | — | | — | | 45 | | — | | — | | — | | — | | 40 | | — | |
| | | | | | | | | | |
| Gain (Loss) on cash flow hedging relationship: | | | | | | | | | | |
| Forward foreign exchange contracts: | | | | | | | | | | |
| Amount of gain or (loss) reclassified from AOCI into income | (17) | | (52) | | 23 | | — | | (18) | | 17 | | 34 | | (113) | | — | | 3 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Amount of gain or (loss) recognized in AOCI | 22 | | (94) | | 33 | | — | | (73) | | (3) | | (193) | | (76) | | — | | 17 | |
| | | | | | | | | | |
| Cross currency interest rate swaps contracts: | | | | | | | | | | |
| Amount of gain or (loss) reclassified from AOCI into income | — | | — | | — | | 120 | | — | | — | | 0 | — | | 92 | | — | |
| | | | | | | | | | |
| Amount of gain or (loss) recognized in AOCI | $ | — | | — | | — | | (128) | | — | | — | | — | | — | | (307) | | — | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| April 2, 2023 | April 3, 2022 |
| (Dollars in Millions) | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense | Sales | Cost of Products Sold | R&D Expense | Interest (Income) Expense | Other (Income) Expense |
| | | | | | | | | | |
| | | | | | | | | | |
| The effects of fair value, net investment and cash flow hedging: | | | | | | | | | | |
| Gain (Loss) on fair value hedging relationship: | | | | | | | | | | |
| Interest rate swaps contracts: | | | | | | | | | | |
| Hedged items | $ | — | | — | | — | | (929) | | — | | — | | — | | — | | (531) | | — | |
| Derivatives designated as hedging instruments | — | | — | | — | | 929 | | — | | — | | — | | — | | 531 | | — | |
| | | | | | | | | | |
| Gain (Loss) on net investment hedging relationship: | | | | | | | | | | |
| Cross currency interest rate swaps contracts: | | | | | | | | | | |
| Amount of gain or (loss) recognized in income on derivative amount excluded from effectiveness testing | — | | — | | — | | 34 | | — | | — | | — | | — | | 45 | | — | |
| Amount of gain or (loss) recognized in AOCI | — | | — | | — | | 34 | | — | | — | | — | | — | | 45 | | — | |
| | | | | | | | | | |
| Gain (Loss) on cash flow hedging relationship: | | | | | | | | | | |
| Forward foreign exchange contracts: | | | | | | | | | | |
| Amount of gain or (loss) reclassified from AOCI into income | 12 | | (146) | | (13) | | — | | 2 | | (17) | | (52) | | 23 | | — | | (18) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Amount of gain or (loss) recognized in AOCI | 24 | | 145 | | (36) | | — | | (14) | | 22 | | (94) | | 33 | | — | | (73) | |
| | | | | | | | | | |
| Cross currency interest rate swaps contracts: | | | | | | | | | | |
| Amount of gain or (loss) reclassified from AOCI into income | — | | — | | — | | 108 | | — | | — | | — | | — | | 120 | | — | |
| | | | | | | | | | |
| Amount of gain or (loss) recognized in AOCI | $ | — | | — | | — | | 417 | | — | | — | | — | | — | | (128) | | — | |
| | | | | | | | | | |
As of April 3, 2022,2, 2023, and January 2, 2022,1, 2023, the following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustment for fair value hedges
| | Line item in the Consolidated Balance Sheet in which the hedged item is included | Line item in the Consolidated Balance Sheet in which the hedged item is included | | Carrying Amount of the Hedged Liability
| | Cumulative Amount of Fair Value Hedging Gain/ (Loss) Included in the Carrying Amount of the Hedged Liability | Line item in the Consolidated Balance Sheet in which the hedged item is included | | Carrying Amount of the Hedged Liability
| | Cumulative Amount of Fair Value Hedging Gain/ (Loss) Included in the Carrying Amount of the Hedged Liability |
| | (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | January 2, 2022 | | April 3, 2022 | | January 2, 2022 | (Dollars in Millions) | | April 2, 2023 | | January 1, 2023 | | April 2, 2023 | | January 1, 2023 |
| | Long-term Debt | Long-term Debt | | 9,313 | | | 9,793 | | | (694) | | | (142) | | Long-term Debt | | $ | 8,860 | | | 8,665 | | | (1,214) | | | (1,435) | |
|
The following table is the effect of derivatives not designated as hedging instruments for the fiscal first quarters ended 20222023 and 2021:2022:
| | | | Gain/(Loss)
Recognized In
Income on Derivative | | | | Gain/(Loss)
Recognized In
Income on Derivative | | |
| (Dollars in Millions) | (Dollars in Millions) | | Location of Gain /(Loss) Recognized in Income on Derivative | | Fiscal First Quarter Ended | | | (Dollars in Millions) | | Location of Gain /(Loss) Recognized in Income on Derivative | | Fiscal First Quarter Ended | | |
| Derivatives Not Designated as Hedging Instruments | Derivatives Not Designated as Hedging Instruments | | April 3, 2022 | | April 4, 2021 | | | Derivatives Not Designated as Hedging Instruments | | April 2, 2023 | | April 3, 2022 | | |
| Foreign Exchange Contracts | Foreign Exchange Contracts | | Other (income) expense | | $ | 29 | | | (16) | | | | Foreign Exchange Contracts | | Other (income) expense | | $ | (31) | | | 29 | | | |
The following table is the effect of net investment hedges for the fiscal first quarters ended in 20222023 and 2021:2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | Gain/(Loss)
Recognized In
Accumulated
OCI | | Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income | | Gain/(Loss) Reclassified From
Accumulated OCI
Into Income |
| (Dollars in Millions) | | April 3, 2022 | | April 4, 2021 | | | | April 3, 2022 | | April 4, 2021 |
| Debt | | $ | 68 | | | 209 | | | Interest (income) expense | | — | | | — | |
| Cross Currency interest rate swaps | | $ | 560 | | | 361 | | | Interest (income) expense | | — | | | — | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | Gain/(Loss)
Recognized In
Accumulated
OCI | | Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income | | Gain/(Loss) Reclassified From
Accumulated OCI
Into Income |
| (Dollars in Millions) | | April 2, 2023 | | April 3, 2022 | | | | April 2, 2023 | | April 3, 2022 |
| Debt | | $ | (77) | | | 68 | | | Interest (income) expense | | — | | | — | |
| Cross Currency interest rate swaps | | $ | 690 | | | 560 | | | Interest (income) expense | | — | | | — | |
| | | | | | | | | | |
The Company holds equity investments with readily determinable fair values and equity investments without readily determinable fair values. The Company has elected to measure equity investments that do not have readily determinable fair
values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
The following table is a summary of the activity related to equity investments:
| | (Dollars in Millions) | (Dollars in Millions) | | January 2, 2022 | | April 3, 2022 | | (Dollars in Millions) | | January 1, 2023 | | April 2, 2023 | |
| | | Carrying Value | | Changes in Fair Value Reflected in Net Income (1) | | Sales/ Purchases/Other (2) | | Carrying Value | | Non Current Other Assets | | | Carrying Value | | Changes in Fair Value Reflected in Net Income (1) | | Sales/ Purchases/Other (2) | | Carrying Value | | Non Current Other Assets |
| Equity Investments with readily determinable value | Equity Investments with readily determinable value | | $ | 1,884 | | | (402) | | | (30) | | | 1,452 | | | 1,452 | | Equity Investments with readily determinable value | | $ | 576 | | | (73) | | | 2 | | | 505 | | | 505 | |
| | Equity Investments without readily determinable value | Equity Investments without readily determinable value | | $ | 500 | | | (5) | | | 10 | | | 505 | | | 505 | | Equity Investments without readily determinable value | | $ | 698 | | | (1) | | | 27 | | | 724 | | | 724 | |
(1) Recorded in Other Income/Expense
(2) Other includes impact of currency
For equity investments without readily determinable market values, there was a decrease
Table of $5 million in the fair value reflected in net income as a result of impairments.Content
Fair value is the exit price that would be received to sell an asset or paid to transfer a liability. Fair value is a market-based measurement determined using assumptions that market participants would use in pricing an asset or liability. In accordance with ASC 820, a three-level hierarchy was established to prioritize the inputs used in measuring fair value. The levels within the hierarchy are described below with Level 1 inputs having the highest priority and Level 3 inputs having the lowest.
The fair value of a derivative financial instrument (i.e., forward foreign exchange contracts, interest rate contracts) is the aggregation by currency of all future cash flows discounted to its present value at the prevailing market interest rates and subsequently converted to the U.S. Dollar at the current spot foreign exchange rate. The Company does not believe that fair values of these derivative instruments materially differ from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a material effect on the Company’s results of operations, cash flows or financial position. The Company also holds equity investments which are classified as Level 1 and debt securities which are classified as Level 2. The Company holds acquisition related contingent liabilities based upon certain regulatory and commercial events, which are classified as Level 3, whose values are determined using discounted cash flow methodologies or similar techniques for which the determination of fair value requires significant judgment or estimations.
The following three levels of inputs are used to measure fair value:
Level 1 — Quoted prices in active markets for identical assets and liabilities.
Level 2 — Significant other observable inputs.
Level 3 — Significant unobservable inputs.
The Company’s significant financial assets and liabilities measured at fair value as of April 3, 20222, 2023 and January 2, 20221, 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | April 3, 2022 | | | | January 2, 2022 |
| (Dollars in Millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Total(1) |
| Derivatives designated as hedging instruments: | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| Forward foreign exchange contracts | | $ | — | | | 742 | | | — | | | 742 | | | 540 | |
Interest rate contracts (2) | | — | | | 975 | | | — | | | 975 | | | 796 | |
| | | | | | | | | | |
| Total | | — | | | 1,717 | | | — | | | 1,717 | | | 1,336 | |
| Liabilities: | | | | | | | | | | |
| Forward foreign exchange contracts | | — | | | 1,058 | | | — | | | 1,058 | | | 881 | |
Interest rate contracts (2) | | — | | | 1,652 | | | — | | | 1,652 | | | 979 | |
| | | | | | | | | | |
| Total | | — | | | 2,710 | | | — | | | 2,710 | | | 1,860 | |
| Derivatives not designated as hedging instruments: | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| Forward foreign exchange contracts | | — | | | 36 | | | — | | | 36 | | | 24 | |
| Liabilities: | | | | | | | | | | |
| Forward foreign exchange contracts | | — | | | 68 | | | — | | | 68 | | | 28 | |
| Other Investments: | | | | | | | | | | |
Equity investments (3) | | 1,452 | | | — | | | — | | | 1,452 | | | 1,884 | |
Debt securities (4) | | — | | | 19,583 | | | — | | | 19,583 | | | 19,727 | |
| Other Liabilities | | | | | | | | | | |
Contingent consideration (5) | | $ | — | | | — | | | 486 | | | 486 | | | 533 | |
| | | | | | | | | | | | | | |
| Gross to Net Derivative Reconciliation | | April 3, 2022 | | January 2, 2022 |
| (Dollars in Millions) | | | | |
| Total Gross Assets | | $ | 1,753 | | | 1,360 | |
| Credit Support Agreement (CSA) | | (1,655) | | | (1,285) | |
| Total Net Asset | | 98 | | | 75 | |
| | | | |
| Total Gross Liabilities | | 2,778 | | | 1,888 | |
| Credit Support Agreement (CSA) | | (2,709) | | | (1,855) | |
| Total Net Liabilities | | $ | 69 | | | 33 | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | April 2, 2023 | | | | January 1, 2023 |
| (Dollars in Millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Total(1) |
| Derivatives designated as hedging instruments: | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| Forward foreign exchange contracts | | $ | — | | | 661 | | | — | | | 661 | | | 629 | |
Interest rate contracts (2) | | — | | | 1,399 | | | — | | | 1,399 | | | 1,534 | |
| | | | | | | | | | |
| Total | | — | | | 2,060 | | | — | | | 2,060 | | | 2,163 | |
| Liabilities: | | | | | | | | | | |
| Forward foreign exchange contracts | | — | | | 349 | | | — | | | 349 | | | 511 | |
Interest rate contracts (2) | | — | | | 2,553 | | | — | | | 2,553 | | | 2,778 | |
| | | | | | | | | | |
| Total | | — | | | 2,902 | | | — | | | 2,902 | | | 3,289 | |
| Derivatives not designated as hedging instruments: | | | | | | | | | | |
| Assets: | | | | | | | | | | |
| Forward foreign exchange contracts | | — | | | 32 | | | — | | | 32 | | | 38 | |
| Liabilities: | | | | | | | | | | |
| Forward foreign exchange contracts | | — | | | 56 | | | — | | | 56 | | | 68 | |
| Other Investments: | | | | | | | | | | |
Equity investments (3) | | 505 | | | — | | | — | | | 505 | | | 576 | |
Debt securities (4) | | — | | | 8,942 | | | — | | | 8,942 | | | 10,487 | |
| Other Liabilities | | | | | | | | | | |
Contingent consideration (5) | | $ | — | | | — | | | 1,142 | | | 1,142 | | | 1,120 | |
| | | | | | | | | | | | | | |
| Gross to Net Derivative Reconciliation | | April 2, 2023 | | January 1, 2023 |
| (Dollars in Millions) | | | | |
| Total Gross Assets | | $ | 2,092 | | | 2,201 | |
| Credit Support Agreement (CSA) | | (2,028) | | | (2,176) | |
| Total Net Asset | | 64 | | | 25 | |
| | | | |
| Total Gross Liabilities | | 2,958 | | | 3,357 | |
| Credit Support Agreement (CSA) | | (2,729) | | | (3,023) | |
| Total Net Liabilities | | $ | 229 | | | 334 | |
| | | | |
Summarized information about changes in liabilities for contingent consideration for the fiscal first quarters ended 2023 and 2022 is as follows:
| | | | April 3, 2022 | | April 4, 2021 | | April 2, 2023 | | April 3, 2022 |
| (Dollars in Millions) | (Dollars in Millions) | | (Dollars in Millions) | |
| Beginning Balance | Beginning Balance | | $ | 533 | | | $ | 633 | | Beginning Balance | | $ | 1,120 | | | 533 | |
Changes in estimated fair value (6) | Changes in estimated fair value (6) | | (47) | | | 15 | | Changes in estimated fair value (6) | | 23 | | | (47) | |
| Additions | Additions | | — | | | — | | Additions | | — | | | — | |
| Payments | Payments | | — | | | (48) | | Payments | | (1) | | | — | |
| Ending Balance | Ending Balance | | $ | 486 | | | $ | 600 | | Ending Balance | | $ | 1,142 | | | 486 | |
(1)20212022 assets and liabilities are all classified as Level 2 with the exception of equity investments of $1,884$576 million, which are classified as Level 1 and contingent consideration of $533$1,120 million, classified as Level 3.
(2) Includes cross currency interest rate swaps and interest rate swaps.
(3) Classified as non-current other assets.
(4) Classified within cash equivalents and current marketable securities.
(5) Includes $469$1,138 million and $520$1,116 million, classified as non-current other liabilities as of April 3, 20222, 2023 and January 2, 2022,1, 2023, respectively. Includes $17$4 million and $13$4 million classified as current liabilities as of April 3, 20222, 2023 and January 2, 2022,1, 2023, respectively.
(6) Ongoing fair value adjustment amounts are primarily recorded in Research and Development expense.
The Company's cash, cash equivalents, restricted cash and current marketable securities as of April 3, 20222, 2023 comprised:
| | (Dollars in Millions) | (Dollars in Millions) | Carrying Amount | | | Gain/( Loss) | | Estimated Fair Value | | Cash & Cash Equivalents | | Current Marketable Securities | (Dollars in Millions) | Carrying Amount | | | Gain/(Loss) | | Estimated Fair Value | | Cash & Cash Equivalents | | Current Marketable Securities |
| Cash | Cash | $ | 3,128 | | | | — | | | 3,128 | | | 3,128 | | | — | | Cash | $ | 4,674 | | | | — | | | 4,674 | | | 4,674 | | | — | |
Restricted cash(1) | | Restricted cash(1) | 7,695 | | | | — | | | 7,695 | | | 7,695 | | | — | |
| Non-U.S. sovereign securities(1) | 329 | | | | — | | | 329 | | | — | | | 329 | | |
| U.S. reverse repurchase agreements | U.S. reverse repurchase agreements | 1,449 | | | | — | | | 1,449 | | | 1,449 | | | — | | U.S. reverse repurchase agreements | 6,286 | | | | — | | | 6,286 | | | 6,286 | | | — | |
| Corporate debt securities(1)(2) | Corporate debt securities(1)(2) | 3,557 | | | | (6) | | | 3,551 | | | 540 | | | 3,017 | | Corporate debt securities(1)(2) | 672 | | | | — | | | 672 | | | 300 | | | 372 | |
| Money market funds | Money market funds | 1,579 | | | | — | | | 1,579 | | | 1,579 | | | — | | Money market funds | 3,364 | | | | — | | | 3,364 | | | 3,364 | | | — | |
Time deposits(1)(2) | Time deposits(1)(2) | 763 | | | | — | | | 763 | | | 763 | | | — | | Time deposits(1)(2) | 675 | | | | — | | | 675 | | | 675 | | | — | |
| Subtotal | Subtotal | 10,805 | | | | (6) | | | 10,799 | | | 7,459 | | | 3,346 | | Subtotal | 23,366 | | | | — | | | 23,366 | | | 22,994 | | | 372 | |
| | | | Unrealized Loss | | | | Unrealized Loss | |
| U.S. Gov't securities | 19,354 | | | | (19) | | | 19,335 | | | 2,968 | | | 16,367 | | |
| Other sovereign securities | 3 | | | | — | | | 3 | | | — | | | 3 | | |
| U.S. Gov’t securities | | U.S. Gov’t securities | 8,462 | | | | (9) | | | 8,453 | | | 3,804 | | | 4,649 | |
| U.S. Gov’t Agencies | | U.S. Gov’t Agencies | 185 | | | | (3) | | | 182 | | | — | | | 182 | |
| Corporate debt securities | Corporate debt securities | 246 | | | | (1) | | | 245 | | | 36 | | | 209 | | Corporate debt securities | 308 | | | | (1) | | | 307 | | | 67 | | | 240 | |
Subtotal available for sale debt(2)(3) | Subtotal available for sale debt(2)(3) | $ | 19,603 | | | | (20) | | | 19,583 | | | 3,004 | | | 16,579 | | Subtotal available for sale debt(2)(3) | $ | 8,955 | | | | (13) | | | 8,942 | | | 3,871 | | | 5,071 | |
| Total cash, cash equivalents and current marketable securities | $ | 30,408 | | | | (26) | | | 30,382 | | | 10,463 | | | 19,925 | | |
| Total cash, cash equivalents, restricted cash and current marketable securities | | Total cash, cash equivalents, restricted cash and current marketable securities | $ | 32,321 | | | | (13) | | | 32,308 | | | 26,865 | | | 5,443 | |
(1)Relates to the Kenvue Inc. (Kenvue) debt offering. See debt schedule below for additional details.
(2) Held to maturity investments are reported at amortized cost and gains or losses are reported in earnings.
(2)(3) Available for sale debt securities are reported at fair value with unrealized gains and losses reported net of taxes in other comprehensive income.
As of the fiscal year ended January 2, 20221, 2023, the carrying amount was approximately the same as the estimated fair value.
Fair value of government securities and obligations and corporate debt securities was estimated using quoted broker prices and significant other observable inputs.
The Company classifies all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months from the date of purchase as current marketable securities. Available for sale securities with stated maturities of greater than one year from the date of purchase are available to fund current operations and are classified as cash equivalents and current marketable securities.
The contractual maturities of the available for sale securities as of April 3, 20222, 2023 are as follows:
| | | | | | | | | | | | | | |
| (Dollars in Millions) | | Cost Basis | | Fair Value |
| Due within one year | | $ | 19,585 | | | 19,564 | |
| Due after one year through five years | | 19 | | | 19 | |
| Due after five years through ten years | | — | | | — | |
| Total debt securities | | $ | 19,604 | | | 19,583 | |
| | | | | | | | | | | | | | |
| (Dollars in Millions) | | Cost Basis | | Fair Value |
| Due within one year | | $ | 8,901 | | | 8,889 | |
| Due after one year through five years | | 54 | | | 53 | |
| Due after five years through ten years | | — | | | — | |
| Total debt securities | | $ | 8,955 | | | 8,942 | |
Financial Instruments not measured at Fair Value:
The following financial liabilities are held at carrying amount on the consolidated balance sheet as of April 3, 2022:2, 2023:
| | (Dollars in Millions) | (Dollars in Millions) | | Carrying Amount | | Estimated Fair Value | (Dollars in Millions) | | Carrying Amount | | Estimated Fair Value |
| | Financial Liabilities | Financial Liabilities | | | | | Financial Liabilities | | | | |
| | Current Debt | Current Debt | | $ | 4,297 | | | 4,298 | | Current Debt | | $ | 17,979 | | | 17,982 | |
| | Non-Current Debt | Non-Current Debt | | | | | Non-Current Debt | | | | |
| 6.73% Debentures due 2023 | | 250 | | | 266 | | |
| 3.375% Notes due 2023 | | 802 | | | 820 | | |
| | 0.650% Notes due 2024 (750MM Euro 1.1311) | | 824 | | | 829 | | |
| 5.50% Notes due 2024 (500 MM GBP 1.3485) | | 654 | | | 713 | | |
| 0.650% Notes due 2024 (750MM Euro 1.0909) | | 0.650% Notes due 2024 (750MM Euro 1.0909) | | 812 | | | 796 | |
| 5.50% Notes due 2024 (500MM GBP 1.2359) | | 5.50% Notes due 2024 (500MM GBP 1.2359) | | 617 | | | 626 | |
| 2.625% Notes due 2025 | 2.625% Notes due 2025 | | 749 | | | 762 | | 2.625% Notes due 2025 | | 749 | | | 732 | |
| 0.55% Notes due 2025 | | 0.55% Notes due 2025 | | 936 | | | 920 | |
| | 0.55% Notes due 2025 | | 950 | | | 886 | | |
| 2.45% Notes due 2026 | 2.45% Notes due 2026 | | 1,995 | | | 1,981 | | 2.45% Notes due 2026 | | 1,997 | | | 1,924 | |
| 2.95% Notes due 2027 | 2.95% Notes due 2027 | | 930 | | | 934 | | 2.95% Notes due 2027 | | 896 | | | 968 | |
| | 0.95% Notes due 2027 | 0.95% Notes due 2027 | | 1,436 | | | 1,307 | | 0.95% Notes due 2027 | | 1,412 | | | 1,329 | |
| 2.90% Notes due 2028 | 2.90% Notes due 2028 | | 1,496 | | | 1,489 | | 2.90% Notes due 2028 | | 1,496 | | | 1,438 | |
| 1.150% Notes due 2028 (750MM Euro 1.1311) | | 826 | | | 829 | | |
| 1.150% Notes due 2028 (750MM Euro 1.0909) | | 1.150% Notes due 2028 (750MM Euro 1.0909) | | 814 | | | 737 | |
| 6.95% Notes due 2029 | 6.95% Notes due 2029 | | 298 | | | 379 | | 6.95% Notes due 2029 | | 298 | | | 368 | |
| | 1.30% Notes due 2030 | 1.30% Notes due 2030 | | 1,672 | | | 1,486 | | 1.30% Notes due 2030 | | 1,628 | | | 1,469 | |
| 4.95% Debentures due 2033 | 4.95% Debentures due 2033 | | 498 | | | 590 | | 4.95% Debentures due 2033 | | 498 | | | 543 | |
| 4.375% Notes due 2033 | 4.375% Notes due 2033 | | 855 | | | 959 | | 4.375% Notes due 2033 | | 854 | | | 879 | |
| 1.650% Notes due 2035 (1.5B Euro 1.1311) | | 1,654 | | | 1,687 | | |
| 1.650% Notes due 2035 (1.5B Euro 1.0909) | | 1.650% Notes due 2035 (1.5B Euro 1.0909) | | 1,629 | | | 1,369 | |
| 3.55% Notes due 2036 | 3.55% Notes due 2036 | | 917 | | | 947 | | 3.55% Notes due 2036 | | 864 | | | 933 | |
| 5.95% Notes due 2037 | 5.95% Notes due 2037 | | 993 | | | 1,288 | | 5.95% Notes due 2037 | | 993 | | | 1,161 | |
| 3.625% Notes due 2037 | 3.625% Notes due 2037 | | 1,416 | | | 1,463 | | 3.625% Notes due 2037 | | 1,359 | | | 1,389 | |
| 3.40% Notes due 2038 | 3.40% Notes due 2038 | | 992 | | | 999 | | 3.40% Notes due 2038 | | 992 | | | 896 | |
| 5.85% Debentures due 2038 | 5.85% Debentures due 2038 | | 697 | | | 901 | | 5.85% Debentures due 2038 | | 697 | | | 806 | |
| 4.50% Debentures due 2040 | 4.50% Debentures due 2040 | | 540 | | | 617 | | 4.50% Debentures due 2040 | | 540 | | | 551 | |
| | 2.10% Notes due 2040 | 2.10% Notes due 2040 | | 914 | | | 777 | | 2.10% Notes due 2040 | | 852 | | | 726 | |
| 4.85% Notes due 2041 | 4.85% Notes due 2041 | | 297 | | | 342 | | 4.85% Notes due 2041 | | 297 | | | 311 | |
| 4.50% Notes due 2043 | 4.50% Notes due 2043 | | 496 | | | 565 | | 4.50% Notes due 2043 | | 496 | | | 501 | |
| 3.70% Notes due 2046 | 3.70% Notes due 2046 | | 1,975 | | | 2,097 | | 3.70% Notes due 2046 | | 1,976 | | | 1,785 | |
| 3.75% Notes due 2047 | 3.75% Notes due 2047 | | 906 | | | 969 | | 3.75% Notes due 2047 | | 837 | | | 899 | |
| 3.50% Notes due 2048 | 3.50% Notes due 2048 | | 743 | | | 766 | | 3.50% Notes due 2048 | | 743 | | | 651 | |
| 2.25% Notes due 2050 | 2.25% Notes due 2050 | | 914 | | | 759 | | 2.25% Notes due 2050 | | 834 | | | 667 | |
| 2.45% Notes due 2060 | 2.45% Notes due 2060 | | 1,155 | | | 942 | | 2.45% Notes due 2060 | | 1,080 | | | 819 | |
| 5.50% Debentures due 2025* | | 5.50% Debentures due 2025* | | 748 | | | 775 | |
| 5.35% Debentures due 2026* | | 5.35% Debentures due 2026* | | 747 | | | 776 | |
| 5.05% Debentures due 2028* | | 5.05% Debentures due 2028* | | 993 | | | 1,038 | |
| 5.00% Debentures due 2030* | | 5.00% Debentures due 2030* | | 992 | | | 1,033 | |
| 4.90% Debentures due 2033* | | 4.90% Debentures due 2033* | | 1,240 | | | 1,271 | |
| 5.10% Debentures due 2043* | | 5.10% Debentures due 2043* | | 741 | | | 774 | |
| 5.05% Debentures due 2053* | | 5.05% Debentures due 2053* | | 1,476 | | | 1,540 | |
| 5.20% Debentures due 2063* | | 5.20% Debentures due 2063* | | 738 | | | 776 | |
| Other | Other | | 7 | | | 7 | | Other | | 57 | | | 56 | |
| Total Non-Current Debt | Total Non-Current Debt | | $ | 28,851 | | | 29,356 | | Total Non-Current Debt | | $ | 34,928 | | | 34,232 | |
The weighted average effective interest rate on non-current debt is 3.04%3.47%.
The excess of the estimated faircarrying value over the carryingestimated fair value of debt was $3.2$1.6 billion at January 2, 2022.1, 2023.
In March 2023, Kenvue, a wholly owned subsidiary of the Company, priced an offering of senior unsecured notes in an aggregate principal amount of $7.75 billion (tranches with an * in the above table). The senior unsecured notes (the Notes) will be senior unsecured obligations of Kenvue and will initially be fully and unconditionally guaranteed (the Guarantees) on a senior unsecured basis by the Company. The Guarantees will terminate upon (1) the completion in all material respects of the transfer of the assets and liabilities of Johnson & Johnson’s Consumer Health Business to Kenvue and (2) Kenvue having registered equity securities. The Notes were issued in connection with Johnson & Johnson’s separation of its Consumer Health Business. The proceeds of the Notes offering were placed in a segregated escrow account pending the transfer of the assets and liabilities of the Consumer Health Business to Kenvue and as such, classified as restricted cash as of the balance sheet date. On April 5, 2023, the net proceeds of the Notes were released from escrow upon completion of the Consumer Health Business transfer.
The current debt balance as of April 3, 20222, 2023 includes $3.8$16.9 billion of commercial paper which has a weighted average interest rate of 0.37%4.85% and a weighted average maturity of approximately three months.
Fair value of the non-current debt was estimated using market prices, which were corroborated by quoted broker prices and significant other observable inputs.
NOTE 5 — INCOME TAXES
The worldwide effective income tax rates for the fiscal first quarters of 2023 and 2022 were 90.8% and 2021 were 12.2% and 16.6%, respectively. This decreaseincrease in the consolidated tax rate as compared to the prior year fiscal first quarter is primarily due to lower income in higher tax jurisdictions, primarily in the U.S., compareda $6.9 billion charge related to the same period intalc settlement proposal at an effective tax rate of 23.5% (for further information see Note 11 to the prior year. This lower income inConsolidated Financial Statements).
In the first fiscal quarter of 2022, was caused by athere were favorable tax benefits due to income mix for mark to market adjustmentadjustments to the Company’s investment portfolio and the impairment of the bermekimab AD IPR&D, (for further information see Note 3 of the Consolidated Financial Statements), both at the U.S. statutory rate. The impact of the income mix was partially offset by incremental tax costs directly related to the planned separation of the Company’s Consumer Health business.
The Company also had tax benefits received from stock-based compensation that were either exercised or vested during each of the fiscal first quarters. Additionally, the Company’sprior year’s effective tax rate benefited from the impact of certain provisions of the Tax Cuts and Jobs Act of 2017 that became effective in 2022. These benefits were partially offset by incremental tax costs directly related to the planned separation of the Company’s Consumer Health business in the first fiscal year 2022.quarter of 2022 as compared to the first fiscal quarter of 2023.
The Company also received tax benefits from stock-based compensation that were either exercised or vested during each of the fiscal first quarters.
As of April 3, 2022,2, 2023, the Company had approximately $3.3$3.8 billion of liabilities from unrecognized tax benefits. The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of jurisdictions. With respect to the United States, the IRS has completed its audit for the tax years through 2012 and is currently auditing tax years 2013 through 2016. The Company currently expects completion of this audit and settlement of the related tax liabilities in the next 12 months. As a result, the Company has classified approximately $1.7 billion of unrecognized tax benefits and associated interest as a current liability on the “Accrued taxes on Income” line of the Consolidated Balance Sheet as of the end of the first fiscal quarter of 2023 in anticipation of final settlement. Subsequent to April 2, 2023, the Company made a payment for approximately $1.4 billion to the U.S. Treasury for the estimated liability of the 2013-2016 IRS Audit. The completion of this tax audit may result in additional adjustments to the Company’s unrecognized tax benefit liability. In other major jurisdictions where the Company conducts business, the years that remain open to tax audit go back to the year 2008. The Company believes it is possible that some tax audits may be completed over the next twelve months by taxing authorities in some jurisdictions outside of the United States.jurisdictions. However, the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments relating to uncertain tax positions.
NOTE 6 — PENSIONS AND OTHER BENEFIT PLANS
Components of Net Periodic Benefit Cost
Net periodic benefit costs for the Company’s defined benefit retirement plans and other benefit plans include the following components:
| | | Fiscal First Quarter Ended | | | | Fiscal First Quarter Ended | | |
| | | | Retirement Plans | | Other Benefit Plans | | | | | Retirement Plans | | Other Benefit Plans | | |
| (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | April 4, 2021 | | April 3, 2022 | | April 4, 2021 | | | (Dollars in Millions) | | April 2, 2023 | | April 3, 2022 | | April 2, 2023 | | April 3, 2022 | | |
| Service cost | Service cost | | $ | 321 | | | 353 | | | 80 | | | 77 | | | | Service cost | | $ | 212 | | | 321 | | | 68 | | | 80 | | | |
| Interest cost | Interest cost | | 230 | | | 193 | | | 26 | | | 20 | | | | Interest cost | | 354 | | | 230 | | | 54 | | | 26 | | | |
| Expected return on plan assets | Expected return on plan assets | | (699) | | | (680) | | | (2) | | | (2) | | | | Expected return on plan assets | | (668) | | | (699) | | | (1) | | | (2) | | | |
| Amortization of prior service cost/(credit) | Amortization of prior service cost/(credit) | | (46) | | | (45) | | | (1) | | | (8) | | | | Amortization of prior service cost/(credit) | | (46) | | | (46) | | | — | | | (1) | | | |
| | Recognized actuarial losses | | 162 | | | 314 | | | 30 | | | 38 | | | | |
| Recognized actuarial (gains) losses | | Recognized actuarial (gains) losses | | (50) | | | 162 | | | 6 | | | 30 | | | |
| Curtailments and settlements | Curtailments and settlements | | 1 | | | 1 | | | — | | | — | | | | Curtailments and settlements | | — | | | 1 | | | — | | | — | | | |
| Net periodic benefit cost/(credit) | Net periodic benefit cost/(credit) | | $ | (31) | | | 136 | | | 133 | | | 125 | | | | Net periodic benefit cost/(credit) | | $ | (198) | | | (31) | | | 127 | | | 133 | | | |
The service cost component of net periodic benefit cost is presented in the same line items on the Consolidated Statement of Earnings where other employee compensation costs are reported, including Cost of products sold, Research and development expense, and Selling, marketing and administrative expenses. All other components of net periodic benefit cost are presented as part of Other (income) expense, net on the Consolidated Statement of Earnings.
Company Contributions
For the fiscal three months ended April 3, 2022,2, 2023, the Company contributed $29$27 million and $5$6 million to its U.S. and international retirement plans, respectively. The Company plans to continue to fund its U.S. defined benefit plans to comply with the Pension Protection Act of 2006. International plans are funded in accordance with local regulations.
NOTE 7 — ACCUMULATED OTHER COMPREHENSIVE INCOME
Components of other comprehensive income (loss) consist of the following:
| | | | | | Foreign | | Gain/(Loss) | | Employee | | Gain/(Loss) | | Total Accumulated | | | Foreign | | Gain/(Loss) | | Employee | | Gain/(Loss) | | Total Accumulated |
| | Currency | | On | | Benefit | | On Derivatives | | Other Comprehensive | | Currency | | On | | Benefit | | On Derivatives | | Other Comprehensive |
| (Dollars in Millions) | (Dollars in Millions) | | Translation | | Securities | | Plans | | & Hedges | | Income (Loss) | (Dollars in Millions) | | Translation | | Securities | | Plans | | & Hedges | | Income (Loss) |
| January 2, 2022 | | $ | (10,017) | | | (3) | | | (2,702) | | | (336) | | | (13,058) | | |
| January 1, 2023 | | January 1, 2023 | | $ | (11,813) | | | (27) | | | (897) | | | (230) | | | (12,967) | |
| Net change | Net change | | (554) | | | (13) | | | 164 | | | (296) | | | (699) | | Net change | | (181) | | | 17 | | | (68) | | | 573 | | | 341 | |
| | April 3, 2022 | | $ | (10,571) | | | (16) | | | (2,538) | | | (632) | | | (13,757) | | |
| April 2, 2023 | | April 2, 2023 | | $ | (11,994) | | | (10) | | | (965) | | | 343 | | | (12,626) | |
Amounts in accumulated other comprehensive income are presented net of the related tax impact. Foreign currency translation is not adjusted for income taxes where it relates to permanent investments in international subsidiaries. For additional details on comprehensive income see the Consolidated Statements of Comprehensive Income.
Details on reclassifications out of Accumulated Other Comprehensive Income:
Gain/(Loss) On Securities - reclassifications released to Other (income) expense, net.
Employee Benefit Plans - reclassifications are included in net periodic benefit cost. See Note 6 for additional details.
Gain/(Loss) On Derivatives & Hedges - reclassifications to earnings are recorded in the same account as the underlying transaction. See Note 4 for additional details.
NOTE 8 — EARNINGSEARNINGS/(LOSS) PER SHARE
The following is a reconciliation of basic net earningsearnings/(loss) per share to diluted net earningsearnings/(loss) per share:
| | | | | Fiscal First Quarter Ended | | | | Fiscal First Quarter Ended | | |
| (Shares in Millions) | (Shares in Millions) | | April 3, 2022 | | April 4, 2021 | | (Shares in Millions) | | April 2, 2023 | | April 3, 2022 | | |
| Basic net earnings per share | | $ | 1.96 | | | 2.35 | | | |
| Basic net earnings/(loss) per share | | Basic net earnings/(loss) per share | | $ | (0.03) | | | 1.96 | | | |
| Average shares outstanding — basic | Average shares outstanding — basic | | 2,629.2 | | | 2,631.6 | | | Average shares outstanding — basic | | 2,605.5 | | | 2,629.2 | | | |
| Potential shares exercisable under stock option plans | Potential shares exercisable under stock option plans | | 140.1 | | | 128.4 | | | Potential shares exercisable under stock option plans | | — | | | 140.1 | | | |
| Less: shares which could be repurchased under treasury stock method | Less: shares which could be repurchased under treasury stock method | | (102.8) | | | (87.3) | | | Less: shares which could be repurchased under treasury stock method | | — | | | (102.8) | | | |
| | Average shares outstanding — diluted | | 2,666.5 | | | 2,672.7 | | | |
| Diluted net earnings per share | | $ | 1.93 | | | 2.32 | | | |
| Average shares outstanding — basic/diluted* | | Average shares outstanding — basic/diluted* | | 2,605.5 | | | 2,666.5 | | | |
| Net earnings/(loss) per share (basic/diluted)* | | Net earnings/(loss) per share (basic/diluted)* | | $ | (0.03) | | | 1.93 | | | |
The diluted net earnings per share calculation for the fiscal first quarter ended April 3, 2022 included all shares related to stock options, as the exercise price of all options was less than the average market value of the Company’s stock.
The diluted net earnings* Basic shares are used to calculate loss per share calculation for the fiscal first quarter ended April 4, 2021 excluded 9 million shares related to stock options, as the exercise price of these options was greater than the average market value of the Company's stock.
NOTE 9 — SEGMENTS OF BUSINESS AND GEOGRAPHIC AREAS
SALES BY SEGMENT OF BUSINESS
| | | | | Fiscal First Quarter Ended | | | | | Fiscal First Quarter Ended | | |
| (Dollars in Millions) | (Dollars in Millions) | | April 3,
2022 | | April 4,
2021 | | Percent
Change | | | (Dollars in Millions) | | April 2,
2023 | | April 3,
2022 | | Percent
Change | | |
| | CONSUMER HEALTH | CONSUMER HEALTH | | | | | | | | | CONSUMER HEALTH | | | | | | | | |
OTC(1) | OTC(1) | | | OTC(1) | | |
| U.S. | U.S. | | $ | 670 | | | 599 | | | 11.8 | % | | | U.S. | | $ | 745 | | | 670 | | | 11.0 | % | | |
| International | International | | 791 | | | 673 | | | 17.5 | | | | International | | 897 | | | 791 | | | 13.5 | | | |
| Worldwide | Worldwide | | 1,461 | | | 1,273 | | | 14.8 | | | | Worldwide | | 1,642 | | | 1,461 | | | 12.4 | | | |
| Skin Health/Beauty | Skin Health/Beauty | | | Skin Health/Beauty | | |
| U.S. | U.S. | | 544 | | | 634 | | | (14.2) | | | | U.S. | | 617 | | | 544 | | | 13.4 | | | |
| International | International | | 468 | | | 529 | | | (11.6) | | | | International | | 493 | | | 468 | | | 5.3 | | | |
| Worldwide | Worldwide | | 1,012 | | | 1,163 | | | (13.0) | | | | Worldwide | | 1,110 | | | 1,012 | | | 9.7 | | | |
| Oral Care | Oral Care | | | Oral Care | | |
| U.S. | U.S. | | 143 | | | 163 | | | (12.6) | | | | U.S. | | 159 | | | 143 | | | 11.6 | | | |
| International | International | | 223 | | | 254 | | | (12.0) | | | | International | | 202 | | | 223 | | | (9.6) | | | |
| Worldwide | Worldwide | | 366 | | | 417 | | | (12.2) | | | | Worldwide | | 361 | | | 366 | | | (1.3) | | | |
| Baby Care | Baby Care | | | Baby Care | | |
| U.S. | U.S. | | 85 | | | 96 | | | (11.5) | | | | U.S. | | 96 | | | 85 | | | 13.0 | | | |
| International | International | | 270 | | | 293 | | | (7.7) | | | | International | | 263 | | | 270 | | | (2.8) | | | |
| Worldwide | Worldwide | | 355 | | | 389 | | | (8.6) | | | | Worldwide | | 359 | | | 355 | | | 1.0 | | | |
| Women's Health | | | |
| Women’s Health | | Women’s Health | | |
| U.S. | U.S. | | 3 | | | 3 | | | 7.2 | | | | U.S. | | 3 | | | 3 | | | 1.8 | | | |
| International | International | | 224 | | | 219 | | | 2.5 | | | | International | | 214 | | | 224 | | | (4.9) | | | |
| Worldwide | Worldwide | | 228 | | | 222 | | | 2.6 | | | | Worldwide | | 217 | | | 228 | | | (4.8) | | | |
| Wound Care/Other | Wound Care/Other | | | Wound Care/Other | | |
| U.S. | U.S. | | 112 | | | 115 | | | (3.3) | | | | U.S. | | 115 | | | 112 | | | 2.6 | | | |
| International | International | | 52 | | | 61 | | | (15.3) | | | | International | | 49 | | | 52 | | | (6.0) | | | |
| Worldwide | Worldwide | | 164 | | | 177 | | | (7.4) | | | | Worldwide | | 164 | | | 164 | | | (0.1) | | | |
| TOTAL CONSUMER HEALTH | TOTAL CONSUMER HEALTH | | | TOTAL CONSUMER HEALTH | | |
| U.S. | U.S. | | 1,557 | | | 1,611 | | | (3.4) | | | | U.S. | | 1,735 | | | 1,557 | | | 11.4 | | | |
| International | International | | 2,029 | | | 2,030 | | | 0.0 | | | International | | 2,117 | | | 2,029 | | | 4.4 | | | |
| Worldwide | Worldwide | | 3,586 | | | 3,641 | | | (1.5) | | | | Worldwide | | 3,852 | | | 3,586 | | | 7.4 | | | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PHARMACEUTICAL | | | | | | | | | | | | |
| Immunology | | | | | | | | | | | | |
| U.S. | | 2,448 | | | 2,501 | | | (2.1) | | | | | | | |
| International | | 1,664 | | | 1,617 | | | 2.9 | | | | | | | |
| Worldwide | | 4,112 | | | 4,119 | | | (0.2) | | | | | | | |
| REMICADE | | | | | | | | | | | | |
| U.S. | | 276 | | | 358 | | | (22.8) | | | | | | | |
| U.S. Exports | | 41 | | | 80 | | | (48.8) | | | | | | | |
| International | | 170 | | | 225 | | | (24.4) | | | | | | | |
| Worldwide | | 487 | | | 663 | | | (26.5) | | | | | | | |
SIMPONI / SIMPONI ARIA | | | | | | | | | | | | |
| U.S. | | 271 | | | 287 | | | (5.6) | | | | | | | |
| International | | 266 | | | 283 | | | (6.1) | | | | | | | |
| Worldwide | | 537 | | | 571 | | | (5.8) | | | | | | | |
STELARA | | | | | | | | | | | | |
| U.S. | | 1,451 | | | 1,379 | | | 5.2 | | | | | | | |
| International | | 993 | | | 909 | | | 9.3 | | | | | | | |
| Worldwide | | 2,444 | | | 2,288 | | | 6.8 | | | | | | | |
TREMFYA | | | | | | | | | | | | |
| U.S. | | 406 | | | 391 | | | 3.9 | | | | | | | |
| International | | 234 | | | 199 | | | 17.3 | | | | | | | |
| Worldwide | | 640 | | | 590 | | | 8.4 | | | | | | | |
OTHER IMMUNOLOGY | | | | | | | | | | | | |
| U.S. | | 3 | | | 6 | | | (51.2) | | | | | | | |
| International | | 0 | | 0 | | — | | | | | | | |
| Worldwide | | 3 | | | 6 | | | (51.3) | | | | | | | |
| | | | | | | | | | | | |
| Infectious Diseases | | | | | | | | | | | | |
| U.S. | | 392 | | | 461 | | | (14.9) | | | | | | | |
| International | | 1,193 | | | 836 | | | 42.8 | | | | | | | |
| Worldwide | | 1,586 | | | 1,297 | | | 22.3 | | | | | | | |
COVID-19 VACCINE | | | | | | | | | | | | |
| U.S. | | 0 | | 75 | | | * | | | | | | |
| International | | 747 | | | 382 | | | 95.6 | | | | | | | |
| Worldwide | | 747 | | | 457 | | | 63.4 | | | | | | | |
EDURANT / rilpivirine | | | | | | | | | | | | |
| U.S. | | 9 | | | 9 | | | (1.4) | | | | | | | |
| International | | 271 | | | 239 | | | 13.4 | | | | | | | |
| Worldwide | | 280 | | | 248 | | | 12.8 | | | | | | | |
PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA | | | | | | | | | | | | |
| U.S. | | 378 | | | 369 | | | 2.5 | | | | | | | |
| International | | 99 | | | 132 | | | (25.2) | | | | | | | |
| Worldwide | | 477 | | | 501 | | | (4.8) | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | PHARMACEUTICAL | | | |
| Immunology | | | |
| U.S. | | 2,501 | | | 2,413 | | | 3.7 | | | | |
| International | | 1,617 | | | 1,501 | | | 7.7 | | | | |
| Worldwide | | 4,119 | | | 3,914 | | | 5.2 | | | | |
| REMICADE | | | |
| U.S. | | 358 | | | 489 | | | (26.8) | | | | |
| U.S. Exports | | 80 | | | 57 | | | 40.5 | | | | |
| International | | 225 | | | 232 | | | (2.6) | | | | |
| Worldwide | | 663 | | | 777 | | | (14.7) | | | | |
SIMPONI / SIMPONI ARIA | | | |
| U.S. | | 287 | | | 255 | | | 12.5 | | | | |
| International | | 283 | | | 307 | | | (7.6) | | | | |
| Worldwide | | 571 | | | 562 | | | 1.5 | | | | |
STELARA | | | |
| U.S. | | 1,379 | | | 1,331 | | | 3.6 | | | | |
| International | | 909 | | | 817 | | | 11.2 | | | | |
| Worldwide | | 2,288 | | | 2,148 | | | 6.5�� | | | | |
TREMFYA | | | |
| U.S. | | 391 | | | 274 | | | 42.7 | | | | |
| International | | 199 | | | 143 | | | 38.8 | | | | |
| Worldwide | | 590 | | | 418 | | | 41.3 | | | | |
OTHER IMMUNOLOGY | | | |
OTHER INFECTIOUS DISEASES | | OTHER INFECTIOUS DISEASES | | |
| U.S. | U.S. | | 6 | | | 7 | | | (3.2) | | | | U.S. | | 5 | | | 8 | | | (33.1) | | | |
| International | International | | 0 | | | 2 | | | * | | | International | | 77 | | | 83 | | | (7.6) | | | |
| Worldwide | Worldwide | | 6 | | | 8 | | | (22.0) | | | | Worldwide | | 82 | | | 91 | | | (9.8) | | | |
| | Infectious Diseases | | | |
| Neuroscience | | Neuroscience | | |
| U.S. | U.S. | | 461 | | | 512 | | | (10.0) | | | | U.S. | | 978 | | | 843 | | | 16.0 | | | |
| International | International | | 836 | | | 485 | | | 72.3 | | | | International | | 826 | | | 898 | | | (8.1) | | | |
| Worldwide | Worldwide | | 1,297 | | | 998 | | | 30.0 | | | | Worldwide | | 1,804 | | | 1,741 | | | 3.6 | | | |
COVID-19 VACCINE | | | |
CONCERTA / methylphenidate | | CONCERTA / methylphenidate | | |
| U.S. | U.S. | | 75 | | | 100 | | | (24.9) | | | | U.S. | | 70 | | | 35 | | | * | | |
| International | International | | 382 | | | 0 | | * | | | International | | 136 | | | 122 | | | 11.4 | | | |
| Worldwide | Worldwide | | 457 | | | 100 | | | * | | | Worldwide | | 206 | | | 157 | | | 31.4 | | | |
EDURANT / rilpivirine | | | |
INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA | | INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA | | |
| U.S. | U.S. | | 9 | | | 10 | | | (12.6) | | | | U.S. | | 713 | | | 661 | | | 7.9 | | | |
| International | International | | 239 | | | 233 | | | 2.5 | | | | International | | 331 | | | 387 | | | (14.6) | | | |
| Worldwide | Worldwide | | 248 | | | 243 | | | 1.8 | | | | Worldwide | | 1,044 | | | 1,048 | | | (0.4) | | | |
PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA | | | |
SPRAVATO | | SPRAVATO | | |
| U.S. | | U.S. | | 111 | | | 61 | | | 82.4 | | | |
| International | | International | | 20 | | | 9 | | | * | | |
| Worldwide | | Worldwide | | 131 | | | 70 | | | 86.9 | | | |
OTHER NEUROSCIENCE(1) | | OTHER NEUROSCIENCE(1) | | |
| U.S. | U.S. | | 369 | | | 380 | | | (3.1) | | | | U.S. | | 84 | | | 86 | | | (3.5) | | | |
| International | International | | 132 | | | 166 | | | (20.3) | | | | International | | 339 | | | 380 | | | (10.7) | | | |
| Worldwide | Worldwide | | 501 | | | 546 | | | (8.3) | | | | Worldwide | | 423 | | | 467 | | | (9.4) | | | |
| | | Oncology | | Oncology | | |
| U.S. | | U.S. | | 1,889 | | | 1,582 | | | 19.4 | | | |
| International | | International | | 2,223 | | | 2,369 | | | (6.1) | | | |
| Worldwide | | Worldwide | | 4,112 | | | 3,950 | | | 4.1 | | | |
CARVYKTI | | CARVYKTI | | |
| U.S. | | U.S. | | 70 | | | — | | | * | | |
| International | | International | | 2 | | | — | | | * | | |
| Worldwide | | Worldwide | | 72 | | | — | | | * | | |
DARZALEX | | DARZALEX | | |
| U.S. | | U.S. | | 1,191 | | | 953 | | | 25.0 | | | |
| International | | International | | 1,072 | | | 903 | | | 18.8 | | | |
| Worldwide | | Worldwide | | 2,264 | | | 1,856 | | | 22.0 | | | |
ERLEADA | | ERLEADA | | |
| U.S. | | U.S. | | 249 | | | 206 | | | 21.2 | | | |
| International | | International | | 293 | | | 194 | | | 50.9 | | | |
| Worldwide | | Worldwide | | 542 | | | 400 | | | 35.6 | | | |
IMBRUVICA | | IMBRUVICA | | |
| U.S. | | U.S. | | 270 | | | 370 | | | (27.1) | | | |
| International | | International | | 557 | | | 668 | | | (16.6) | | | |
| Worldwide | | Worldwide | | 827 | | | 1,038 | | | (20.3) | | | |
ZYTIGA / abiraterone acetate | | ZYTIGA / abiraterone acetate | | |
| OTHER INFECTIOUS DISEASES(1) | | | |
| U.S. | | U.S. | | 16 | | | 19 | | | (14.0) | | | |
| International | | International | | 229 | | | 520 | | | (56.0) | | | |
| Worldwide | | Worldwide | | 245 | | | 539 | | | (54.5) | | | |
OTHER ONCOLOGY | | OTHER ONCOLOGY | | |
| U.S. | U.S. | | 8 | | | 21 | | | (62.5) | | | | U.S. | | 92 | | | 34 | | | * | | |
| International | International | | 83 | | | 87 | | | (3.8) | | | | International | | 70 | | | 84 | | | (17.2) | | | |
| Worldwide | Worldwide | | 91 | | | 108 | | | (15.3) | | | | Worldwide | | 162 | | | 118 | | | 37.4 | | | |
| | Neuroscience | | | |
| Pulmonary Hypertension | | Pulmonary Hypertension | | |
| U.S. | U.S. | | 843 | | | 771 | | | 9.3 | | | | U.S. | | 600 | | | 572 | | | 4.9 | | | |
| International | International | | 898 | | | 943 | | | (4.8) | | | | International | | 272 | | | 279 | | | (2.7) | | | |
| Worldwide | Worldwide | | 1,741 | | | 1,715 | | | 1.5 | | | | Worldwide | | 872 | | | 852 | | | 2.4 | | | |
CONCERTA / methylphenidate | | | |
OPSUMIT | | OPSUMIT | | |
| U.S. | U.S. | | 35 | | | 47 | | | (26.5) | | | | U.S. | | 273 | | | 273 | | | (0.1) | | | |
| International | International | | 122 | | | 123 | | | (1.3) | | | | International | | 167 | | | 170 | | | (1.6) | | | |
| Worldwide | Worldwide | | 157 | | | 171 | | | (8.3) | | | | Worldwide | | 440 | | | 443 | | | (0.7) | | | |
INVEGA SUSTENNA / XEPLION / INVEGA TRINZA / TREVICTA | | | |
UPTRAVI | | UPTRAVI | | |
| U.S. | U.S. | | 661 | | | 589 | | | 12.2 | | | | U.S. | | 304 | | | 269 | | | 13.1 | | | |
| International | International | | 387 | | | 376 | | | 3.0 | | | | International | | 58 | | | 56 | | | 3.3 | | | |
| Worldwide | Worldwide | | 1,048 | | | 965 | | | 8.6 | | | | Worldwide | | 362 | | | 325 | | | 11.4 | | | |
RISPERDAL CONSTA | | | |
| U.S. | | 63 | | | 67 | | | (6.4) | | | | |
| International | | 66 | | | 89 | | | (26.1) | | | | |
| Worldwide | | 129 | | | 157 | | | (17.6) | | | | |
OTHER NEUROSCIENCE(1) | | | |
OTHER PULMONARY HYPERTENSION | | OTHER PULMONARY HYPERTENSION | | |
| U.S. | U.S. | | 84 | | | 67 | | | 25.5 | | | | U.S. | | 23 | | | 30 | | | (22.4) | | | |
| International | International | | 323 | | | 355 | | | (8.9) | | | | International | | 47 | | | 53 | | | (12.6) | | | |
| Worldwide | Worldwide | | 408 | | | 422 | | | (3.5) | | | | Worldwide | | 70 | | | 83 | | | (16.1) | | | |
| | Oncology | | | |
| Cardiovascular / Metabolism / Other | | Cardiovascular / Metabolism / Other | | |
| U.S. | U.S. | | 1,582 | | | 1,377 | | | 14.9 | | | | U.S. | | 715 | | | 672 | | | 6.3 | | | |
| International | International | | 2,369 | | | 2,193 | | | 8.0 | | | | International | | 212 | | | 238 | | | (10.8) | | | |
| Worldwide | Worldwide | | 3,950 | | | 3,570 | | | 10.6 | | | | Worldwide | | 927 | | | 910 | | | 1.8 | | | |
DARZALEX | | | |
| U.S. | | 953 | | | 691 | | | 37.9 | | | | |
| International | | 903 | | | 674 | | | 34.0 | | | | |
| Worldwide | | 1,856 | | | 1,365 | | | 36.0 | | | | |
ERLEADA | | | |
| U.S. | | 206 | | | 171 | | | 20.3 | | | | |
| International | | 194 | | | 90 | | | * | | | |
| Worldwide | | 400 | | | 261 | | | 53.0 | | | | |
IMBRUVICA | | | |
| U.S. | | 370 | | | 444 | | | (16.7) | | | | |
| International | | 668 | | | 680 | | | (1.8) | | | | |
| Worldwide | | 1,038 | | | 1,125 | | | (7.7) | | | | |
ZYTIGA / abiraterone acetate | | | |
XARELTO | | XARELTO | | |
| U.S. | U.S. | | 19 | | | 50 | | | (62.1) | | | | U.S. | | 578 | | | 508 | | | 13.7 | | | |
| International | International | | 520 | | | 588 | | | (11.6) | | | | International | | — | | | — | | | — | | | |
| Worldwide | Worldwide | | 539 | | | 638 | | | (15.6) | | | | Worldwide | | 578 | | | 508 | | | 13.7 | | | |
| | OTHER(2) | | OTHER(2) | | |
| U.S. | | U.S. | | 137 | | | 164 | | | (16.7) | | | |
| International | | International | | 212 | | | 238 | | | (10.8) | | | |
| Worldwide | | Worldwide | | 349 | | | 402 | | | (13.2) | | | |
| | TOTAL PHARMACEUTICAL | | TOTAL PHARMACEUTICAL | | | | | | |
| U.S. | | U.S. | | 7,023 | | | 6,632 | | | 5.9 | | | |
| International | | International | | 6,390 | | | 6,237 | | | 2.4 | | | |
| Worldwide | | Worldwide | | 13,413 | | | 12,869 | | | 4.2 | | | |
|
| OTHER ONCOLOGY | | | |
| U.S. | | 34 | | | 21 | | | 63.1 | | | | |
| International | | 84 | | | 161 | | | (47.7) | | | | |
| Worldwide | | 118 | | | 182 | | | (35.1) | | | | |
| | Pulmonary Hypertension | | | |
| U.S. | | 572 | | | 573 | | | (0.2) | | | | |
| International | | 279 | | | 288 | | | (2.9) | | | | |
| Worldwide | | 852 | | | 861 | | | (1.1) | | | | |
OPSUMIT | | | |
| U.S. | | 273 | | | 272 | | | 0.5 | | | | |
| International | | 170 | | | 179 | | | (4.8) | | | | |
| Worldwide | | 443 | | | 450 | | | (1.6) | | | | |
UPTRAVI | | | |
| U.S. | | 269 | | | 259 | | | 3.9 | | | | |
| International | | 56 | | | 46 | | | 20.9 | | | | |
| Worldwide | | 325 | | | 305 | | | 6.5 | | | | |
OTHER PULMONARY HYPERTENSION | | | |
| U.S. | | 30 | | | 42 | | | (29.0) | | | | |
| International | | 53 | | | 63 | | | (15.2) | | | | |
| Worldwide | | 83 | | | 105 | | | (20.8) | | | | |
| | Cardiovascular / Metabolism / Other | | | |
| U.S. | | 672 | | | 799 | | | (15.8) | | | | |
| International | | 238 | | | 245 | | | (3.0) | | | | |
| Worldwide | | 910 | | | 1,044 | | | (12.8) | | | | |
XARELTO | | | |
| U.S. | | 508 | | | 589 | | | (13.8) | | | | |
| International | | — | | | — | | | — | | | | |
| Worldwide | | 508 | | | 589 | | | (13.8) | | | | |
INVOKANA / INVOKAMET | | | |
| U.S. | | 60 | | | 87 | | | (30.7) | | | | |
| International | | 68 | | | 63 | | | 7.5 | | | | |
| Worldwide | | 128 | | | 150 | | | (14.6) | | | | |
| MEDTECH | | MEDTECH | | |
| OTHER(1,2) | | | |
| | Interventional Solutions | | Interventional Solutions | | |
| U.S. | U.S. | | 104 | | | 122 | | | (14.9) | | | | U.S. | | 863 | | | 494 | | | 74.5 | | | |
| International | International | | 170 | | | 182 | | | (6.6) | | | | International | | 640 | | | 597 | | | 7.1 | | | |
| Worldwide | Worldwide | | 274 | | | 305 | | | (10.0) | | | | Worldwide | | 1,503 | | | 1,092 | | | 37.6 | | | |
| | TOTAL PHARMACEUTICAL | | | | | | | |
ELECTROPHYSIOLOGY | | ELECTROPHYSIOLOGY | | |
| U.S. | U.S. | | 6,632 | | | 6,446 | | | 2.9 | | | | U.S. | | 571 | | | 470 | | | 21.4 | | | |
| International | International | | 6,237 | | | 5,655 | | | 10.3 | | | | International | | 522 | | | 532 | | | (1.8) | | | |
| Worldwide | Worldwide | | 12,869 | | | 12,101 | | | 6.3 | | | | Worldwide | | 1,092 | | | 1,002 | | | 9.1 | | | |
| | ABIOMED(3) | | ABIOMED(3) | | |
| U.S. | | U.S. | | 264 | | | — | | | * | | |
| International | | International | | 60 | | | — | | | * | | |
| Worldwide | | Worldwide | | 324 | | | — | | | * | | |
OTHER INTERVENTIONAL SOLUTIONS | | OTHER INTERVENTIONAL SOLUTIONS | | |
| U.S. | | U.S. | | 28 | | | 24 | | | 17.4 | | | |
| International | | International | | 58 | | | 65 | | | (11.7) | | | |
| Worldwide | | Worldwide | | 87 | | | 90 | | | (3.9) | | | |
| Orthopaedics | | Orthopaedics | | |
| U.S. | | U.S. | | 1,363 | | | 1,289 | | | 5.8 | | | |
| International | | International | | 881 | | | 899 | | | (2.0) | | | |
| Worldwide | | Worldwide | | 2,245 | | | 2,188 | | | 2.6 | | | |
HIPS | | HIPS | | |
| U.S. | | U.S. | | 241 | | | 225 | | | 7.3 | | | |
| International | | International | | 149 | | | 164 | | | (9.0) | | | |
| Worldwide | | Worldwide | | 390 | | | 389 | | | 0.4 | | | |
KNEES | | KNEES | | |
| U.S. | | U.S. | | 226 | | | 201 | | | 12.4 | | | |
| International | | International | | 142 | | | 138 | | | 3.4 | | | |
| Worldwide | | Worldwide | | 368 | | | 339 | | | 8.7 | | | |
TRAUMA | | TRAUMA | | |
| U.S. | | U.S. | | 491 | | | 475 | | | 3.2 | | | |
| International | | International | | 267 | | | 273 | | | (2.4) | | | |
| Worldwide | | Worldwide | | 757 | | | 748 | | | 1.2 | | | |
SPINE, SPORTS & OTHER | | SPINE, SPORTS & OTHER | | |
| U.S. | | U.S. | | 406 | | | 387 | | | 4.7 | | | |
| International | | International | | 323 | | | 324 | | | (0.3) | | | |
| Worldwide | | Worldwide | | 729 | | | 712 | | | 2.4 | | | |
| Surgery | | Surgery | | |
| U.S. | | U.S. | | 975 | | | 921 | | | 5.9 | | | |
| International | | International | | 1,459 | | | 1,513 | | | (3.6) | | | |
| Worldwide | | Worldwide | | 2,434 | | | 2,434 | | | 0.0 | | | |
ADVANCED | | ADVANCED | | |
| U.S. | | U.S. | | 444 | | | 417 | | | 6.5 | | | |
| International | | International | | 673 | | | 729 | | | (7.6) | | | |
| Worldwide | | Worldwide | | 1,118 | | | 1,146 | | | (2.5) | | | |
GENERAL | | GENERAL | | |
| U.S. | | U.S. | | 531 | | | 504 | | | 5.4 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MEDTECH(3) | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Interventional Solutions | | | | | | | | | | | | |
| U.S. | | 494 | | | 434 | | | 13.8 | | | | | | | |
| International | | 597 | | | 514 | | | 16.2 | | | | | | | |
| Worldwide | | 1,092 | | | 949 | | | 15.1 | | | | | | | |
| Orthopaedics | | | | | | | | | | | | |
| U.S. | | 1,289 | | | 1,249 | | | 3.2 | | | | | | | |
| International | | 899 | | | 864 | | | 4.1 | | | | | | | |
| Worldwide | | 2,188 | | | 2,113 | | | 3.5 | | | | | | | |
HIPS | | | | | | | | | | | | |
| U.S. | | 225 | | | 209 | | | 7.3 | | | | | | | |
| International | | 164 | | | 146 | | | 12.2 | | | | | | | |
| Worldwide | | 389 | | | 356 | | | 9.3 | | | | | | | |
KNEES | | | | | | | | | | | | |
| U.S. | | 201 | | | 185 | | | 8.6 | | | | | | | |
| International | | 138 | | | 132 | | | 4.1 | | | | | | | |
| Worldwide | | 339 | | | 317 | | | 6.7 | | | | | | | |
TRAUMA | | | | | | | | | | | | |
| U.S. | | 475 | | | 450 | | | 5.5 | | | | | | | |
| International | | 273 | | | 282 | | | (3.3) | | | | | | | |
| Worldwide | | 748 | | | 733 | | | 2.1 | | | | | | | |
SPINE, SPORTS & OTHER | | | | | | | | | | | | |
| U.S. | | 387 | | | 404 | | | (4.1) | | | | | | | |
| International | | 324 | | | 303 | | | 7.0 | | | | | | | |
| Worldwide | | 712 | | | 707 | | | 0.6 | | | | | | | |
| Surgery | | | | | | | | | | | | |
| U.S. | | 921 | | | 898 | | | 2.5 | | | | | | | |
| International | | 1,513 | | | 1,474 | | | 2.7 | | | | | | | |
| Worldwide | | 2,434 | | | 2,372 | | | 2.6 | | | | | | | |
ADVANCED | | | | | | | | | | | | |
| U.S. | | 417 | | | 405 | | | 3.0 | | | | | | | |
| International | | 729 | | | 713 | | | 2.2 | | | | | | | |
| Worldwide | | 1,146 | | | 1,118 | | | 2.5 | | | | | | | |
GENERAL | | | | | | | | | | | | |
| U.S. | | 504 | | | 493 | | | 2.1 | | | | | | | |
| International | | 784 | | | 761 | | | 3.1 | | | | | | | |
| Worldwide | | 1,288 | | | 1,254 | | | 2.7 | | | | | | | |
| Vision | | | | | | | | | | | | |
| U.S. | | 521 | | | 472 | | | 10.4 | | | | | | | |
| International | | 736 | | | 673 | | | 9.4 | | | | | | | |
| Worldwide | | 1,257 | | | 1,145 | | | 9.8 | | | | | | | |
CONTACT LENSES / OTHER | | | | | | | | | | | | |
| U.S. | | 400 | | | 371 | | | 7.7 | | | | | | | |
| International | | 511 | | | 486 | | | 5.1 | | | | | | | |
| Worldwide | | 910 | | | 857 | | | 6.2 | | | | | | | |
| | | | | | | | | | | | |
| | International | | International | | 785 | | | 784 | | | 0.2 | | | |
| Worldwide | | Worldwide | | 1,316 | | | 1,288 | | | 2.2 | | | |
| Vision | | Vision | | |
| U.S. | | U.S. | | 558 | | | 521 | | | 7.1 | | | |
| International | | International | | 743 | | | 736 | | | 0.8 | | | |
| Worldwide | | Worldwide | | 1,300 | | | 1,257 | | | 3.4 | | | |
CONTACT LENSES / OTHER | | CONTACT LENSES / OTHER | | |
| U.S. | | U.S. | | 444 | | | 400 | | | 11.1 | | | |
| International | | International | | 509 | | | 511 | | | (0.3) | | | |
| Worldwide | | Worldwide | | 953 | | | 910 | | | 4.7 | | | |
SURGICAL | SURGICAL | | | SURGICAL | | |
| U.S. | U.S. | | 121 | | | 101 | | | 20.2 | | | | U.S. | | 114 | | | 121 | | | (6.0) | | | |
| International | International | | 226 | | | 187 | | | 20.5 | | | | International | | 233 | | | 226 | | | 3.3 | | | |
| Worldwide | Worldwide | | 347 | | | 288 | | | 20.4 | | | | Worldwide | | 347 | | | 347 | | | 0.1 | | | |
| | TOTAL MEDTECH | TOTAL MEDTECH | | | | | | | TOTAL MEDTECH | | | | | | |
| U.S. | U.S. | | 3,225 | | | 3,054 | | | 5.6 | | | | U.S. | | 3,759 | | | 3,225 | | | 16.6 | | | |
| International | International | | 3,746 | | | 3,525 | | | 6.3 | | | | International | | 3,722 | | | 3,746 | | | (0.6) | | | |
| Worldwide | Worldwide | | 6,971 | | | 6,579 | | | 5.9 | | | | Worldwide | | 7,481 | | | 6,971 | | | 7.3 | | | |
| | WORLDWIDE | WORLDWIDE | | | | | | | | | WORLDWIDE | | | | | | | | |
| U.S. | U.S. | | 11,414 | | | 11,111 | | | 2.7 | | | | U.S. | | 12,517 | | | 11,414 | | | 9.7 | | | |
| International | International | | 12,012 | | | 11,210 | | | 7.2 | | | | International | | 12,229 | | | 12,012 | | | 1.8 | | | |
| Worldwide | Worldwide | | $ | 23,426 | | | 22,321 | | | 5.0 | % | | | Worldwide | | $ | 24,746 | | | 23,426 | | | 5.6 | % | | |
*Percentage greater than 100% or not meaningful
(1) In the fiscal first quarterInclusive of 2021, approximately $0.1 billion of certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changesRISPERDAL CONSTA which was previously disclosed separately
(2) Inclusive of PROCRIT / EPREXINVOKANA which was previously disclosed separately
(3) Previously referred to as Medical DevicesAcquired on December 22, 2022
EARNINGSEARNINGS/(LOSS) BEFORE PROVISION FOR TAXES BY SEGMENT*SEGMENT
| | | | | Fiscal First Quarter Ended | | | | | Fiscal First Quarter Ended | | |
| (Dollars in Millions) | (Dollars in Millions) | | April 3,
2022 | | April 4,
2021 | | Percent
Change | | | (Dollars in Millions) | | April 2,
2023 | | April 3,
2022 | | Percent
Change | | |
Consumer Health (1) | Consumer Health (1) | | $ | 686 | | | 842 | | | (18.5)% | | | Consumer Health(1) | | $ | 776 | | | 686 | | | 13.1 | % | | |
Pharmaceutical(2) | Pharmaceutical(2) | | 3,924 | | | 5,169 | | | (24.1) | | | Pharmaceutical(2) | | 4,444 | | | 3,924 | | | 13.3 | | | |
MedTech(3) | MedTech(3) | | 1,477 | | | 1,629 | | | (9.3) | | | MedTech(3) | | 1,445 | | | 1,477 | | | (2.2) | | |
| Segment earnings before provision for taxes | Segment earnings before provision for taxes | | 6,087 | | | 7,640 | | | (20.3) | | | Segment earnings before provision for taxes | | 6,665 | | | 6,087 | | | 9.5 | | | |
Less: Expense not allocated to segments (4) | Less: Expense not allocated to segments (4) | | 123 | | | 211 | | | | | | Less: Expense not allocated to segments (4) | | 7,102 | | | 123 | | | | | |
| Less: Consumer Health separation costs | Less: Consumer Health separation costs | | 102 | | | — | | | | Less: Consumer Health separation costs | | 300 | | | 102 | | | |
| Worldwide income before tax | | $ | 5,862 | | | 7,429 | | | (21.1)% | | | |
| Worldwide income/(loss) before tax | | Worldwide income/(loss) before tax | | $ | (737) | | | 5,862 | | | * | | |
*Fiscal first quarter 2021 earnings before provision for taxes has been reclassified as certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changesPercentage greater than 100% or not meaningful
(1) Consumer Health includes:
•Intangible amortization expense of $0.1 billion in both the fiscal first quarter of 20222023 and 20212022.
(2) Pharmaceutical includes:
•Divestiture gainsIntangible amortization expense of $0.6$0.7 billion and $0.8 billion in the fiscal first quarter of 2021 related to two brands outside the U.S.2023 and 2022, respectively.
•Intangible amortization expenseCOVID-19 Vaccine related exit costs of $0.8 billion and $0.9$0.4 billion in the fiscal first quarter of 2022 and 2021, respectively2023.
•A restructuring related charge of $0.1 billion in the fiscal first quarter of 2023.
•In the fiscal first quarter of 2022, the Company recorded an intangible asset impairment charge of approximately $0.6 billion related to an in-process research and development asset, bermekimab (JnJ-77474462), an investigational drug for the treatment of Atopic Dermatitis (AD) and Hidradenitis Suppurativa (HS). Additional information regarding efficacy of the AD indication became available which led the Company to the decision to terminate the development of bermekimab for AD.
•A loss of $0.4 billion related to the changeUnfavorable changes in the fair value of securities in the fiscal first quarter of 2022
In fiscal 2021 and 2020, the Company entered into a series of contract manufacturing arrangements for vaccine production with third party contract manufacturing organizations. These arrangements provide the Company with future supplemental commercial capacity for vaccine production and potentially transferable rights to such production if capacity is not required. Amounts paid for services to be delivered and contractually obligated to be paid to these contract manufacturing organizations of approximately $0.9 billion are reflected in the prepaid expenses and other, other assets, accrued liabilities and other liabilities
accounts in the Company's consolidated balance sheet upon execution of each agreement. Additionally, the Company has entered into certain vaccine development cost sharing arrangements with government related organizations. The Company continues to evaluate the global demand for the COVID-19 vaccine and its related supply.$0.4 billion.
(3) MedTech includes:
•Intangible amortization expense of $0.4 billion and $0.3 billion in the fiscal first quarter of 2023 and 2022, respectively.
•A restructuring related charge of $0.1 billion in both the fiscal first quarter of 2022 and 2021
•Intangible amortization expense of $0.3 billion in both the fiscal first quarter of 2022 and 20212022.
(4)Amounts not allocated to segments include interest income/expense and general corporate income/expense. The fiscal first quarter of 2023 includes the incremental $6.9 billion charge related to the talc settlement proposal. See Note 11, Legal Proceedings, for additional details.
SALES BY GEOGRAPHIC AREA
| | | | | Fiscal First Quarter Ended | | | | | Fiscal First Quarter Ended | | |
| (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | April 4, 2021 | | Percent
Change | | | (Dollars in Millions) | | April 2, 2023 | | April 3, 2022 | | Percent
Change | | |
| United States | United States | | $ | 11,414 | | | 11,111 | | | 2.7 | % | | | United States | | $ | 12,517 | | | 11,414 | | | 9.7 | % | | |
| Europe | Europe | | 6,024 | | | 5,414 | | | 11.3 | | | | Europe | | 6,332 | | | 6,024 | | | 5.1 | | | |
| Western Hemisphere, excluding U.S. | Western Hemisphere, excluding U.S. | | 1,482 | | | 1,424 | | | 4.1 | | | | Western Hemisphere, excluding U.S. | | 1,587 | | | 1,482 | | | 7.1 | | | |
| Asia-Pacific, Africa | Asia-Pacific, Africa | | 4,506 | | | 4,372 | | | 3.1 | | | | Asia-Pacific, Africa | | 4,310 | | | 4,506 | | | (4.3) | | | |
| Total | Total | | $ | 23,426 | | | 22,321 | | | 5.0 | % | | | Total | | $ | 24,746 | | | 23,426 | | | 5.6 | % | | |
NOTE 10— ACQUISITIONS AND DIVESTITURES
There were no material acquisitions or divestitures in the fiscal first quarter of 2022.2023.
On December 22, 2022, the Company completed the acquisition of Abiomed, a leading, first-to-market provider of cardiovascular medical technology with a first-in-kind portfolio for the treatment of coronary artery disease and heart failure which also has an extensive innovation pipeline of life-saving technologies. The transaction broadens the Company’s position as a growing cardiovascular innovator, advancing the standard of care in heart failure and recovery, one of healthcare’s largest areas of unmet need. The transaction was accounted for as a business combination and the results of operations were included in the MedTech segment as of the date of the acquisition. The acquisition was completed through a tender offer for all outstanding shares. The consideration paid in the acquisition consisted of an upfront payment of $380.00 per share in cash, amounting to $17.1 billion, net of cash acquired, as well as a non-tradeable contingent value right (CVR) entitling the holder to receive up to $35.00 per share in cash (which with respect to the CVRs total approximately $1.6 billion in the aggregate) if certain commercial and clinical milestones are achieved. The corresponding enterprise value (without taking into account the CVRs) of approximately $16.5 billion includes cash, cash equivalents and marketable securities acquired.
The milestones of the CVR consist of:
a.$17.50 per share, payable if net sales for Abiomed products exceeds $3.7 billion during Johnson & Johnson’s fiscal second quarter of 2027 through fiscal first quarter of 2028, or if this threshold is not met during this period and is subsequently met during any rolling four quarter period up to the end of Johnson & Johnson’s fiscal first quarter of 2029, $8.75per share;
b.$7.50 per share payable upon FDA premarket application approval of the use of Impella® products in ST-elevated myocardial infarction (STEMI) patients without cardiogenic shock by January 1, 2028; and
c.$10.00 per share payable upon the first publication of a Class I recommendation for the use of Impella® products in high risk PCI or STEMI with or without cardiogenic shock within four years from their respective clinical endpoint publication dates, but in all cases no later than December 31, 2029.
DuringThe fair value of the first fiscal quarteracquisition was initially allocated to assets acquired of 2021, in separate transactions,$19.9 billion (net of $0.3 billion cash acquired), primarily to goodwill for $10.9 billion, amortizable intangible assets for $6.6 billion, IPR&D for $1.1 billion, marketable securities of $0.6 billion and liabilities assumed of $2.8 billion, which includes the Company divested two brands outsidefair value of the U.S. withincontingent consideration mentioned above for $0.7 billion and deferred taxes of $1.8 billion. The goodwill is primarily attributable to the Pharmaceutical segment.commercial acceleration and expansion of the portfolio and is not expected to be deductible for tax purposes. The Company recognized a pre-tax gaincontingent consideration was recorded in Other (income) expense, net,Liabilities on the Consolidated Balance Sheet.
As the acquisition occurred in December 2022, the Company is still finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed. The allocation of the purchase price included in the current period balance sheet is based on the best estimate of management and is preliminary and subject to change. To assist management in the allocation, the Company engaged valuation specialists to prepare appraisals. The Company will finalize the amounts recognized as the information necessary to complete the analysis is obtained. The Company expects to finalize these amounts as soon as possible but no later than one year from the acquisition date. In the fiscal first quarter of 2023, there were purchase price allocation adjustments netting to approximately $0.1 billion with an offsetting increase to goodwill.
The amortizable intangible assets were primarily comprised of already in-market products of the Impella® platform with an average weighted life of 14 years. The IPR&D assets were valued for technology programs for unapproved products. The value of the IPR&D was calculated using probability-adjusted cash flow projections discounted for the risk inherent in such projects. The probability of success factor ranged from 52% to 70%. The discount rate applied was 9.5%.
In 2022, the Company recorded acquisition related costs before tax of approximately $0.6 billion.$0.3 billion, which was recorded in Other (income)/expense.
There were no material acquisitions or divestitures in the fiscal first quarter of 2022.
NOTE 11 — LEGAL PROCEEDINGS
Johnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability; intellectual property; commercial; indemnification and other matters; governmental investigations; and other legal proceedings that arise from time to time in the ordinary course of their 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. As of April 3, 2022,2, 2023, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated. The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25. For these and other litigation and regulatory matters discussed below 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 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 including timing of related payments. The ability to make such estimates and judgments can be affected by various factors including, among other things, 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; procedural or jurisdictional issues; the uncertainty and unpredictability of the number of potential claims; ability to achieve comprehensive multi-party settlements; complexity of related cross-claims and counterclaims; and/or there are numerous parties involved. To the extent adverse awards, judgments or verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.
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.
MATTERS CONCERNING TALC
A significant number of personal injury claims alleging that talc causes cancer were made against Johnson & Johnson Consumer Inc. and the Company arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder. The number of these personal injury lawsuits, filed in state and federal courts in the United States as well as outside of the United States, continued to increase.
In talc cases that previously have gone to trial, the Company has obtained a number of defense verdicts, but there also have been verdicts against the Company, many of which have been reversed on appeal. In June 2020, the Missouri Court of Appeals reversed in part and affirmed in part a July 2018 verdict of $4.7 billion in Ingham v. Johnson & Johnson, et al., No. ED 207476 (Mo. App.), reducing the overall award to $2.1 billion. An application for transfer of the case to the Missouri Supreme Court was subsequently denied and in June 2021, a petition for certiorari, seeking a review of the Ingham decision by the United States Supreme Court, was denied. In June 2021, the Company paid the award, which, including interest, totaled approximately $2.5 billion. The facts and circumstances, including the terms of the award, were unique to the Ingham decision and not representative of other claims brought against the Company. The Company continues to believe that it has strong legal grounds to contest the other talc verdicts that it has appealed. Notwithstanding the Company’s confidence in the safety of its talc products, in certain circumstances the Company has settled cases.
In October 2021, Johnson & Johnson Consumer Inc. (Old JJCI) implemented a corporate restructuring (the 2021 Corporate Restructuring). As a result of that restructuring, Old JJCI ceased to exist and three new entities were created: (a) LTL Management LLC, a North Carolina limited liability company (LTL or Debtor); (b) Royalty A&M LLC, a North Carolina limited liability company and a direct subsidiary of LTL (RAM); and (c) the Debtor’s direct parent, Johnson & Johnson Consumer Inc., a New Jersey company (New JJCI). The Debtor received certain of Old JJCI’s assets and became solely responsible for the talc-related liabilities of Old JJCI, including all liabilities related in any way to injury or damage, or alleged injury or damage, sustained or incurred in the purchase or use of, or exposure to, talc, including talc contained in any product, or to the risk of, or responsibility for, any such damage or injury, except for any liabilities for which the exclusive remedy is provided under a workers’ compensation statute or act (the Talc-Related Liabilities).
In October 2021, notwithstanding the Company’s confidence in the safety of its talc products, the Debtor filed a voluntary petition with the United States Bankruptcy Court for the Western District of North Carolina, Charlotte Division, seeking relief under chapter 11 of the Bankruptcy Code (the LTL Bankruptcy Case). All litigation against LTL, Old JJCI, New JJCI, the Company, other of their corporate affiliates, identified retailers, insurance companies, and certain other parties (the Protected Parties) was stayed, although LTL did agree to lift the stay on a small number of appeals where appeal bonds had been filed. The LTL Bankruptcy Case was transferred to the United States Bankruptcy Court for the District of New Jersey. Claimants filed motions to dismiss the LTL Bankruptcy Case and, following a multiple day hearing, the New Jersey Bankruptcy Court denied those motions in March 2022.
The claimants subsequently filed notices of appeal as to the denial of the motions to dismiss the LTL Bankruptcy Case and the extension of the stay to the Protected Parties. On January 30, 2023, the Third Circuit reversed the Bankruptcy Court’s ruling and remanded to the Bankruptcy Court to dismiss the LTL bankruptcy.
LTL filed a petition for rehearing of the Third Circuit’s decision, which was denied on March 22, 2023. On the same day, LTL filed a motion in the Third Circuit to stay the mandate directing the New Jersey Bankruptcy Court to dismiss the LTL bankruptcy pending filing and disposition of a petition for writ of certiorari to the United States Supreme Court. On March 31, 2023, the Third Circuit denied the motion to stay the mandate and issued the mandate.
On April 4, 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to all parties and returning the talc litigation to the tort system. Several hours later, also on April 4, 2023, LTL re-filed in the United States Bankruptcy Court for the District of New Jersey seeking relief under chapter 11 of the Bankruptcy Code (the LTL 2 Bankruptcy Case). As a result of the new filing, all talc claims against LTL were again automatically stayed pursuant to section 362 of the Bankruptcy Code. Additionally, on April 5, 2023, the New Jersey Bankruptcy Court issued a temporary restraining order staying all litigation as to LTL, Old JJCI, New JJCI, the Company, identified retailers, and certain other parties (the New Protected Parties).
On April 20, 2023, the New Jersey Bankruptcy Court issued a decision that granted limited injunctive relief to the Company and the New Protected Parties (the LTL 2 Preliminary Injunction). The LTL 2 Preliminary Injunction will remain in force and effect until June 15, 2023, subject to the New Jersey Bankruptcy Court revisiting its ruling at a hearing scheduled for May 22, 2023. Under the LTL 2 Preliminary Injunction, except for in those cases filed in the federal court ovarian cancer multi-district litigation, discovery in all personal injury and wrongful death matters is permitted to proceed. No trials may occur in any of the personal injury and wrongful death matters. On April 24, 2023, the Talc Claimants' Committee filed a motion to dismiss the LTL 2 Bankruptcy.
In the original bankruptcy case, the Company agreed to provide funding to LTL for the payment of amounts the New Jersey Bankruptcy Court determines are owed by LTL and the establishment of a $2.0 billion trust in furtherance of this purpose. The Company established a reserve for approximately $2.0 billion in connection with the aforementioned trust. After and as a result of the filing of the LTL Bankruptcy Case, the Company de-consolidated LTL, which is a related party. The impact of the de-consolidation is not material to the Company. In the LTL 2 Bankruptcy Case, the Company has agreed to contribute an additional $6.9 billion which, when added to the prior $2.0 billion, will be a total reserve of present value of $8.9 billion payable over 25 years (nominal value approximately $12.0 billion discounted at a rate of 4.41%), to resolve all the current and future talc claims.
The expected payment schedule provides that approximately $6.0 billion is paid in the first two years, with the remainder paid over the remaining 23 years. The parties have not yet reached a resolution of all talc matters in the LTL Bankruptcy Case, and the Company is unable to estimate the possible loss or range of loss beyond the amount accrued.
A class action advancing claims relating to industrial talc was filed against the Company and others in New Jersey state court in May 2022 (the Edley Class Action). The Edley Class Action asserts, among other things, that the Company fraudulently defended past asbestos personal injury lawsuits arising from exposure to industrial talc mined, milled, and manufactured before January 6, 1989 by the Company’s then wholly owned subsidiary, Windsor Minerals, Inc., which is currently a debtor in the Imerys Bankruptcy described hereafter. The Company removed the Edley Class Action to federal court in the District of New
Jersey. In October 2022, the Company filed motions to dismiss and to deny certification of a class to pursue the Edley Class Action in the New Jersey District Court.
In February 2019, the Company’s talc supplier, Imerys Talc America, Inc. and two of its affiliates, Imerys Talc Vermont, Inc. and Imerys Talc Canada, Inc. (collectively, Imerys) filed a voluntary petition under chapter 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (Imerys Bankruptcy). The Imerys Bankruptcy relates to Imerys’s potential liability for personal injury from exposure to talcum powder sold by Imerys. In its bankruptcy, Imerys alleges it has claims against the Company for indemnification and rights to joint insurance proceeds.
In June 2020, Cyprus Mines Corporation and its parent, Cyprus Amax Minerals Company (CAMC) (together, Cyprus), which had owned certain Imerys talc mines, filed an adversary proceeding against the Company and Imerys in the Imerys Bankruptcy seeking a declaration of indemnity rights under certain contractual agreements (the Cyprus Adversary Proceeding). The Company denies such indemnification is owed and filed a motion to dismiss the adversary complaint. In February 2021, Cyprus filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code and filed its Disclosure Statement and Plan (the Cyprus Plan). The Cyprus Plan contemplates a settlement with Imerys and talc claimants where Cyprus would make a monetary contribution to a trust established under the Imerys Plan in exchange for an injunction against talc claims asserted against it and certain protected parties. Cyprus has not yet sought approval of its Disclosure Statement and Plan. Cyprus, along with the Tort Claimants’ Committee (TCC) and Future Claimants’ Representative (FCR) appointed in the Cyprus chapter 11 case, have agreed to participate in the mediation with the Mediation Parties. In October 2021, the Company filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Cyprus Adversary Proceeding. In June 2022, Cyprus commenced an Adversary Proceeding in its chapter 11 case seeking an order enforcing the automatic stay by enjoining parties from commencing or continuing “talc-related claims” against CAMC. In June 2022, the court entered a preliminary injunction order enjoining claimants from pursuing talc-related claims against CAMC through January 2023. The court subsequently extended the preliminary injunction through July 31, 2023.
Imerys, the TCC, the FCR, certain of Imerys’s insurers, and certain parties in the Cyprus Mines chapter 11 case (collectively the Mediation Parties) have been engaged in mediation since October 2021.
In July 2021, Imerys commenced an adversary proceeding against the Company in the Imerys Bankruptcy (the Imerys Adversary Proceeding). The Imerys Adversary Proceeding sought, among other things, certain declarations with respect to the indemnification obligations allegedly owed by the Company to Imerys. The Company filed a motion to dismiss the adversary proceeding.
In February 2021, several of the Company’s insurers involved in coverage litigation in New Jersey State Court (the Coverage Action) filed a motion in the Imerys Bankruptcy Court proceeding seeking a determination that the automatic stay does not apply to the Coverage Action and, in the alternative, seeking relief from the automatic stay to allow them to continue to litigate their claims in the Coverage Action. The Court entered an agreed order modifying the stay to allow the litigation in the Coverage Action to continue.
In February 2018, a securities class action lawsuit was filed against the Company and certain named officers in the United States District Court for the District of New Jersey, alleging that the Company violated the federal securities laws by failing to disclose alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S Baby Powder, and that purchasers of the Company’s shares suffered losses as a result. In April 2019, the Company moved to dismiss the complaint. In December 2019, the Court denied, in part, the motion to dismiss. In April 2021, briefing on Plaintiff’s motion for class certification was completed. In March 2022, LTL asked the New Jersey Bankruptcy Court to stay the securities class action. In May 2022, the New Jersey Bankruptcy Court entered an order staying the securities class action and Plaintiff appealed the Bankruptcy Court’s order. However, on March 31, 2023, the Third Circuit issued the mandate to dismiss the LTL Bankruptcy Case, which mooted the appeal, and on April 4, 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to this matter.
A lawsuit was brought against the Company in the Superior Court of California for the County of San Diego alleging violations of California’s Consumer Legal Remedies Act (CLRA) relating to JOHNSON’S Baby Powder. In that lawsuit, the plaintiffs allege that the Company violated the CLRA by failing to provide required Proposition 65 warnings. In July 2019, the Company filed a notice of removal to the United States District Court for the Southern District of California and plaintiffs filed a second amended complaint shortly thereafter. In October 2019, the Company moved to dismiss the second amended complaint for failure to state a claim upon which relief may be granted. In response to those motions, plaintiffs filed a third amended complaint. In December 2019, the Company moved to dismiss the third amended complaint for failure to state a claim upon which relief may be granted. In April 2020, the Court granted the motion to dismiss but granted leave to amend. In May 2020, plaintiffs filed a Fourth Amended Complaint but indicated that they would be filing a motion for leave to file a fifth amended complaint. Plaintiffs filed a Fifth Amended Complaint in August 2020. The Company moved to dismiss the Fifth Amended Complaint for failure to state a claim upon which relief may be granted. In January 2021, the Court issued an Order and opinion ruling in the Company’s favor and granting the motion to dismiss with prejudice. In February 2021, Plaintiffs filed a Notice of
Appeal with the Ninth Circuit. Plaintiffs filed their opening brief in July 2021. The company filed its responsive brief in October 2021.
In June 2014, the Mississippi Attorney General filed a complaint in Chancery Court of The First Judicial District of Hinds County, Mississippi against the Company and Johnson & Johnson Consumer Companies, Inc. (now known as Johnson & Johnson Consumer Inc.) (collectively, JJCI). The complaint alleges that JJCI violated the Mississippi Consumer Protection Act by failing to disclose alleged health risks associated with female consumers’ use of talc contained in JOHNSON’S Baby Powder and JOHNSON’S Shower to Shower (a product divested in 2012) and seeks injunctive and monetary relief. In February 2022, the trial court set the case for trial to begin in February 2023. However, in October 2022, the LTL bankruptcy court issued an order staying the case. On March 31, 2023, the Third Circuit issued the mandate to dismiss the LTL Bankruptcy Case and on April 4, 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to this matter. The trial court has indicated it will set a new trial date in this matter during the second fiscal quarter of 2024.
In January 2020, the State of New Mexico filed a consumer protection case alleging that the Company deceptively marketed and sold its talcum powder products by making misrepresentations about the safety of the products and the presence of carcinogens, including asbestos. In March 2022, the New Mexico court denied the Company’s motion to compel the State of New Mexico to engage in discovery of state agencies and denied the Company’s request for interlocutory appeal of that decision. The Company then filed a Petition for Writ of Superintending Control and a Request for a Stay to the New Mexico Supreme Court on the issue of the State of New Mexico’s discovery obligations. In April 2022, in view of the efforts to resolve talc-related claims in the LTL Bankruptcy Case, the Company and the State agreed to a 60-day stay of all matters except for the pending writ before the New Mexico Supreme Court, which expired in June 2022. Thereafter, the Company moved to enjoin prosecution of the case in the LTL Bankruptcy Case. In October 2022, the bankruptcy court issued an order staying the case. In December 2022, the State filed an appeal to the Third Circuit concerning the stay order. Separately, in September 2022, the New Mexico Supreme Court granted the Company's request for a stay pending further briefing on the scope of the State of New Mexico’s discovery obligations. On March 31, 2023, the Third Circuit issued the mandate to dismiss the LTL Bankruptcy Case and on April 4, 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to this matter. However, this case remains stayed as a result of the New Mexico Supreme Court’s stay until such time as the Supreme Court issues an order concerning the State of New Mexico’s discovery obligations.
Forty-two states and the District of Columbia (including Mississippi and New Mexico) have commenced a joint investigation into the Company’s marketing of its talcum powder products. At this time, the multi-state group has not asserted any claims against the Company. Five states have issued Civil Investigative Demands seeking documents and other information. The Company has produced documents to Arizona, North Carolina, Texas, and Washington and entered into confidentiality agreements. The Company has not received any follow up requests from those states. In March 2022, each of the forty-two states agreed to mediation of their claims in the LTL Bankruptcy Case. In July 2022, New Mexico and Mississippi indicated they would no longer voluntarily submit to further mediation in the LTL Bankruptcy and would proceed with their respective cases in state court. In March 2023, the mediation was terminated. The procedural history and status of the New Mexico and Mississippi matters specifically have been discussed above.
In addition, the Company has received inquiries, subpoenas, and requests to produce documents regarding talc matters and the LTL Bankruptcy Case from various governmental authorities. The Company has produced documents and responded to inquiries, and will continue to cooperate with government inquiries.
MATTERS CONCERNING OPIOIDS
Beginning in 2014 and continuing to the present, the Company and Janssen Pharmaceuticals, Inc. (JPI), along with other pharmaceutical companies, have been named in close to 3,500 lawsuits related to the marketing of opioids, including DURAGESIC, NUCYNTA and NUCYNTA ER. The suits also raise allegations related to previously owned narcotic raw material and active pharmaceutical ingredient supplier subsidiaries, Tasmanian Alkaloids Pty, Ltd. and Noramco, Inc. (both subsidiaries were divested in 2016). The majority of the cases have been filed by state and local governments, including 20 suits filed by state or territorial Attorneys General following a multi-state investigation of opioid marketing practices. Similar lawsuits have also been filed by private plaintiffs and organizations, including but not limited to the following: individual plaintiffs on behalf of children born with Neonatal Abstinence Syndrome (NAS); hospitals; and health insurers/payors. In August 2019, the Company received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York for documents related to the Company’s anti-diversion policies and procedures and distribution of its opioid medications, in what the Company understands to be part of a broader investigation into manufacturers’ and distributors’ monitoring programs and reporting under the Controlled Substances Act.
The majority of the opioid marketing cases have been filed in federal courts and coordinated in a multi-district litigation proceeding in the United States District Court for the Northern District of Ohio (Ohio MDL), with most of the remainder in various state courts. To date, the Company and JPI have litigated two of the cases to judgment and have prevailed in both, either at trial or on appeal. In November 2021, the Oklahoma Supreme Court reversed a $465 million judgment entered against the Company and JPI on a public nuisance claim brought by the Oklahoma Attorney General, holding that the marketing of
lawful products was not actionable under the State’s public nuisance law, and directing entry of judgment for the Company and JPI. In February 2022, the Superior Court of Orange County, California, entered judgment for the Company, JPI, and three other pharmaceutical manufacturers on public nuisance and deceptive marketing claims brought by four California local governments, holding that the plaintiffs had failed to prove that any defendant’s marketing was deceptive or that any defendant’s allegedly deceptive marketing led to medically inappropriate prescribing. The California plaintiffs appealed from that judgment, but abandoned their appeal after electing to participate in the Company’s national settlement agreement.
In October 2019, after settling an initial test case brought by two Ohio counties in the Ohio MDL, the Company announced a proposed agreement in principle with a negotiating committee of state Attorneys General to settle all remaining government opioid litigation claims nationwide. Under the final national settlement agreement, which was announced in July 2021, the Company agreed to pay up to $5.0 billion to resolve all opioid lawsuits and future opioid claims by states, cities, counties, local school districts and other special districts, and tribal governments, contingent on sufficient participation by eligible government entities, and with credits back for entities that declined or were ineligible to participate. In July 2021, the Company announced that the terms of the agreement to settle the state and subdivision claims had been finalized and approximately half of the all-in settlement was paid by the first fiscal quarter of 2023. The expected payment schedule provides that approximately $0.6 billion of payments are to be paid by the end of the first fiscal quarter of 2024. The agreement is not an admission of liability or wrongdoing, and it provides for the release of all opioid-related claims against the Company, JPI, and their affiliates (including the Company’s former subsidiaries Tasmanian Alkaloids Pty, Ltd. and Noramco, Inc.). By February 2022, 45 states, five territories, the District of Columbia, and the vast majority of eligible subdivisions had elected to participate in the settlement. The Company confirmed that this level of participation was sufficient to proceed with the agreement, which became effective in April 2022. Also in 2022, the Company completed separate settlements with most of the government entities that had declined to participate in the national settlement agreement, including all federally-recognized tribes, the States of Alabama, New Hampshire, and West Virginia and their participating subdivisions, and litigating Oklahoma subdivisions. Consequently, by the end of the fiscal year 2022, the Company and JPI had settled or otherwise resolved the opioid claims advanced by all government entity claimants except the State of Washington and its subdivisions, the City of Baltimore, a number of school districts and other special district claimants, and a handful of others.
The Company and JPI continue to defend the cases brought by the remaining government entity litigants as well as the cases brought by private litigants, including NAS claimants, hospitals, and health insurers/payors. Counting the private litigant cases, there are approximately 55 remaining opioid cases against the Company and JPI in various state courts, 545 remaining cases in the Ohio MDL, and 20 additional cases in other federal courts. Several of these cases are scheduled for trial in 2023, 2024, or 2025. In addition, the Province of British Columbia filed suit against the Company and its Canadian affiliate Janssen Inc., and many other industry members, in Canada, and is seeking to have that action certified as an opt in class action on behalf of other provincial/territorial and the federal governments in Canada. Additional proposed class actions have been filed in Canada against the Company and Janssen Inc., and many other industry members, by and on behalf of people who used opioids (for personal injuries), municipalities and First Nations bands. These actions allege a variety of claims related to opioid marketing practices, including false advertising, unfair competition, public nuisance, consumer fraud violations, deceptive acts and practices, false claims and unjust enrichment. The suits generally seek penalties and/or injunctive and monetary relief and, in some of the suits, the plaintiffs are seeking joint and several liability among the defendants. An adverse judgment in any of these lawsuits could result in the imposition of large monetary penalties and significant damages including, punitive damages, cost of abatement, substantial fines, equitable remedies and other sanctions.
From June 2017 through December 2019, the Company’s Board of Directors received a series of shareholder demand letters alleging breaches of fiduciary duties related to the marketing of opioids. The Board retained independent counsel to investigate the allegations in the demands, and in April 2020, independent counsel delivered a report to the Board recommending that the Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of related derivative litigation. The Board unanimously adopted the recommendations of the independent counsel’s report.
In November 2019, one of the shareholders who sent a demand filed a derivative complaint against the Company as the nominal defendant and certain current and former directors and officers as defendants in the Superior Court of New Jersey. The complaint alleges breaches of fiduciary duties related to the marketing of opioids, and that the Company has suffered damages as a result of those alleged breaches. A series of additional derivative complaints making similar allegations against the same and similar defendants were filed in New Jersey state and federal courts in 2019 and 2020. By 2022, all but two state court cases had been voluntarily dismissed. In February 2022, the state court granted the Company’s motion to dismiss one of the two cases, and the shareholder that brought the second case filed a notice of dismissal. The shareholder whose complaint was dismissed filed a motion for reconsideration. In May 2022, the state court held oral argument on the motion for reconsideration and subsequently denied the motion. The shareholder has appealed the state court’s dismissal order.
PRODUCT LIABILITY
Johnson & JohnsonThe Company and certain of its subsidiaries are involved in numerous product liability claims and lawsuits involving multiple products. Claimants in these cases seek substantial compensatory and, where available, punitive damages. While the Company believes it has substantial defenses, it is not feasible to predict the ultimate outcome of litigation. From time to time, even if it
has substantial defenses, the Company considers isolated settlements based on a variety of circumstances. The Company has establishedaccrued for these matters and will continue to monitor each related legal issue and adjust accruals for product liability claimsas might be warranted based on new information and lawsuitsfurther developments in complianceaccordance with ASC 450-20 based on currently available information, which in some cases may be limited.450-20-25. The Company accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be reasonably estimated. For certain of these matters, the Company has accrued additional amounts such as estimated costs associated with settlements, damages and other losses. Product liability accruals can represent projected product liability for thousands of claims around the world, each in different litigation environments and with different fact patterns. Changes to the accruals may be required in the future as additional information becomes available.
The table below contains the most significant of these cases include:and provides the DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System; the PINNACLE Acetabular Cup System; pelvic meshes; RISPERDAL; XARELTO; body powders containing talc, primarily JOHNSON’S Baby Powder; INVOKANA; and ETHICON PHYSIOMESH Flexible Composite Mesh. Asapproximate number of April 3, 2022,plaintiffs in the United States there were approximately 230 plaintiffs with direct claims in pending lawsuits regarding injuries allegedly due to the DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System; 3,900 with respect to the PINNACLE Acetabular Cup System; 9,800 with respect to pelvic meshes; 8,600 with respect to RISPERDAL; 4,300 with respect to XARELTO; 40,400 with respect to body powders containing talc; 80 with respect to INVOKANA;relevant product or product category as of April 2, 2023:
| | | | | | | | |
| Product or product category | | Number of Plaintiffs |
| Body powders containing talc, primarily JOHNSON’S Baby Powder | | 40,330 | |
| DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System | | 160 | |
| PINNACLE Acetabular Cup System | | 940 | |
| Pelvic meshes | | 8,780 | |
| ETHICON PHYSIOMESH Flexible Composite Mesh | | 2,070 | |
| RISPERDAL | | 520 | |
| ELMIRON | | 2,070 | |
| TYLENOL | | 200 | |
and 4,800 with respect to ETHICON PHYSIOMESH Flexible Composite Mesh.
The number of pending lawsuits is expected to fluctuate as certain lawsuits are settled or dismissed and additional lawsuits are filed.
MedTech
DePuy ASR XL Acetabular System and ASR Hip Resurfacing System
In August 2010, DePuy Orthopaedics, Inc. (DePuy) announced a worldwide voluntary recall of its ASR XL Acetabular System and DePuy ASR Hip Resurfacing System (ASR Hip) used in hip replacement surgery. Claims for personal injury have been made against DePuy and Johnson & Johnson.the Company. Cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Ohio. Litigation has also been filed in countries outside of the United States, primarily in the United Kingdom, Canada, Australia, Ireland, Germany, India and Italy. In November 2013, DePuy reached an agreement with a Court-appointed committee of lawyers representing ASR Hip plaintiffs to establish a program to settle claims with eligible ASR Hip patients in the United States who had surgery to replace their ASR Hips, known as revision surgery, as of August 2013. DePuy reached additional agreements in February 2015 and March 2017, which further extended the settlement program to include ASR Hip patients who had revision surgeries after August 2013 and prior to February 15, 2017. This settlement program has resolved more than 10,000 claims, thereby bringing to resolution significant ASR Hip litigation activity in the United States. However, lawsuits in the United States remain, and the settlement program does not address litigation outside of the United States. In Australia, a class action settlement was reached that resolved the claims of the majority of ASR Hip patients in that country. In Canada, the Company has reached agreements to settle the class actions filed in that country. The Company continues to receive information with respect to potential additional costs associated with this recall on a worldwide basis. The Company has established accruals for the costs associated with the United States settlement program and ASR Hip-related product liability litigation.
DePuy PINNACLE Acetabular Cup System
Claims for personal injury have also been made against DePuy Orthopaedics, Inc. and Johnson & Johnsonthe Company (collectively, DePuy) relating to the PINNACLE Acetabular Cup System used in hip replacement surgery. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. CasesMost cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Texas.Texas (Texas MDL). Beginning on June 1, 2022, the Judicial Panel on Multidistrict Litigation ceased transfer of new cases into the Texas MDL, and there are now cases pending in federal court outside the Texas MDL. Litigation also has been filed in some state courts and in countries outside of the United States. Several adverse verdicts have been rendered against DePuy, one of which was reversed on appeal and remanded for retrial. During the first quarter of 2019, DePuy established a United States settlement program to resolve these cases. As part of the settlement program, adverse verdicts have been settled. The Company has established an accrual for product liability litigation associated with the PINNACLE Acetabular Cup System and the related settlement program.
Ethicon Pelvic Mesh
Claims for personal injury have been made against Ethicon, Inc. (Ethicon) and Johnson & Johnsonthe Company arising out of Ethicon’s pelvic mesh devices used to treat stress urinary incontinence and pelvic organ prolapse. The Company continues to receive information with respect to potential costs and additional cases. Cases filed in federal courts in the United States had been organized as a multi-district litigation (MDL) in the United States District Court for the Southern District of West Virginia. In March 2021, the MDL Court entered an order closing the MDL. The MDL Court has remanded cases for trial to the jurisdictions where the case was originally filed and additional pelvic mesh lawsuits have been filed, and remain, outside of the MDL. The Company has settled or otherwise resolved the majority of the United States cases and the estimated costs associated with these settlements and the remaining cases are reflected in the Company’s accruals. In addition, class actions and individual
personal injury cases or claims seeking damages for alleged injury resulting from Ethicon’s pelvic mesh devices have been commenced in various countries outside of the United States, including claims and cases in the United Kingdom, the Netherlands, Belgium, France, Ireland, Italy, Spain and Slovenia and class actions in Israel, Australia, Canada and Canada.South Africa. In November 2019, the Federal Court of Australia issued a judgment regarding its findings with respect to liability in relation to the three Lead Applicants and generally in relation to the design, manufacture, prepre- and post-market assessments and testing, and supply and promotion of the devices in Australia used to treat stress urinary incontinence and pelvic organ prolapse. In March 2020,September 2022, after exhausting its appeals, the Court issued a decision and entered damages awardsCompany reached an in-principle agreement to resolve the three Lead Applicants. The Company appealed the decision to the intermediate appellate court, the Full Court. The appeal was heardtwo pelvic mesh class actions in February 2021Australia and in March 2021,2023 the FullFederal Court entered a judgment dismissingapproved the appeal. An application for special leave to the High Court of Australia was filed in April 2021, and the High Court heard oral argument on the application in November 2021. Special leave was refused. While this brings an end to the appellate process, there will now be an individual case assessment process for the remaining group member claims. In March 2022, the Court appointed a barrister to prepare a written report and recommendation on the form and mechanism of the individual case assessment process, due by August 2022, with a court hearing on those findings later that month.settlement. The class actions in Canada were discontinued in 2020 as a result of a settlement of a group of cases and an agreement to resolve the Israeli class action was reached in May 2021. The parties in the Israeli class action are currently finalizing the terms of the settlement. A motion to approve the settlement is expected to bewas filed with the Court by May 2022.Court. The Company has established accruals with respect to product liability litigation associated with Ethicon’s pelvic mesh products.
Ethicon Physiomesh
Following a June 2016 worldwide market withdrawal of ETHICON PHYSIOMESHEthicon Physiomesh Flexible Composite Mesh (Physiomesh), claims for personal injury have been made against Ethicon, Inc. (Ethicon) and Johnson & Johnsonthe Company alleging personal injury arising out of the use of this hernia mesh device. Cases filed in federal courts in the United States have been organized as a multi-district litigation (MDL) in the United States District Court for the Northern District of Georgia. A multi-county litigation (MCL) also has been formed in New Jersey state court and assigned to Atlantic County for cases pending in New Jersey. In addition to the matters in the MDL and MCL, there are additional lawsuits pending in the United States District Court for the Southern District of Ohio, which are part of the MDL for polypropylene mesh devices manufactured by C.R. Bard, Inc., one multi-plaintiff lawsuitand lawsuits pending in Oklahoma state courttwo New Jersey MCLs formed for Proceed/Proceed Ventral Patch and Prolene Hernia systems, and lawsuits pending outside the United States. In May 2021, Ethicon and lead counsel for the plaintiffs entered into a term sheet to resolve approximately 3,600 Physiomesh cases (covering approximately 4,300 plaintiffs) pending in the MDL and MCL at that time. A master settlement agreement (MSA) was entered into in September 2021 and includes 3,729 cases in the MDL and MCL. All deadlines and trial settings in those proceedings are currently stayed pending the completion of the settlement agreement. The deadline for issuance of Individual Allocation amounts byOf the Special Master was March 2022. Plaintiffs requested an extensioncases subject to the MSA, 2,308 have been dismissed with prejudice. Ethicon has received releases from 3,496 plaintiffs, and releases continue to be submitted as part of the deadline.settlement process. Post-settlement cases in the Physiomesh MDL and MCL are subject to docket control orders requiring early expert reports and discovery requirements. As of April 2022,March 2023, there are approximately 105225 active cases subject to these orders which are being reviewed and evaluated.
Claims have also been filed against Ethicon and Johnson & Johnsonthe Company alleging personal injuries arising from the PROCEED Mesh and PROCEED Ventral Patch hernia mesh products. In March 2019, the New Jersey Supreme Court entered an order consolidating these cases pending in New Jersey as an MCL in Atlantic County Superior Court. Additional cases have been filed in various federal and state courts in the United States, and in jurisdictions outside the United States. Discovery is underway in the MCL proceedings.
Ethicon and Johnson & Johnsonthe Company also have been subject to claims for personal injuries arising from the PROLENE Polypropylene Hernia System. In January 2020, the New Jersey Supreme Court created an MCL in Atlantic County Superior Court to handle such cases. Cases involving this product have also been filed in other federal and state courts in the United States.
In October 2022, an agreement in principle, subject to various conditions, was reached to settle the majority of the pending cases involving Proceed, Proceed Ventral Patch, Prolene Hernia System and related multi-layered mesh products. All litigation activities in the two New Jersey MCLs are stayed pending resolution of the proposed settlement. Future cases that are filed in the New Jersey MCLs will be subject to docket control orders requiring early expert reports and discovery requirements.
The Company has established accruals with respect to product liability litigation associated with ETHICON PHYSIOMESHEthicon Physiomesh Flexible Composite Mesh, PROCEED Mesh and PROCEED Ventral Patch, and PROLENE Polypropylene Hernia System products.
Pharmaceuticals
RISPERDAL
Claims for personal injury have been made against Janssen Pharmaceuticals, Inc. and Johnson & Johnsonthe Company arising out of the use of RISPERDAL, and related compounds, indicated for the treatment of schizophrenia, acute manic or mixed episodes associated with bipolar I disorder and irritability associated with autism. Lawsuits primarily have been filed in state courts in Pennsylvania, California, and Missouri. Other actions are pending in various courts in the United States and Canada. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. The Company has successfully defended a number of these cases but there have been verdicts against the Company, including a verdict in October 2019 of $8.0 billion of punitive damages related to one plaintiff, which the trial judge reduced to $6.8 million in January 2020. In September 2021, the Company entered into a settlement in principle with the counsel representing plaintiffs in this matter and in substantially all of the outstanding cases in the United States. The costs associated with this and other settlements are reflected in the Company’s accruals.
Claims for personal injury arising out of the use of XARELTO, an oral anticoagulant, have been made against Janssen Pharmaceuticals, Inc. (JPI); Johnson & Johnson; and JPI’s collaboration partner for XARELTO, Bayer Healthcare AG, and certain of its affiliates. Cases filed in federal courts in the United States have been organized as a multi-district litigation in the
United States District Court for the Eastern District of Louisiana. In addition, cases were filed in state courts across the United States. Many of these cases were consolidated into a state mass tort litigation in Philadelphia, Pennsylvania and in a coordinated proceeding in Los Angeles, California. Class action lawsuits also have been filed in Canada. In March 2019, JPI and Johnson & Johnson announced an agreement in principle to settle the XARELTO cases in the United States; the settlement agreement was executed in May 2019, the settlement became final in December 2019, and the settlement was funded in January 2020. This resolved the majority of cases pending in the United States. The Company has established accruals for its costs associated with the United States settlement program and XARELTO related product liability litigation.
A significant number of personal injury claims alleging that talc causes cancer were made against Johnson & Johnson Consumer Inc. and Johnson & Johnson arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder. The number of these personal injury lawsuits, filed in state and federal courts in the United States as well as outside of the United States, continued to increase.
In talc cases that previously have gone to trial, the Company has obtained a number of defense verdicts, but there also have been verdicts against the Company, many of which have been reversed on appeal. In June 2020, the Missouri Court of Appeals reversed in part and affirmed in part a July 2018 verdict of $4.7 billion in Ingham v. Johnson & Johnson, et al., No. ED 207476 (Mo. App.), reducing the overall award to $2.1 billion. An application for transfer of the case to the Missouri Supreme Court was subsequently denied and in June 2021, a petition for certiorari, seeking a review of the Ingham decision by the United States Supreme Court, was denied. In June 2021, the Company paid the award, which, including interest, totaled approximately $2.5 billion. The facts and circumstances, including the terms of the award, were unique to the Ingham decision and not representative of other claims brought against the Company. The Company continues to believe that it has strong legal grounds to contest the other talc verdicts that it has appealed. Notwithstanding the Company’s confidence in the safety of its talc products, in certain circumstances the Company has settled cases.
In October 2021, Johnson & Johnson Consumer Inc. (Old JJCI) implemented a corporate restructuring (the 2021 Corporate Restructuring). As a result of that restructuring, Old JJCI ceased to exist and three new entities were created: (a) LTL Management LLC, a North Carolina limited liability company (LTL or Debtor); (b) Royalty A&M LLC, a North Carolina limited liability company and a direct subsidiary of LTL (RAM); and (c) the Debtor’s direct parent, Johnson & Johnson Consumer Inc., a New Jersey company (New JJCI). The Debtor received certain of Old JJCI’s assets and became solely responsible for the talc-related liabilities of Old JJCI, including all liabilities related in any way to injury or damage, or alleged injury or damage, sustained or incurred in the purchase or use of, or exposure to, talc, including talc contained in any product, or to the risk of, or responsibility for, any such damage or injury, except for any liabilities for which the exclusive remedy is provided under a workers’ compensation statute or act (the Talc-Related Liabilities).
In October 2021, notwithstanding the Company’s confidence in the safety of its talc products, the Debtor filed a voluntary petition with the United States Bankruptcy Court for the Western District of North Carolina, Charlotte Division, seeking relief under chapter 11 of the Bankruptcy Code (the LTL Bankruptcy Case). As a result of the LTL Bankruptcy Case, the North Carolina Bankruptcy Court entered a temporary restraining order staying all litigation against LTL and Old JJCI. On November 15, 2021, the North Carolina Bankruptcy Court confirmed the scope of the stay, issuing a Preliminary Injunction (PI) prohibiting and enjoining the commencement and prosecution of talc-related claims against LTL, Old JJCI, New JJCI, Johnson & Johnson, other of their corporate affiliates, identified retailers, insurance companies, and certain other parties (the Protected Parties). The LTL Bankruptcy Case was transferred to the United States Bankruptcy Court for the District of New Jersey in November 2021, and that court extended the PI through the end of February 2022. Claimants filed motions to dismiss the LTL Bankruptcy Case and, following a multiple day hearing, the New Jersey Bankruptcy Court denied those motions by order issued in March 2022. The New Jersey Bankruptcy Court simultaneously issued another order extending the stay as to the Protected Parties. The claimants subsequently filed notices of appeal as to the denial of the motions to dismiss and the extension of the stay, and also asked the New Jersey Bankruptcy Court for leave to pursue direct appeals to the Third Circuit Court of Appeals, which was granted. In April 2022, claimants filed a request with Third Circuit Court of Appeals to hear the case, and LTL filed its opposition to the request. While the New Jersey Bankruptcy Court’s order effectively stays all of the Company’s talc-related personal injury litigation, LTL has agreed to lift the stay on a small number of appeals where appeal bonds have been filed.
The Company has agreed to provide funding to LTL for the payment of amounts the New Jersey Bankruptcy Court determines are owed by LTL and the establishment of a $2 billion trust in furtherance of this purpose. The Company has established a reserve for approximately $2 billion in connection with the aforementioned trust. After and as a result of the filing of the LTL Bankruptcy Case, the Company de-consolidated LTL, which is a related party. The impact of the de-consolidation is not material to the Company. The parties have not yet reached a resolution of all talc matters in the LTL Bankruptcy Case, and the Company is unable to estimate the possible loss or range of loss beyond the amount accrued.
In February 2019, the Company’s talc supplier, Imerys Talc America, Inc. and two of its affiliates, Imerys Talc Vermont, Inc. and Imerys Talc Canada, Inc. (collectively, Imerys) filed a voluntary petition under chapter 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (Imerys Bankruptcy). The Imerys Bankruptcy relates to Imerys’s potential liability for personal injury from exposure to talcum powder sold by Imerys. In its
bankruptcy, Imerys alleges it has claims against the Company for indemnification and rights to joint insurance proceeds. In May 2020, Imerys, its parent Imerys S.A., the Tort Claimants’ Committee (TCC), and the Future Claimants’ Representative (FCR) (collectively, the Plan Proponents) filed their Plan of Reorganization (the Plan) and the Disclosure Statement related thereto. The Plan Proponents have since filed numerous amendments to the Plan and Disclosure Statement. A hearing on the Plan Proponent’s Disclosure Statement was held in January 2021, and the Court entered an order approving the Disclosure Statement, allowing Imerys to proceed with soliciting votes on the Plan. In March 2021, the Company voted to reject the Plan and opted out of the consensual releases in the Plan. In April 2021, the Plan Proponents announced the Plan had received the requisite number of accepting votes to confirm the Plan. The Company challenged certain improprieties with respect to portions of the vote and sought to disqualify those votes. In October 2021, the Bankruptcy Court issued a ruling deeming thousands of votes as withdrawn as improperly voted. In October 2021, Imerys cancelled the confirmation hearing on the Plan. Imerys, the TCC, the FCR, and certain of Imerys’s insurers (the Mediation Parties) have since agreed to engage in mediation.
In July 2021, Imerys commenced an adversary proceeding against the Company in the Imerys Bankruptcy (the Imerys adversary proceeding). The Imerys adversary proceeding sought, among other things, certain declarations with respect to the indemnification obligations allegedly owed by the Company to Imerys. The TCC and FCR simultaneously filed a motion for temporary restraining order and preliminary injunction seeking to enjoin the Company from undergoing a corporate restructuring that would separate the Company’s talc liabilities from its other assets. The Bankruptcy Court denied the motion. The Company thereafter filed a motion to dismiss the adversary proceeding. The Bankruptcy Court has not yet decided the motion to dismiss. In October 2021, the Company filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Imerys adversary proceeding.
In June 2020, Cyprus Mines Corporation and its parent (together, Cyprus), which had owned certain Imerys talc mines, filed an adversary proceeding against the Company and Imerys in the Imerys Bankruptcy seeking a declaration of indemnity rights under certain contractual agreements (the Cyprus adversary proceeding). The Company denies such indemnification is owed, and filed a motion to dismiss the adversary complaint. In February 2021, Cyprus filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code and filed its Disclosure Statement and Plan. The Plan contemplates a settlement with Imerys and talc claimants where Cyprus would make a monetary contribution to a trust established under the Imerys Plan in exchange for an injunction against Talc Claims asserted against it. Cyprus has not yet sought approval of its Disclosure Statement and Plan. Cyprus, along with the TCC and FCR appointed in the Cyprus chapter 11 case, have agreed to participate in the mediation with the Mediation Parties. In October 2021, the Company filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Cyprus adversary proceeding.
In February 2021, several of the Company’s insurers involved in coverage litigation in New Jersey State Court (the Coverage Action) filed a motion in the Imerys Bankruptcy Court proceeding seeking a determination that the automatic stay does not apply to the Coverage Action and, in the alternative, seeking relief from the automatic stay to allow them to continue to litigate their claims in the Coverage Action. In March 2021, the Company filed a limited response and reservation of rights with respect to the motion. The Court entered an agreed order modifying the stay to allow the litigation in the Coverage Action to continue. In October 2021, LTL filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Coverage Action. In March 2022, the New Jersey Bankruptcy Court ruled that the stay applied to the Coverage Action.
In February 2018, a securities class action lawsuit was filed against Johnson & Johnson and certain named officers in the United States District Court for the District of New Jersey, alleging that Johnson & Johnson violated the federal securities laws by failing to disclose alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S Baby Powder, and that purchasers of Johnson & Johnson’s shares suffered losses as a result. Plaintiff is seeking damages. In April 2019, the Company moved to dismiss the complaint and briefing on the motion was complete as of August 2019. In December 2019, the Court denied, in part, the motion to dismiss. In March 2020, the Company answered the complaint. In April 2021, briefing on Plaintiffs’ motion for class certification was completed. In July 2021, the Company filed a notice of supplemental authority in opposition to Plaintiff’s motion for class certification, and Plaintiff filed a response. In December 2021, the Company filed a motion to supplement the class certification record, and in January 2022, Plaintiff responded. In March 2022, LTL asked the New Jersey Bankruptcy Court to stay the securities class action.
In June 2019, a shareholder filed a complaint initiating a summary proceeding in New Jersey state court for a books and records inspection. In August 2019, Johnson & Johnson responded to the books and records complaint and filed a cross motion to dismiss. In September 2019, Plaintiff replied and the Court heard oral argument. In February 2022, the Court granted Johnson & Johnson’s cross motion to dismiss.
In October 2019, December 2019, and January 2020, four shareholders filed four separate derivative lawsuits against Johnson & Johnson as the nominal defendant and its current directors and certain officers as defendants in the United States District Court for the District of New Jersey, alleging a breach of fiduciary duties related to the alleged asbestos contamination in body powders containing talc, primarily JOHNSON’SBaby Powder, and that Johnson & Johnson has suffered damages as a result of those alleged breaches. In February 2020, the four cases were consolidated into a single action under the caption In re Johnson
& Johnson Talc Stockholder Derivative Litigation. In July 2020, a report was delivered to the Company’s Board of Directors by independent counsel retained by the Board to investigate the allegations in the derivative lawsuits and in a series of shareholder letters that the Board received raising similar issues and demanding that suit be brought against certain Directors. Four of the shareholders who sent demands are plaintiffs in the In re Johnson & Johnson Talc Stockholder Derivative Litigation. The independent counsel recommended that the Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of the derivative lawsuits. The Board unanimously adopted the recommendations of the independent counsel’s report. In October 2020, the shareholders filed a consolidated complaint, and in January 2021, Johnson & Johnson moved to dismiss the consolidated complaint. In March 2021, Plaintiffs filed a motion for discovery. The Court temporarily terminated Johnson & Johnson’s motion to dismiss pending a decision on Plaintiff’s motion for discovery. In November 2021, at the Court’s request, the parties submitted supplemental briefing on Plaintiff’s motion for discovery.
In January 2019, two ERISA class action lawsuits were filed by participants in the Johnson & Johnson Savings Plan against Johnson & Johnson, its Pension and Benefits Committee, and certain named officers in the United States District Court for the District of New Jersey, alleging that the defendants breached their fiduciary duties by offering Johnson & Johnson stock as a Johnson & Johnson Savings Plan investment option when it was imprudent to do so because of failures to disclose alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S Baby Powder. Plaintiffs are seeking damages and injunctive relief. In September 2019, Defendants filed a motion to dismiss. In April 2020, the Court granted Defendants’ motion but granted leave to amend. In June 2020, Plaintiffs filed an amended complaint, and in July 2020, Defendants moved to dismiss the amended complaint. As of October 2020, briefing on Defendants’ motion was complete. In February 2021, the Court granted Defendants’ motion, and granted Plaintiffs leave to amend. In April 2021, Plaintiffs informed the Court that they did not intend to file an amended complaint, and the Court dismissed the case with prejudice. In May 2021, Plaintiffs filed a notice of appeal with the Third Circuit. In July 2021, Plaintiffs filed their opening brief in the Third Circuit and in September 2021, Defendants filed their response brief, and in October 2021, Plaintiffs filed their reply brief. In January 2022, the Third Circuit heard oral argument.
A lawsuit was brought against the Company in the Superior Court of California for the County of San Diego alleging violations of California’s Consumer Legal Remedies Act (CLRA) relating to JOHNSON’S Baby Powder. In that lawsuit, the plaintiffs allege that Johnson & Johnson violated the CLRA by failing to provide required Proposition 65 warnings. In July 2019, the Company filed a notice of removal to the United States District Court for the Southern District of California and plaintiffs filed a second amended complaint shortly thereafter. In October 2019, the Company moved to dismiss the second amended complaint for failure to state a claim upon which relief may be granted. In response to those motions, plaintiffs filed a third amended complaint. In December 2019, the Company moved to dismiss the third amended complaint for failure to state a claim upon which relief may be granted. In April 2020, the Court granted the motion to dismiss but granted leave to amend. In May 2020, plaintiffs filed a Fourth Amended Complaint but indicated that they would be filing a motion for leave to file a fifth amended complaint. Plaintiffs filed a Fifth Amended Complaint in August 2020. The Company moved to dismiss the Fifth Amended Complaint for failure to state a claim upon which relief may be granted. In January 2021, the Court issued an Order and opinion ruling in the Company’s favor and granting the motion to dismiss with prejudice. In February 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit. Plaintiffs filed their opening brief in July 2021. The company filed its responsive brief in October 2021. In October 2021, Notice of Suggestion of Bankruptcy was filed with the Ninth Circuit. A bankruptcy stay was imposed in December 2021, and the Court held the reply deadline in abeyance. In February 2022, the Bankruptcy Court issued an order extending the stay.
In addition, the Company has received inquiries, subpoenas, and requests to produce documents regarding talc matters and the LTL Bankruptcy Case from various governmental authorities. The Company has produced documents and responded to inquiries, and will continue to cooperate with government inquiries.
Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen Pharmaceuticals, Inc. and Johnson & Johnson, arising out of the use of INVOKANA, a prescription medication indicated to improve glycemic control in adults with Type 2 diabetes. In December 2016, lawsuits filed in federal courts in the United States were organized as a multi-district litigation in the United States District Court for the District of New Jersey. Cases have also been filed in state courts. Class action lawsuits have been filed in Canada. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. The Company has settled or otherwise resolved many of the cases and claims in the United States and the costs associated with these settlements are reflected in the Company’s accruals.
Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen Pharmaceuticals, Inc. and Johnson & Johnson,the Company, arising out of the use of ELMIRON, a prescription medication indicated for the relief of bladder pain or discomfort associated with interstitial cystitis. These lawsuits, which allege that ELMIRON contributes to the development of permanent retinal injury and vision loss, have been filed in both state and federal courts across the United States. In December 2020, lawsuits filed in federal courts in the United States, including putative class action cases seeking medical monitoring, were organized as a multi-district litigation in the United States District Court for the District of New Jersey. Cases alsoIn addition, cases have been filed in various state courts.courts of New Jersey, which have been coordinated in a multi-county litigation in Bergen County, as well as the Court of Common Pleas in Philadelphia, which have been coordinated and granted mass tort designation. In addition, three class action lawsuits have been filed in Canada. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. The Company has established accruals for defense and indemnity costs associated with ELMIRON related product liability litigation.
Consumer Health
30
TYLENOL
TableClaims for personal injury have been made against Johnson and Johnson Consumer Inc. (JJCI), arising out of Content
the use of TYLENOL, an over-the-counter pain medication, alleging that prenatal exposure to acetaminophen is associated with the development of autism spectrum disorder and/or attention-deficit/hyperactivity disorder. In October 2022, lawsuits filed in federal courts in the United States were organized as a multi-district litigation in the United States District Court for the Southern District of New York. In addition, lawsuits have been filed in Canada against Johnson & Johnson Inc. and the Company. Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases. The Company has established accruals for defense costs associated with ELMIRONTYLENOL related product liability litigation.
INTELLECTUAL PROPERTY
Certain subsidiaries of Johnson & Johnsonthe Company are subject, from time to time, to legal proceedings and claims related to patent, trademark and other intellectual property matters arising out of their businesses. Many of these matters involve challenges to the coverage and/or validity of the patents on various products and allegations that certain of the Company’s products infringe the patents of third parties. Although these subsidiaries believe that they have substantial defenses to these challenges and allegations with respect to all significant patents, there can be no assurance as to the outcome of these matters. A loss in any of these cases could adversely affect the ability of these subsidiaries to sell their products, result in loss of sales due to loss of market exclusivity, require the payment of past damages and future royalties, and may result in a non-cash impairment charge for any associated intangible asset. Significant matters are described below.
MedTech
In August 2018, Intuitive Surgical, Inc. and Intuitive Surgical Operations, Inc. (collectively, Intuitive) filed a patent infringement suit against Auris Health, Inc. (Auris) in United States District Court for the District of Delaware. In the suit, Intuitive alleges willful infringement of U.S. Patent Nos. 6,246,200 (’200); 6,491,701 (’701); 6,522,906 (’906); 6,800,056 (’056); 8,142,447 (’447); 8,620,473 (’473); 8,801,601 (’601); and 9,452,276 (’276) based on Auris’ MONARCH Platform. Auris filed IPR Petitions with the U.S. Patent and Trademark Office (USPTO) regarding the ’200, ’056, ’601 ’701, ’447, ’276 and ’906 patents. Intuitive subsequently dropped the ’200, ’473 and ’701 patents from the suit. In December 2019, the USPTO instituted review of the ’601 patent and denied review of the ’056 patent. In February and March 2020, the USPTO instituted review of the ’200, ’447, ’701 and ’906 patents and denied review of the ’276 patent. In December 2020, the USPTO declared all of the challenged claims in the ’601 patent to be invalid. In March 2022, the U.S. Court of Appeals for the Federal Circuit affirmed the finding of invalidity of the ’601 patent. In March 2021, the USPTO ruled that the challenged claims of the ’447 and ’906 patents are not invalid. Auris has appealed that decision. Auris filed a request for reexamination of the ’276 patent in November 2021, and in January 2022, the USPTO granted the reexamination request. Trial is scheduled to begin in January 2023.
In August 2019, RSB Spine LLC (RSB Spine) filed a patent infringement suit against DePuy Synthes, Inc. in the United States District Court for the District of Delaware. In October 2019, RSB Spine amended the complaint to change the named defendants to DePuy Synthes Sales, Inc. and DePuy Synthes Products, Inc. In the suit, RSB Spine alleges willful infringement of United States Patent Nos. 6,984,234 and 9,713,537 by one or more of the following products: ZERO-P-VA Spacer, ZERO-P Spacer, ZERO-P NATURAL Plate, SYNFIX LR Spacer and SYNFIX Evolution System. RSB Spine seeks monetary damages and injunctive relief. In November 2019, the suit was consolidated for pre-trial purposes with other patent infringement suits brought by RSB Spine in the United States District Court for the District of Delaware against Life Spine, Inc., Medacta USA, Inc., and Precision Spine, Inc. Trial is scheduled to begin in December 2022.
In October 2020, Rasmussen Instruments, LLC (Rasmussen) filed a patent infringement suit against DePuy Synthes Products, Inc., DePuy Synthes Sales, Inc. and Medical Device Business Services, Inc. (collectively, DePuy) in the United States District Court for the District of Massachusetts. Rasmussen alleges that DePuy willfully infringes U.S. Patent Nos. 9,492,180 and 10,517,583 (’583) by making and selling the Attune Balanced Sizer. In April 2021, Rasmussen sought permission to amend its infringement contentions to allege that DePuy also willfully infringes the ’583 patent by making and selling the Attune Balancing Blocks. Rasmussen seeks treble damages for willful infringement. Trial concluded in March 2022, with the jury returning a verdict in favor of Rasmussen, finding willful infringement of the ’180 patent, and awarding damages in the amount of $20 million. DePuy is challenging the verdict in its post-trial motions.
Pharmaceutical
Pharmaceuticals - Litigation Against Filers of Abbreviated New Drug Applications (ANDAs)
The following summarizes lawsuits the Company’s subsidiaries have brought lawsuits against generic companies that have filed ANDAs with the U.S. FDA or undertaken(or similar regulatory processeslawsuits outside of the United States,States) seeking to market generic formsversions of products sold by various subsidiaries of Johnson & Johnsonthe Company prior to expiration of the applicable patents covering those products. These ANDAslawsuits typically include allegations of non-infringement andand/or invalidity of patents listed in FDA’s publication “Approved Drug Products with Therapeutic Equivalence Evaluations” (commonly known as the applicable patents. The Inter Partes Review (IPR) process withOrange Book). In each of these lawsuits, the USPTO, created underCompany’s subsidiaries are seeking an order enjoining the 2011 America Invents Act, is also being used at times bydefendant from marketing a generic companies in conjunction with ANDAs and lawsuits, to challengeversion of a product before the applicable patents.expiration of the relevant patents (Orange Book Listed Patents). In the event the Company’s subsidiaries are not successful in an action, or theany automatic statutory stay of the ANDAs expires before the United States District Courtcourt rulings are obtained, the generic companies involved would have the ability, upon regulatory approval, of the U.S. FDA, to introduce generic versions of their products to the market, resulting in the potential for substantial market share and revenue
market share and revenue losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset. In addition, from time to time, the Company’s subsidiaries may settle these types of actions and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents.
ZYTIGA
BeginningThe Inter Partes Review (IPR) process with the United States Patent and Trademark Office (USPTO), created under the 2011 America Invents Act, is also being used at times by generic companies in January 2019, Janssen Inc.conjunction with ANDAs and Janssen Oncology, Inc. (collectively, Janssen) initiated Statements of Claim under Section 6 oflawsuits to challenge the Patented Medicines (Notice of Compliance) Regulations in Canada against Apotex Inc. (Apotex), Pharmascience Inc. (Pharmascience) and Dr. Reddy’s Laboratories Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively, DRL) in response to those parties’ filing of Abbreviated New Drug Submissions (ANDS) seeking approval to market generic versions of ZYTIGA before the expiration of the Canadian Patent No. 2,661,422 (’422). The trial in these actions concluded in November 2020, and the Court issued a decision holding the ’422 patent invalid in January 2021. In February 2021, Janssen appealed the decision.applicable patents.
XARELTO
Beginning in March 2021, Janssen Pharmaceuticals, Inc. (JPI); Bayer Pharma AG; Bayer AG; and Bayer Pharma AG and Bayer AG (collectively, Bayer)Intellectual Property GmbH filed patent infringement lawsuits in the United States District Court for the District of Delawaredistrict courts against a number of generic companiesmanufacturers who have filed ANDAs seeking approval to market generic versions of XARELTO (2.5 mg) before expiration of U.S. Patent No. 10,828,310 (’310).certain Orange Book Listed Patents. The following generic drug companiesentities are named defendants: Dr. Reddy’s Laboratories, Inc. and; Dr. Reddy’s Laboratories, Ltd.; Lupin Limited andLimited; Lupin Pharmaceuticals, Inc.; Taro Pharmaceutical Industries Ltd. and; Taro Pharmaceuticals U.S.A., Inc.; and Teva Pharmaceuticals USA, Inc.; Mylan Pharmaceuticals Inc.; Mylan Inc.; USV Private Limited; Mankind Pharma Limited; Epic Pharma, LLC; Apotex Inc.; Apotex Corp.; Biocon Pharma Limited; Biocon Limited; Biocon Pharma, Inc.; and ScieGen Pharmaceuticals, Inc. The following U.S. patents are included in one or more cases: 9,539,218; and 10,828,310. In October 2021,March 2023, the court consolidated the Delaware lawsuits for all purposes, including trial. Trial for the consolidated Delaware lawsuits is scheduled to begin in May 2023.Company entered into a confidential settlement with Epic Pharma, LLC.
In July 2021, JPI and Bayer filed a patent infringement lawsuitU.S. Patent No. 10,828,310 is also under consideration by the USPTO in the United States District Court for the Northern District of West Virginia against Mylan Pharmaceuticals Inc. and Mylan Inc. which filed an ANDA seeking approval to market a generic version of XARELTO (2.5 mg) before expiration of the ’310 patent. In August 2021, JPI and Bayer filed a motion before the United States Judicial Panel on Multidistrict Litigation (the MDL panel) to transfer this lawsuit to the United States District Court for the District of Delaware for coordinated and consolidated pretrial proceedings. In December 2021, the MDL panel granted the motion. No trial date has been set in this lawsuit.IPR proceeding.
In February 2022, JPI and Bayer filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Micro Labs Ltd. and Micro Labs USA Inc. (collectively, Micro) which filed an ANDA seeking approval to market a generic version of XARELTO (2.5 mg) before expiration of the ’310 patent. In March 2022, the case against Micro was consolidated for all purposes, including trial, with the consolidated Delaware lawsuits.
In each of these lawsuits, JPI and Bayer are seeking an order enjoining defendants from marketing their generic version of XARELTO (2.5 mg) before the expiration of the ’310 patent.
In February 2022, Mylan Pharmaceuticals Inc. filed a Petition for Inter Parties Review with the United States Patent and Trademark Office, seeking to invalidate the ’310 patent.
In April 2022, Janssen Pharmaceuticals, Inc. (JPI), Bayer Intellectual Property GmbH and Bayer AG filed a patent infringement lawsuit in the United States District Court for the District of New Jersey against Changzhou Pharmaceutical Factory, which filed an ANDA seeking approval to market generic a version of XARELTO (10 mg, 15 mg, and 20 mg) before expiration of U.S. Patent No. 9,539,218 (’218). In this lawsuit, JPI, Bayer Intellectual Property GmbH and Bayer AG are seeking an order enjoining Changzhou from marketing its generic version of XARELTO (10 mg, 15 mg, and 20 mg) before the expiration of the ’218 patent.
INVOKANA/INVOKAMET/INVOKAMET XR
In October 2019, Janssen Pharmaceuticals, Inc., Janssen Research & Development, LLC, Cilag GmbH International and Janssen Pharmaceutica NV (collectively, Janssen) and Mitsubishi Tanabe Pharma Corporation (MTPC) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories Ltd (DRL), who filed an ANDA seeking approval to market a generic version of INVOKAMET before expiration of MTPC’s United States Patent No. 7,943,788 (’788) relating to INVOKAMET. In this lawsuit, Janssen and MTPC are seeking an order enjoining DRL from marketing its generic version of INVOKAMET before the expiration of the ’788 patent. In January 2021, Janssen and MTPC filed a patent infringement lawsuit in the United States District Court for the District of New Jersey against Macleods Pharmaceuticals, Ltd. and Macleods Pharma USA, Inc. (Macleods), which filed an ANDA seeking approval to market a generic version of INVOKAMET XR before expiration of MTPC’s United States Patent
Nos. 7,943,582 (’582) and/or 8,513,202 (’202) relating to INVOKAMET XR. In February 2022, the case was dismissed by stipulation.
In October 2020, Janssen Inc., Janssen Pharmaceutica NV and MTPC initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz Canada Inc. (Sandoz) in Canada in response to Sandoz’s filing of an ANDS seeking approval to market a generic version of INVOKANA before the expiration of the Canadian Patent Nos. 2,799,204, 2,534,024 and 2,671,357. Janssen Inc., Janssen Pharmaceutica NV and MTPC are seeking an order enjoining Sandoz from marketing its generic version of INVOKANA before the expiration of the relevant patents. The trial is scheduled to begin in August 2022. In February 2022, the case was discontinued.
OPSUMIT
Beginning in January 2023 Actelion Pharmaceuticals Ltd and Actelion Pharmaceuticals US, Inc. filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of OPSUMIT before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Sun Pharmaceutical Industries Limited; Sun Pharmaceutical Industries, Inc.; Alembic Pharmaceuticals Ltd.; and Alembic Pharmaceuticals, Inc. The following U.S. patents are included in one or more cases: 7,094,781; and 10,946,015.
InBeginning in May 2020, Janssen Inc. (Janssen) and Actelion Pharmaceuticals Ltd (Actelion)initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations in Canada against generic manufacturers who have filed ANDSs seeking approval to market generic versions of OPSUMIT before expiration of certain listed patents. The following entities are named defendants: Sandoz Canada Inc.; Apotex Inc.; and Generic Medical Partners Inc. In March 2023, the Company entered into a confidential settlement agreement with Generic Medical Partners Inc. The following Canadian patent is included in one or more cases: 2,659,770.
INVEGA SUSTENNA
Beginning in January 2018, Janssen Pharmaceutica NV and Janssen Pharmaceuticals, Inc. filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of INVEGA SUSTENNA before expiration of the Orange Book Listed Patent. The following entities are named defendants: Teva Pharmaceuticals USA, Inc.; Mylan Laboratories Limited; Pharmascience Inc.; Mallinckrodt PLC; Specgx LLC; Tolmar, Inc.; and Accord Healthcare, Inc. The following U.S. patent is included in one or more cases: 9,439,906.
Beginning in February 2018, Janssen Inc. and Janssen Pharmaceutica NV initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz Canada Inc. (Sandoz) in Canada in response to Sandoz’s filing of an ANDSgeneric manufacturers who have filed ANDSs seeking approval to market a generic versionversions of OPSUMIT10 mg,INVEGA SUSTENNA before the expiration of the listed patent. The following entities are named defendants: Teva Canada Limited; Pharmascience Inc.; and Apotex Inc. The following Canadian Patent No. 2,659,770 (’770). Trial against Sandoz concludedpatent is included in February 2022.one or more cases: 2,655,335.
In MayINVEGA TRINZA
Beginning in September 2020, Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica NV, and ActelionJanssen Research & Development, LLC filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of INVEGA TRINZA before expiration of the Orange Book Listed Patent. The following entities are named defendants: Mylan Laboratories Limited; Mylan Pharmaceuticals Inc.; and Mylan Institutional LLC. The following U.S. patent is included in one or more cases: 10,143,693.
IMBRUVICA
Beginning in September 2021, Pharmacyclics LLC and Janssen Inc. initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex Inc. (Apotex) in Canada in response to Apotex’s filing of an ANDSgeneric manufacturers who have filed ANDSs seeking approval to market a generic version of OPSUMIT10 mg,before the expiration of the ’770 patent. Trial against Apotex concluded in March 2022.
In July 2020, Janssen and Actelion initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against JAMP Pharma Corporation (JAMP) in Canada in response to JAMP’s filing of an ANDS seeking approval to market a generic version of OPSUMIT10 mg before the expiration of the ’770 patent and Canadian Patent No. 2,621,273 (’273). In April 2022, the parties entered a confidential settlement agreement, and the case was discontinued.
In each of these Canadian actions, Janssen and Actelion are seeking an order enjoining the defendants from marketing their generic versions of OPSUMITIMBRUVICA before the expiration of the relevantcertain listed patents.
INVEGA SUSTENNA
In January 2018, Janssen Pharmaceutica NV The following entities are named defendants: Natco Pharma (Canada) Inc.; and Janssen Pharmaceuticals,Sandoz Canada Inc. (collectively, Janssen) initiated a patent infringement lawsuitThe following patents are included in the United States District Court for the District of New Jersey against Teva Pharmaceuticals USA, Inc. (Teva), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of United States Patent No. 9,439,906 (’906). Trial concluded in October 2020. In October 2021, the court issued a decision in Janssen’s favor. Teva has appealed the decision.
In August 2019, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan Laboratories Limited (Mylan), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent. Pursuant to an agreement by the parties, judgment in favor of Janssen was entered in December 2021. Mylan appealed.
In December 2019, Janssen initiated a patent infringement lawsuit in the United States District Courts for the Districts of New Jerseyone or more cases: 2,663,116; 2,928,721; 2,800,913; 3,007,787; 3,007,788; 2,875,986; and Delaware against Pharmascience Inc., Mallinckrodt PLC and Specgx LLC (collectively, Pharmascience), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent.
In November 2021, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Tolmar, Inc., Tolmar Therapeutics, Inc., Tolmar Pharmaceuticals, Inc. and Tolmar Holding, Inc. (collectively, Tolmar), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent. A trial is scheduled to begin in October 2023.
In February 2022, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Accord Healthcare, Inc., Accord Healthcare, Ltd. and Intas Pharmaceuticals, Ltd. (collectively, Accord), who filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent.
In each of these U.S. lawsuits, Janssen is seeking an order enjoining the defendant from marketing a generic version of INVEGA SUSTENNA before the expiration of the relevant patents.3,022,256.
In February 2018, Janssen Inc. and Janssen Pharmaceutica NV (collectively, Janssen Canada) initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Teva Canada Limited (Teva Canada) in response to Teva’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of Canadian Patent Nos. 2,309,629 (’629) and 2,655,335 (’335). Janssen subsequently discontinued the portion of the lawsuit relating to the ’629 patent. In May 2020, the Canadian Federal Court issued a Public Judgment and Reasons declaring that Teva Canada’s generic version of INVEGA SUSTENNA, if approved, would infringe certain claims of the ’335 patent and that the claims of the ’335 patent are not invalid. Teva Canada appealed.
In November 2020, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Pharmascience Inc. in response to Pharmascience Inc.’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’335 patent. A summary trial on the issue of infringement took place in November 2021. In January 2022, the Court issued a decision in favor of Janssen on the issue of infringement. Pharmascience filed an appeal. In March 2022, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Pharmascience in response to Pharmascience’s filing of an ANDS seeking approval to market a generic version of an additional strength of INVEGA SUSTENNA before the expiration of the ’335 patent. The action has been consolidated with the November 2020 action for trial, which is scheduled to begin in July 2022.
In January 2021, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex Inc. (Apotex) in response to Apotex’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’335 patent. A summary trial on the issue of infringement took place in December 2021. In January 2022, the Court issued a decision in favor of Janssen on the issue of infringement. Apotex appealed.
In each of these Canadian lawsuits, Janssen Canada is seeking an order enjoining the defendant from marketing a generic version of INVEGA SUSTENNA before the expiration of the relevant patents.
INVEGA TRINZA
In September 2020, Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica NV, and Janssen Research & Development, LLC (collectively, Janssen) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan Laboratories Limited, Mylan Pharmaceuticals Inc., and Mylan Institutional LLC (collectively, Mylan). Mylan filed an ANDA seeking approval to market generic versions of INVEGA TRINZA (546 mg) before expiration of United States Patent No. 10,143,693 (’693) relating to INVEGA TRINZA(546 mg). Trial is scheduled to begin in October 2022.
In August 2021, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan. Mylan filed an ANDA seeking approval to market generic versions of INVEGA TRINZA(819 mg) before expiration of the ’693 patent.
In October 2021, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan. Mylan filed an ANDA seeking approval to market generic versions of INVEGA TRINZA (273 mg and 410 mg) before expiration of the ’693 patent.
In January 2022, the court consolidated the three cases into the case filed in September 2020. In each of these consolidated cases, Janssen is seeking an order enjoining Mylan from marketing its generic versions of INVEGA TRINZAbefore expiration of the ’693 patent.
IMBRUVICA
In March 2019, Pharmacyclics LLC (Pharmacyclics) and Janssen Biotech, Inc. (JBI) filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Alvogen Pine Brook LLC and Natco Pharma Ltd. (collectively, Alvogen), which filed an ANDA seeking approval to market generic versions of IMBRUVICA tablets, asserting infringement of United States Patent Nos. 7,514,444; 8,003,309; 8,476,284; 8,497,277; 8,697,711; 8,753,403; 8,754,090; 8,754,091; 8,952,015; 8,957,079; 9,181,257; 9,296,753; 9,655,857; 9,725,455; 10,010,507; 10,106,548; and 10,125,140. In June 2019, Pharmacyclics and JBI amended their complaint against Alvogen to further allege infringement of United States Patent No. 10,213,386.
Trial against Alvogen took place in October 2020. In August 2021, the District Court issued a decision in favor of Pharmacyclics and Janssen finding the asserted claims against Alvogen to be infringed and not invalid. Alvogen has appealed that decision.
In September 2021, Pharmacyclics and Janssen Inc. (Janssen Canada) initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Natco Pharma (Canada) Inc. (Natco) in response to Natco’s filing of two ANDSs seeking approval to market generic versions of IMBRUVICAcapsules before the expiration of Canadian Patent Nos. 2,663,116; 2,928,721; 2,800,913; 3,007,787; 3,007,788; 2,875,986; and 3,022,256. In this lawsuit, Pharmacyclics and Janssen Canada are seeking an order enjoining Natco from marketing its generic version of IMBRUVICA before the expiration of the relevant patents. The trial is scheduled to begin in July 2023.
SYMTUZA
InBeginning in November 2021, Janssen Products, L.P. and, Janssen Sciences Ireland Unlimited Company, (collectively, Janssen) and Gilead Sciences, Inc. and Gilead Sciences Ireland UC (collectively, Gilead) initiated afiled patent infringement lawsuitlawsuits in the United States District Court for the Districtdistrict courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of Delaware againstSYMTUZA before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Lupin Limited,Limited; Lupin Pharmaceuticals, Inc.,; MSN Laboratories Private Ltd.,; MSN Life Sciences Private Ltd., and; MSN Pharmaceuticals Inc. (collectively, Lupin); Apotex Inc.; and Apotex Corp. The following U.S. patents are included in one or more cases: 10,039,718 and 10,786,518.
ERLEADA
Beginning in May 2022, Aragon Pharmaceuticals, Inc., whichJanssen Biotech, Inc., Sloan Kettering Institute for Cancer Research and The Regents of the University of California filed an ANDApatent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market a generic versionversions of SYMTUZAERLEADA before the expiration of United States Patent Nos. 10,039,718 (the ’718 patent)certain Orange Book Listed Patents. The following entities are named defendants: Lupin Limited; Lupin Pharmaceuticals, Inc.; Zydus Worldwide DMCC; Zydus Pharmaceuticals (USA), Inc.; Zydus Lifesciences Limited; Sandoz Inc.; Eugia Pharma Specialities Limited; Aurobindo Pharma USA, Inc.; Auromedics Pharma LLC; Hetero Labs Limited Unit V; and 10,786,518 (the ’518 patent). Janssen is seeking an order enjoining Lupin from marketing its generic version of SYMTUZA before the expiration of the ’718Hetero USA, Inc. The following U.S. patents are included in one or more cases: 9,481,663; 9,884,054; 10,052,314; 10,702,508; 10,849,888; 8,445,507; 8,802,689; 9,388,159; 9,987,261; and ’518 patents.RE49,353.
Other LitigationUPTRAVI
InBeginning in November 2021, Janssen Pharmaceutica N.V. (Janssen) provided2022, Actelion Pharmaceuticals US Inc., Actelion Pharmaceuticals Ltd and Nippon Shinyaku Co., Ltd. filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to Alkermes Pharma Irelandmarket generic versions of UPTRAVI before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Alembic Pharmaceuticals Limited, Elan Pharma International Limited,Alembic Pharmaceuticals Inc.; Lupin Ltd.; Lupin Pharmaceuticals, Inc.; Cipla Limited; and Elan Drug Delivery,Cipla USA Inc. three-months’ notice of termination of a License Agreement byThe following U.S. patents are included in one or more cases: 8,791,122; 9,284,280; and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems, Elan Pharma International Limited and Janssen, executed in March, 1999. In November 2021, Janssen also provided to Alkermes Pharma Ireland Limited three-months’ notice of termination of a License Agreement between Elan Pharma International Limited and Janssen executed in July 2003. In April 2022, in responses to these notices, Alkermes Pharma Ireland Limited (Alkermes) initiated arbitration in the International Institute for Conflict Prevention and Resolution.
GOVERNMENT PROCEEDINGS
Like other companies in the pharmaceutical, consumer health and medical devices industries, Johnson & Johnsonthe Company and certain of its subsidiaries are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which they operate. Such regulation has been the basis of government investigations and litigations. The most significant litigation brought by, and investigations conducted by, government agencies are listed below. It is possible that criminal charges and substantial fines and/or civil penalties or damages could result from government investigations or litigation.
Average Wholesale Price (AWP) Litigation
Johnson & Johnson and several of its pharmaceutical subsidiaries (the J&J AWP Defendants), along with numerous other pharmaceutical companies, were named as defendants in a series of lawsuits in state and federal courts involving allegations that the pricing and marketing of certain pharmaceutical products amounted to fraudulent and otherwise actionable conduct because, among other things, the companies allegedly reported an inflated Average Wholesale Price (AWP) for the drugs at issue. Payors alleged that they used those AWPs in calculating provider reimbursement levels. The plaintiffs in these cases included three classes of private persons or entities that paid for any portion of the purchase of the drugs at issue based on AWP, and state government entities that made Medicaid payments for the drugs at issue based on AWP. Many of these cases, both federal actions and state actions removed to federal court, were consolidated for pre-trial purposes in a multi-district litigation in the United States District Court for the District of Massachusetts, where all claims against the J&J AWP Defendants were ultimately dismissed. The J&J AWP Defendants also prevailed in a case brought by the Commonwealth of Pennsylvania. Other AWP cases have been resolved through court order or settlement. The case brought by Illinois was settled after trial. In New Jersey, a putative class action based upon AWP allegations is pending against Centocor, Inc. and Ortho Biotech Inc. (both now Janssen Biotech, Inc.), Johnson & Johnson and ALZA Corporation. All other cases have been resolved.MedTech
Opioid Litigation
Beginning in 2014 and continuing to the present, Johnson & Johnson and Janssen Pharmaceuticals, Inc. (JPI), along with other pharmaceutical companies, have been named in close to 3,500 lawsuits related to the marketing of opioids, including DURAGESIC, NUCYNTA and NUCYNTA ER. The suits also raise allegations related to previously owned active pharmaceutical ingredient supplier subsidiaries, Tasmanian Alkaloids Pty, Ltd. and Noramco, Inc. (both subsidiaries were divested in 2016). The majority of the cases have been filed by state and local governments. Similar lawsuits have also been
filed by private plaintiffs and organizations, including but not limited to the following: individual plaintiffs on behalf of children suffering from Neonatal Abstinence Syndrome; hospitals; and health insurers/payors. To date, complaints against pharmaceutical manufacturers, including Johnson & Johnson and JPI, have been filed by the state Attorneys General in Arkansas, Florida, Idaho, Illinois, Kentucky, Louisiana, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, South Dakota, Texas, Washington and West Virginia. Complaints against the manufacturers also have been filed in state or federal court by city, county and local government agencies in the following states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. The Government of Puerto Rico filed suit in Superior Court of San Juan.
Johnson & Johnson, JPI and other pharmaceutical companies had also received subpoenas or requests for information related to opioids marketing practices from the following state Attorneys General: Alaska, Indiana, Montana, New Hampshire, South Carolina, Tennessee, Texas and Washington. In September 2017, Johnson & Johnson and JPI were contacted by the Texas and Colorado Attorney General’s Offices on behalf of approximately 38 states regarding a multi-state Attorney General investigation.
In 2019, the trial in the matter filed by the Oklahoma Attorney General resulted in a judgment against Johnson & Johnson and JPI in the amount of $465 million. Johnson & Johnson and JPI appealed the judgment, and in November 2021, the Oklahoma Supreme Court reversed the trial court’s judgment and directed entry of judgment for Defendants. In October 2019 Johnson & Johnson and JPI announced a settlement of the first case set for trial in the MDL with two counties in Ohio. In April 2021, three California counties and the City of Oakland commenced a trial in California state court against Johnson & Johnson and JPI, and other affiliates, as well as three other pharmaceutical manufacturers. The trial concluded in October 2021, and in December 2021, the Court entered a final trial judgment in favor of Defendants on all claims. In February 2022, Plaintiffs’ motion to set aside and vacate the judgment was denied. Plaintiffs appealed the judgment, but later filed a request to dismiss the appeal after electing to participate in the national settlement agreement.
In October 2019, the Company announced a proposed agreement in principle that would include the Company paying $4 billion as settlement of these matters that had not been tried or settled. In October 2020, the Company agreed to contribute up to an additional $1 billion to an all-in settlement amount that would resolve opioid lawsuits filed and future claims by states, cities, counties and tribal governments, for a total of $5 billion which has been accrued, subject to various conditions and an agreement being finalized. This agreement is not an admission of liability or wrong-doing. In July 2021, the Company announced that the terms of the agreement to settle the state and subdivision claims had been finalized and up to one-third of the all-in settlement is expected to be paid within the next 12 months, depending upon the level of participation by the states and their subdivisions. The terms provided a period of time for states to elect to participate in the agreement and, thereafter, a period for the subdivisions of the participating states to opt-in. Based on expected participation, the Company committed in advance to proceed with the settlement in five of the participating states (New York, Texas, Florida, Nevada, and New Mexico) and with tribal governments. By late February 2022, 45 states, five territories, the District of Columbia, and the vast majority of eligible subdivisions had elected to participate in the settlement, and the Company confirmed that the level of participation was sufficient to proceed with the agreement as to all participants. The agreement was effective in April 2022 and initial payments are set for July 2022. In April 2022, the Company entered into settlement agreements with the states of Alabama and West Virginia and their participating subdivisions.
There are approximately 100 cases remaining post-settlement in various state courts. There are approximately 1,000 remaining federal cases coordinated in a federal Multi-District Litigation (MDL) pending in the U.S. District Court for the Northern District of Ohio. In addition, the Province of British Columbia filed suit against Johnson & Johnson and its Canadian affiliate Janssen Inc., and many other industry members, in Canada, and is seeking to have that action certified as an opt in class action on behalf of other provincial/territorial and the federal governments in Canada. Additional proposed class actions have been filed in Canada against Johnson & Johnson and Janssen Inc., and many other industry members, by and on behalf of people who used opioids (for personal injuries), municipalities and First Nations bands. In October 2019, an antitrust complaint was filed by private plaintiffs in federal court in Tennessee and is pending transfer to the MDL. These actions allege a variety of claims related to opioid marketing practices, including false advertising, unfair competition, public nuisance, consumer fraud violations, deceptive acts and practices, false claims and unjust enrichment. The suits generally seek penalties and/or injunctive and monetary relief and, in some of the suits, the plaintiffs are seeking joint and several liability among the defendants. An adverse judgment in any of these lawsuits could result in the imposition of large monetary penalties and significant damages including, punitive damages, cost of abatement, substantial fines, equitable remedies and other sanctions.
In August 2019, Johnson & Johnson received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York for documents related to the Company’s anti-diversion policies and procedures and distribution of its opioid medications, in what the Company understands to be part of a broader investigation into manufacturers’ and distributors’ monitoring programs and reporting under the Controlled Substances Act.
From June 2017 through December 2019, the Company’s Board of Directors received a series of shareholder demand letters alleging breaches of fiduciary duties related to the marketing of opioids. The Board retained independent counsel to investigate the allegations in the demands, and in April 2020, independent counsel delivered a report to the Board recommending that the Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of related derivative litigation. The Board unanimously adopted the recommendations of the independent counsel’s report.
In November 2019, one of the shareholders who sent a demand filed a derivative complaint against Johnson & Johnson as the nominal defendant and certain current and former directors and officers as defendants in the Superior Court of New Jersey. The complaint alleges breaches of fiduciary duties related to the marketing of opioids, and that Johnson & Johnson has suffered damages as a result of those alleged breaches. A series of additional derivative complaints making similar allegations against the same and similar defendants were filed in New Jersey state and federal courts in 2019 and 2020. By 2022, all but two state court cases had been voluntarily dismissed. In February 2022, the state court granted Johnson & Johnson’s motion to dismiss one of the two cases, and the shareholder that brought the second case filed a notice of dismissal. The shareholder whose complaint was dismissed filed a motion for reconsideration.
Other
In August 2012, DePuy Orthopaedics, Inc., DePuy, Inc. (now known as DePuy Synthes, Inc.), and Johnson & Johnson Services, Inc. (collectively DePuy) received an informal request from the United States Attorney’s Office for the District of Massachusetts and the Civil Division of the United States Department of Justice (the United States) for the production of materials relating to the DePuy ASR XL Hip device. In July 2014, the United States notified the United States District Court for the District of Massachusetts that it had declined to intervene in a qui tam case filed pursuant to the False Claims Act against the companies concerning the hip devices. In February 2016, the District Court granted the companies’ motion to dismiss with prejudice, unsealed the qui tam complaint, and denied the qui tam relators’ request for leave to file a further amended complaint. The qui tam relators appealed the case to the United States Court of Appeals for the First Circuit. In July 2017, the First Circuit affirmed the District Court’s dismissal in part, reversed in part, and affirmed the decision to deny the relators’ request to file a third amended complaint. In March 2021, DePuy filed its motion to strike and dismiss the relators’ second amended complaint; the District Court denied DePuy’s motion to strike and dismiss in July 2021. DePuy filed a motion for reconsideration of the District Court’s July 2021 ruling. In November 2021, the District Court granted DePuy’s motion for reconsideration and dismissed the case with prejudice. The District Court’s order was unsealed in December 2021. The Relatorsrelators filed several post-dismissal motions, including a January 2022 omnibus motion for reconsideration, which the District Court denied. Following the District Court’s order dismissing the case with prejudice, DePuy filed a December 2021 motion seeking the recovery of attorneys’ fees and costs, which the District Court denied except as to costs. The Relators have appealed the District Court’s dismissal of the case to the First Circuit. The briefing on the appeal is complete, the First Circuit held oral argument on December 6, 2022, and the Relators’ brief is due in May 2022.
In December 2018, Janssen Biotech, Inc., Janssen Oncology, Inc, Janssen Research & Development, LLC, and Johnson & Johnson (collectively, Janssen) were served with a qui tam complaint filed on behalf of the United States, 28 states, and the District of Columbia. The complaint, which was filed in December 2017 in United States District Court for the Northern District of California, alleges that Janssen violated the federal False Claims Act and state law when providing pricing information for ZYTIGA to the government in connection with direct government sales and government-funded drug reimbursement programs. At this time, the federal and state governments have declined to intervene. The case has been transferred to United States District Court for the District of New Jersey. Janssen’s motion to dismiss was denied in December 2021.First Circuit’s decision remains pending.
In October 2012, Johnson & Johnsonthe Company was contacted by the California Attorney General’s office regarding a multi-state Attorney General investigation of the marketing of surgical mesh products for hernia and urogynecological purposes by Johnson & Johnson’sthe Company’s subsidiary, Ethicon, Inc. (Ethicon). In May 2016, California and Washington filed civil complaints against Johnson & Johnson,the Company, Ethicon and Ethicon US, LLC alleging violations of their consumer protection statutes. Similar complaints were filed against the companies by the following states: Kentucky, Mississippi, West Virginia and Oregon. In April 2019, Johnson & Johnson and Ethicon settled the Washington case. In October 2019, Johnson & Johnsonthe Company and Ethicon settled the multi-state investigation with 41 other states and the District of Columbia. InBetween April 2020, the Company settled the West Virginia case. In October 2020,2019 and February
2023, the Company settled with the Attorney General of Oregon. In November 2020, the Company settled with the Attorney General of Mississippi. Trial in the Kentucky matter is scheduled for May 2023.Washington, West Virginia, Oregon, Mississippi and Kentucky. The California case started trial in July 2019 and concluded in September 2019. In January 2020, the Court in California issued a statement of decision, finding in favor of the State of California, and awarded civil penalties in the amount of $344 million. In April 2020, the Court in California denied the Company’s motion for a new trial. In August 2020, the Court entered judgment with respect to the penalties of $344 million, but denied the Attorney General’s request for injunctive relief. The Company appealed the penalty judgment. In April 2022, the Court of Appeals reduced the judgment to $302 million, but otherwise denied the appeal. The Company is pursuing an appeal toIn July 2022, the Supreme Court of California.
In June 2014,California denied the Mississippi Attorney General filed a complaint in ChanceryCompany’s petition to review the Court of The First Judicial District of Hinds County, Mississippi against Johnson & JohnsonAppeals decision, and Johnson & Johnson Consumer Companies, Inc. (now known as Johnson & Johnson Consumer Inc.) (collectively, JJCI). The complaint alleges that JJCI violated the Mississippi Consumer Protection Act by failingCompany recorded a charge to disclose alleged health risks associated with female consumers’ use of talc contained in JOHNSON’S Baby Powder and JOHNSON’S Shower to Shower (a product divested in 2012) and seeks injunctive and monetary relief. Johnson & Johnson and JJCI moved for summary judgment onreflect the grounds that the State’s claim was barred by preemption, which the trial court denied. The Mississippi Supreme Court granted Johnson & Johnson and JJCI’s request to file an interlocutory appeal of the denial of the motion for summary judgment in late 2019. Briefing and oral argument were completed. Thereafter, the Court rejectedsecond quarter of 2022. In November 2022, the interlocutory appeal in April 2021 and remanded the matter to the trial court. In August 2021, JJCI filed a Petition for Writ of Certiorari inCompany petitioned the United States Supreme Court asfor review. In February 2023, the Company’s petition to the Mississippi Supreme Court’s ruling of April 2021. In December 2021 the United States Supreme Court denied the Petition for Writ of Certiorari. After the Mississippi Supreme Court remanded the matter to the trial court, the State moved for a trial setting. JJCI objected to any trial setting and in January 2022, the Court granted plaintiff’s motion for trial setting and directed the parties to consult with the Court administrator to secure a trial date. In February 2022, the trial court set the case for trial to begin in February 2023. However, given the efforts to resolve talc-related claims in the LTL Bankruptcy Case, the Company and the State agreed to a temporary stay of discovery until May 2022.
In January 2020, the State of New Mexico filed a consumer protection case alleging that the Company deceptively marketed and sold its talcum powder products by making misrepresentations about the safety of the products and the presence of carcinogens, including asbestos. The State of New Mexico filed an Amended Complaint in March 2020. The Company moved to dismiss certain of the claims in the Amended Complaint, which was granted. The Company then filed a motion for partial judgment on the pleadings in December 2020, which was denied. In March 2022, the New Mexico court denied the Company’s motion to compel the State of New Mexico to engage in discovery of state agencies and denied the Company’s request for interlocutory appeal of that decision. The Company then filed a Petition for Writ of Superintending Control and a Request for a Stay to the New Mexico Supreme Court on the issue of the State of New Mexico’s discovery obligations. In April 2022, in view of the efforts to resolve talc-related claims in the LTL Bankruptcy Case, the Company and the State agreed to a 60-day stay of all matters except for the pending writ before the New Mexico Supreme Court.
Forty-two states and the District of Columbia have commenced a joint investigation into the Company’s marketing of its talcum powder products. At this time, the multi-state group has not asserted any claims against the Company. Five states have issued Civil Investigative Demands seeking documents and other information. The Company has produced documents to Arizona, North Carolina, Texas, and Washington and entered into confidentiality agreements. The Company has not received any follow up requests from those states. In March 2022, each of the forty-two states (including Mississippi and New Mexico) agreed to enter into negotiations to determine if they would resolve their claims through the LTL Bankruptcy Case.
In July 2016, Johnson & Johnson and Janssen Products, LP were served with a qui tam complaint pursuant to the False Claims Act filed in the United States District Court for the District of New Jersey alleging the off-label promotion of two HIV products, PREZISTA and INTELENCE, and anti-kickback violations in connection with the promotion of these products. The complaint was filed under seal in December 2012. The federal and state governments have declined to intervene, and the lawsuit is being prosecuted by the relators. The Court denied summary judgment on all claims in December 2021. Daubert motions were granted in part and denied in part in January 2022, and the case is proceeding to trial.
In March 2017, Janssen Biotech, Inc. (JBI) received a Civil Investigative Demand from the United States Department of Justice regarding a False Claims Act investigation concerning management and advisory services provided to rheumatology and gastroenterology practices that purchased REMICADE or SIMPONI ARIA. In August 2019, the United States Department of Justice notified JBI that it was closing the investigation. Subsequently, the United States District Court for the District of Massachusetts unsealed a qui tam False Claims Act complaint, which was served on the Company. The Department of Justice had declined to intervene in the qui tam lawsuit in August 2019. The Company filed a motion to dismiss, which was granted in part and denied in part. Discovery is underway.
In April and September 2017, Johnson & Johnson received subpoenas from the United States Attorney for the District of Massachusetts seeking documents broadly relating to pharmaceutical copayment support programs for DARZALEX, OLYSIO, REMICADE, SIMPONI, STELARA and ZYTIGA. The subpoenas also seek documents relating to Average Manufacturer Price and Best Price reporting to the Center for Medicare and Medicaid Services related to those products, as well as rebate payments to state Medicaid agencies. The Company has provided documents in response to the subpoenas.
In June 2017, Johnson & Johnsonthe Company received a subpoena from the United States Attorney’s Office for the District of Massachusetts seeking information regarding practices pertaining to the sterilization of DePuy Synthes, Inc. (DePuy) spinal implants at three hospitals in Boston as well as interactions of employees of Company subsidiaries with physicians at these
hospitals. Johnson & JohnsonThe Company and DePuy have produced documents in response to the subpoena and are fully cooperatingcooperated with the government’s investigation. In January 2023, the Company, DePuy Synthes, Inc., and DePuy Synthes Sales Inc. entered into a settlement agreement with the United States resolving the matter for an immaterial amount. The only claim remaining before the United States District Court for the District of Massachusetts is the Relator’s employment retaliation claim.
In July 2018, the Public Prosecution Service in Rio de Janeiro and representatives from the Brazilian antitrust authority CADE inspected the offices of more than 30 companies including Johnson & Johnson do Brasil Indústria e Comércio de Produtos para Saúde Ltda. The authorities appear to be investigating allegations of possible anti-competitive behavior and possible improper payments in the medical device industry. The Company continues to respond to inquiries regarding the Foreign Corrupt Practices Act from the United States Department of Justice and the United States Securities and Exchange Commission.
Pharmaceuticals
The Company and several of its pharmaceutical subsidiaries (the J&J AWP Defendants), along with numerous other pharmaceutical companies, were named as defendants in a series of lawsuits in state and federal courts involving allegations that the pricing and marketing of certain pharmaceutical products amounted to fraudulent and otherwise actionable conduct because, among other things, the companies allegedly reported an inflated Average Wholesale Price (AWP) for the drugs at issue. Payors alleged that they used those AWPs in calculating provider reimbursement levels. The plaintiffs in these cases included three classes of private persons or entities that paid for any portion of the purchase of the drugs at issue based on AWP, and state government entities that made Medicaid payments for the drugs at issue based on AWP. Many of these cases, both federal actions and state actions removed to federal court, were consolidated for pre-trial purposes in a multi-district litigation in the United States District Court for the District of Massachusetts, where all claims against the J&J AWP Defendants were ultimately dismissed. The J&J AWP Defendants also prevailed in a case brought by the Commonwealth of Pennsylvania. Other AWP cases have been resolved through court order or settlement. The case brought by Illinois was settled after trial. In New Jersey, a putative class action based upon AWP allegations is pending against Centocor, Inc. and Ortho Biotech Inc. (both now Janssen Biotech, Inc.), the Company and ALZA Corporation. All other cases have been resolved.
In July 2016, the Company and Janssen Products, LP were served with a qui tam complaint pursuant to the False Claims Act filed in the United States District Court for the District of New Jersey alleging the off-label promotion of two HIV products, PREZISTA and INTELENCE, and anti-kickback violations in connection with the promotion of these products. The complaint was filed under seal in December 2012. The federal and state governments have declined to intervene, and the lawsuit is being prosecuted by the relators. The Court denied summary judgment on all claims in December 2021. Daubert motions were granted in part and denied in part in January 2022, and the case is proceeding to trial.
In March 2017, Janssen Biotech, Inc. (JBI) received a Civil Investigative Demand from the United States Department of Justice regarding a False Claims Act investigation concerning management and advisory services provided to rheumatology and gastroenterology practices that purchased REMICADE or SIMPONI ARIA. In August 2019, the United States Department of Justice notified JBI that it was closing the investigation. Subsequently, the United States District Court for the District of Massachusetts unsealed a qui tam False Claims Act complaint, which was served on the Company. The Department of Justice had declined to intervene in the qui tam lawsuit in August 2019. The Company filed a motion to dismiss, which was granted in part and denied in part. Discovery is underway.
In April and September 2017, the Company received subpoenas from the United States Attorney for the District of Massachusetts seeking documents broadly relating to pharmaceutical copayment support programs for DARZALEX, OLYSIO, REMICADE, SIMPONI, STELARA and ZYTIGA. The subpoenas also seek documents relating to Average Manufacturer Price and Best Price reporting to the Center for Medicare and Medicaid Services related to those products, as well as rebate payments to state Medicaid agencies. The Company has provided documents in response to the subpoenas.
From time to time, the Company has received requests from a variety of United States Congressional Committees to produce information relevant to ongoing congressional inquiries. It is the policy of Johnson & Johnson to cooperate with these inquiries by producing the requested information.
GENERAL LITIGATION
In March and April 2015, over 30 putative class action complaints were filed by contact lens patients in a number of courts around the United States against Johnson & Johnson Vision Care, Inc. (JJVCI) and other contact lens manufacturers, distributors, and retailers, alleging vertical and horizontal conspiracies to fix the retail prices of contact lenses. The complaints allege that the manufacturers reached agreements with each other and certain distributors and retailers concerning the prices at which some contact lenses could be sold to consumers. The plaintiffs are seeking damages and injunctive relief. All of the class action cases were transferred to the United States District Court for the Middle District of Florida in June 2015. The plaintiffs filed a consolidated class action complaint in November 2015. This case was settled in March 2022, subject to Court approval.
Beginning in September 2017, multiple purported class actions were filed on behalf of indirect purchasers of REMICADE againstThe Company (subsequently substituted by Johnson & Johnson Consumer Inc. (JJCI)) along with more than 120 other companies, is a defendant in a cost recovery and Janssen Biotech, Inc. (collectively, Janssen) alleging that Janssen has violated federal antitrust laws through its contracting strategies for REMICADE. The cases were consolidated for pre-trial purposes as In re REMICADE Antitrust Litigation contribution action brought by Occidental Chemical Corporation in United States District Court for the Eastern District of Pennsylvania. This case was settled in February 2022, subject to Court approval.
In June 2018 Walgreen Co. and Kroger Co., filed an antitrust complaint against Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in the United States District Court for the Eastern District of Pennsylvania. The complaint alleges that Janssen has violated federal antitrust laws through its contracting strategies for REMICADE. The complaint seeks damages and injunctive relief. In March 2019, summary judgment was grantedNew Jersey, related to the clean-up of a section of the Lower Passaic River in favor of Janssen. In February 2020, the United States Court of Appeals for the Third Circuit reversed the District Court’s decision. This case was settled in January 2022.New Jersey.
In June 2019, the United States Federal Trade Commission (FTC) issued a Civil Investigative Demand to Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigation of whether Janssen’s REMICADE contracting practices violate federal antitrust laws. The Company has produced documentsor its subsidiaries are also parties to various proceedings brought under the Comprehensive Environmental Response, Compensation, and information responsive toLiability Act, commonly known as Superfund, and comparable state, local or foreign laws in which the Civil Investigative Demand.
In February 2022,primary relief sought is the United States Federal Trade Commission (FTC) issued Civil Investigative Demands to Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigationcost of whether advertising practices for REMICADE violate federal law. Janssen has produced documents and information responsive to the Civil Investigative Demands.past and/or future remediation.
In October 2017, certain United States service members and their families brought a complaint against a number of pharmaceutical and medical devices companies, including Johnson & Johnson and certain of its subsidiaries in United States District Court for the District of Columbia, alleging that the defendants violated the United States Anti-Terrorism Act. The complaint alleges that the defendants provided funding for terrorist organizations through their sales practices pursuant to pharmaceutical and medical device contracts with the Iraqi Ministry of Health. In July 2020, the District Court dismissed the complaint. In January 2022, the United States Court of Appeals for the District of Columbia Circuit reversed the District Court’s decision. In February 2022,2023, defendants petitionedpetition for rehearing en banc.on the decision was denied.
MedTech
In October 2020, Fortis Advisors LLC (Fortis), in its capacity as representative of the former stockholders of Auris Health Inc. (Auris), filed a complaint against the Company, Ethicon Inc., and certain named officers and employees (collectively, Ethicon) in the Court of Chancery of the State of Delaware. The complaint alleges breach of contract, fraud, and other causes of action against Ethicon in connection with Ethicon’s acquisition of Auris in 2019. The complaint seeks damages and other relief. In December 2021, the Court granted in part and denied in part defendants’ motion to dismiss certain causes of action. All claims against the individual defendants were dismissed. The trial is scheduled for January 2024.
In October 2019, Innovative Health, LLC filed a complaint against Biosense Webster, Inc. (BWI) in the United States District Court for the Middle District of California. The complaint alleges that certain of BWI’s business practices and contractual terms violate the antitrust laws of the United States and the State of California by restricting competition in the sale of High Density Mapping Catheters and Ultrasound Catheters. In December 2021, BWI filed a motion for summary judgment. In March 2022, the Court granted BWI’s motion for summary judgment. In April 2022, Innovative appealed this ruling to the United States Court of Appeals for the Ninth Circuit. Oral argument has been set for June 2023.
Pharmaceuticals
Beginning in September 2017, multiple purported class actions were filed on behalf of indirect purchasers of REMICADE against the Company and Janssen Biotech, Inc. (collectively, Janssen) alleging that Janssen has violated federal antitrust laws through its contracting strategies for REMICADE. The cases were consolidated for pre-trial purposes as In re REMICADE Antitrust Litigation in United States District Court for the Eastern District of Pennsylvania. This case was settled in February 2022. The Court issued final approval in March 2023.
In June 2019, the United States Federal Trade Commission (FTC) issued a Civil Investigative Demand to the Company and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigation of whether Janssen’s REMICADE contracting practices violate federal antitrust laws. The Company has produced documents and information responsive to the Civil Investigative Demand. Janssen is in ongoing discussions with the FTC staff regarding its inquiry.
In February 2022, the United States Federal Trade Commission (FTC) issued Civil Investigative Demands to Johnson & Johnson and Janssen Biotech, Inc. (collectively, Janssen) in connection with its investigation of whether advertising practices for REMICADE violate federal law. Janssen has produced documents and information responsive to the Civil Investigative Demands. Janssen is in ongoing discussions with the FTC staff regarding the inquiry.
In June 2022, Genmab A/S filed a Notice for Arbitration with International Institute for Conflict Prevention and Resolution (CPR) against Janssen Biotech, Inc. seeking milestones and an extended royalty term for Darzalex FASPRO. Janssen filed its Notice of Defense in July 2022. Genmab and Janssen have cross-moved for early disposition of the arbitration. In April 2023, the Arbitration Panel ruled in Janssen's favor and dismissed Genmab's claims. In April 2023, Genmab announced that it intends to appeal the award.
In October 2018, two separate putative class actions were filed against Actelion Pharmaceutical Ltd., Actelion Pharmaceuticals U.S., Inc., and Actelion Clinical Research, Inc. (collectively Actelion) in United States District Court for the District of Maryland and United States District Court for the District of Columbia. The complaints allege that Actelion violated state and federal antitrust and unfair competition laws by allegedly refusing to supply generic pharmaceutical manufacturers with samples of TRACLEER. TRACLEER is subject to a Risk Evaluation and Mitigation Strategy required by the U.S. Food and Drug Administration, which imposes restrictions on distribution of the product. In January 2019, the plaintiffs dismissed the District of Columbia case and filed a consolidated complaint in the United States District Court for the District of Maryland. In October
2019, the Court granted Actelion’s motion to dismiss the amended complaint. In April 2021, the United States Court of Appeals for the Fourth Circuit reversed and remanded. Discovery is ongoing.
In May 2019, a class action antitrust complaint was filed against Janssen R&D Ireland (Janssen) and Johnson & Johnson in the United States District Court for the Northern District of California. The complaint alleges that Janssen violated federal and state antitrust and consumer protection laws by agreeing to exclusivity provisions in its agreements with Gilead concerning the development and marketing of combination antiretroviral therapies (cART) to treat HIV. The complaint also alleges that Gilead entered into similar agreements with Bristol-Myers Squibb and Japan Tobacco. In March 2020, the Court granted in part and denied in part defendants’ motions to dismiss. Plaintiffs filed an amended complaint in April 2020. Defendants moved to dismiss the amended complaint. In July 2020, the Court granted in part and denied in part the renewed motion to dismiss. In December 2021, several insurance companies and other payers filed individual “Opt-Out” complaints containing allegations similar to the original complaint. Discovery is ongoing.
In October 2019, Innovative Health, LLC filed a complaint against Biosense Webster, Inc. (BWI) in the United States District Court for the Middle District of California. The complaint alleges that certain of BWI’s business practices and contractual terms violate the antitrust laws of the United States and the State of California by restricting competition in the sale of High Density Mapping Catheters and Ultrasound Catheters. In January 2020, BWI filed a motion to dismiss the complaint. In August 2020,September 2022, the Court granted in part and denied in part BWI’splaintiff’s motion for class certification. Trial was scheduled for May 2023; in March 2023, the Court issued an order dividing the matter into two separate trials. The first trial, scheduled for May 2023, relates to dismiss. claims that do not involve Janssen. The court did not set a date for trial on the claims that do involve Janssen.
In December 2021, BWIJune 2022, Janssen Pharmaceuticals, Inc. filed a motionDemand for summary judgment.Arbitration against Emergent Biosolutions Inc. et al (EBSI) with the American Arbitration Association, alleging that EBSI breached the parties’ Manufacturing Services Agreement for the Company’s COVID-19 vaccine. In July 2022, Emergent filed its answering statement and counterclaims. The hearing is scheduled for March 2024.
In October 2022, Janssen Pharmaceuticals, Inc. filed a Demand for Arbitration against Merck Sharp & Dohme Corp. with the Court granted BWI’s motionAmerican Arbitration Association pursuant to the Parties’ agreements relating to production of drug substance and drug product for summary judgment.the Company’s COVID-19 vaccine. Also in October 2022, Merck filed its answer and counterclaims.The hearing is scheduled for September 2023.
Consumer Health
In November 2019, Johnson & Johnsonthe Company received a demand for indemnification from Pfizer Inc. (Pfizer), pursuant to the 2006 Stock and Asset Purchase Agreement between the Company and Pfizer. Also in November 2019, Johnson & Johnson Inc. received notice reserving rights to claim indemnification from Sanofi Consumer Health, Inc. (Sanofi), pursuant to the 2016 Asset Purchase Agreement between Johnson & Johnson Inc. and Sanofi. In January 2020, Johnson & Johnson received a demand for indemnification from Boehringer Ingelheim Pharmaceuticals, Inc. (Boehringer Ingelheim), pursuant to the 2006 Asset Purchase Agreement among the Company, Pfizer, and Boehringer Ingelheim. In November 2022, Johnson & Johnson received a demand for indemnification from GlaxoSmithKline LLC (GSK), pursuant to the 2006 Stock and Asset Purchase Agreement between the Company and Pfizer, and certain 1993, 1998, and 2002 agreements between Glaxo Wellcome and Warner-Lambert entities. The notices seek indemnification for legal claims related to over-the-counter ZANTAC (ranitidine) products. Plaintiffs in the underlying actions allege that ZANTAC and other over-the-counter ranitidine medications contain unsafe levels of NDMA (N-nitrosodimethylamine) and can cause and/or have caused various cancers in patients using the products, and seek injunctive and monetary relief. The Company and Johnson & Johnson Inc. have also been named in putative class actions filed in Canada with similar allegations regarding ZANTAC or ranitidine use. Johnson & Johnson Inc. was also named as a defendant along with other manufacturers in various personal injury actions in Canada related to ZANTAC products. Johnson & Johnson Inc. has provided Sanofi notice reserving rights to claim indemnification pursuant to the 2016 Asset Purchase Agreement related to the class actions and personal injury actions.
In October 2020, Fortis Advisors LLC (Fortis), in its capacity as representative of the former stockholders of Auris Health Inc. (Auris), filed a complaint against Johnson & Johnson, Ethicon Inc., and certain named officers and employees (collectively, Ethicon) in the Court of Chancery of the State of Delaware. The complaint alleges breach of contract, fraud, and other causes of action against Ethicon in connection with Ethicon’s acquisition of Auris in 2019. The complaint seeks damages and other relief. In December 2021, the Court granted in part and denied in part defendants’ motion to dismiss certain causes of action. All claims against the individual defendants were dismissed. The trial is scheduled for February 2023.
Beginning in May 2021, multiple putative class actions were filed in state and federal courts (California,(California, Florida, New York, and New Jersey) against various Johnson & Johnson entities alleging violations of state consumer fraud statutes based on nondisclosure of alleged benzene contamination of certain Neutrogena and Aveeno sunscreen products and the affirmative promotion of those products as “safe”; and, in at least one case, alleging astrict liability manufacturing defect and failure to warn claims, asserting that the named plaintiffs suffered unspecified injuries as a result of alleged exposure to benzene. The Judicial Panel on Multi-District Litigation has consolidated all pending actions, except one product liability case and one case pending in New Jersey state court, in the United States District Court for the Southern District of Florida, Fort Lauderdale Division. In October 2021, the Company reached an agreement in principle for the settlement of a nationwide class, encompassing the claims of the consolidated actions, subject to approval by the Florida federal Court. In March 2022,December 2021, plaintiffs in the Court grantedconsolidated actions filed a motion for preliminary approval of a nationwide class settlement. The court issued an order granting final approval of the settlement.settlement in February 2023. A Notice of Appeal was filed in April 2023.
Johnson & Johnson (subsequently substituted by Johnson & Johnson Consumer Inc. (JJCI)) along with more than 120 other companies, is a defendant in a cost recovery and contribution action brought by Occidental Chemical Corporation in June 2018 in the United States District Court for the District of New Jersey, related to the clean-up of a section of the Lower Passaic River in New Jersey.
Johnson & Johnson or its subsidiaries are also parties to various proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, and comparable state, local or foreign laws in which the primary relief sought is the cost of past and/or future remediation.
NOTE 12— RESTRUCTURING
In the fiscal second quarter of 2018 the Company announced plans to implement a series of actions across its Global Supply Chain that are intended to focus resources and increase investments in the critical capabilities, technologies and solutions necessary to manufacture and supply its product portfolio, enhance agility and drive growth. The Global Supply Chain actions will include expanding the use of strategic collaborations and bolstering initiatives to reduce complexity, improve cost-competitiveness, enhance capabilities and optimize the Supply Chain network. In the fiscal first quarter of 2022, the Company recorded a net pre-tax charge of $72 million, which is included on the following lines of the Consolidated Statement of Earnings, $70 million in restructuring, $16 million in cost of products sold and income of $14 million (from property sales) in other (income) expense, net. Total project costs of approximately $1.8 billion have been recorded since the restructuring was announced. See the following table for additional details on the restructuring program.
In total, the Company expects the Global Supply Chain actions to generate approximately $0.6 billion to $0.8 billion in annual pre-tax cost savings that will be substantially delivered by the end of 2022. The Company expects to record pre-tax restructuring charges of approximately $2.1 billion to $2.3 billion by the completion of the program in December 2022. These costs are associated with network optimizations, exit costs and accelerated depreciation and amortization.
The following table summarizes the severance related reserves and the associated restructuring expenses through the fiscal first quarter of 2022:
| | | | | | | | | | | | | | | | | |
| (Dollars in Millions) | Severance | Asset Write-offs/Sales | | Other(2) | Total |
| Reserve balance, January 2, 2022 | $ | 112 | | — | | | 25 | | 137 | |
| | | | | |
| Current year activity: | | | | | |
| Charges | — | | (23) | | | 95 | | 72 | |
| Cash settlements | (10) | | 35 | | (3) | | (107) | | (82) | |
| Settled non cash | — | | (12) | | | — | | (12) | |
| | | | | |
| | | | | |
Reserve balance, April 3, 2022(1) | $ | 102 | | — | | | 13 | | 115 | |
(1) Cash outlays for severance are expected to be substantially paid out by the completion of the program in December 2022.
(2) Other includes project expense such as salaries for employees supporting these initiatives and consulting expenses.
(3) Represents gain on sale of assets
The Company continuously reevaluates its severance reserves related to restructuring and the timing of payments due to the planned release of associates regarding several longer-term projects. The Company believes that the existing severance reserves are sufficient to cover the Global Supply Chain plans given the period over which the actions will take place. The Company will continue to assess and make adjustments as necessary if additional amounts become probable and estimable.
Item 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales to Customers
Analysis of Consolidated Sales
For the fiscal first quarter of 2022,2023, worldwide sales were $23.4$24.7 billion, a total increase of 5.0%5.6%, which included operational growth of 7.7%9.0% and a negative currency impact of 2.7%3.4% as compared to 20212022 fiscal first quarter sales of $22.3$23.4 billion. In the fiscal first quarter of 2022,2023, the net impact of acquisitions and divestitures on worldwide operational sales growth was a negative 0.2%positive 1.4%.
Sales by U.S. companies were $11.4$12.5 billion in the fiscal first quarter of 2022,2023, which represented an increase of 2.7%9.7% as compared to the prior year. In the fiscal first quarter of 2022,2023, the net impact of acquisitions and divestitures on the U.S. operational sales growth was a negative 0.1%positive 2.3%. Sales by international companies were $12.0$12.2 billion, a total increase of 7.2%1.8%, which included operational growth of 12.6%8.3% and a negative currency impact of 5.4%6.5%. In the fiscal first quarter of 2022,2023, the net impact of acquisitions and divestitures on the international operational sales growth was a negative 0.3%positive 0.4%.
In the fiscal first quarter of 2022,2023, sales by companies in Europe achieved growth of 11.3%5.1%, which included operational growth of 19.5%10.0% and a negative currency impact of 8.2%4.9%. Sales by companies in the Western Hemisphere, excluding the U.S., achieved growth of 4.1%7.1%, including operational growth of 5.1%14.3% and a negative currency impact of 1.0%7.2%. Sales by companies in the Asia-Pacific, Africa region achieved growth 3.1%experienced a decline of 4.3%, including operational growth of 6.6% and4.1% offset by a negative currency impact of 3.5%8.4%.
Note: values may have been rounded
Analysis of Sales by Business Segments
Consumer Health
Consumer Health segment sales in the fiscal first quarter of 20222023 were $3.6$3.9 billion, a decreasean increase of 1.5%7.4% as compared to the same period a year ago, including operational growth of 0.8% offset by11.3% and a negative currency impact of 2.3%3.9%. U.S. Consumer Health segment sales decreasedincreased by 3.4%11.4%. International Consumer Health segment sales were flatincreased by 4.4% including operational growth of 4.1%11.3% and a negative currency impact of 4.1%6.9%. In the fiscal first quarter of 2022,2023, the net impact of acquisitions and divestitures on the Consumer Health segment operational sales growth was a negative 0.8% primarily due to the DR. CI:LABO - Sedona divestiture in Asia Pacific.negligible.
Major Consumer Health Franchise Sales*Sales — Fiscal First Quarter Ended
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in Millions) | | April 3, 2022 | | April 4, 2021 | | Total
Change | | Operations
Change | | Currency
Change |
OTC(1) | | $ | 1,461 | | | $ | 1,273 | | | 14.8 | % | | 17.1 | % | | (2.3) | % |
| Skin Health/Beauty | | 1,012 | | | 1,163 | | | (13.0) | | | (11.0) | | | (2.0) | |
| Oral Care | | 366 | | | 417 | | | (12.2) | | | (10.2) | | | (2.0) | |
| Baby Care | | 355 | | | 389 | | | (8.6) | | | (6.4) | | | (2.2) | |
| Women’s Health | | 228 | | | 222 | | | 2.6 | | | 8.3 | | | (5.7) | |
| Wound Care/Other | | 164 | | | 177 | | | (7.4) | | | (7.2) | | | (0.2) | |
| Total Consumer Health Sales | | $ | 3,586 | | | $ | 3,641 | | | (1.5) | % | | 0.8 | % | | (2.3) | % |
*Certain prior year amounts have been reclassified to conform to current year presentation
(1)In the fiscal first quarter of 2021, approximately $0.1 billion of certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in Millions) | | April 2, 2023 | | April 3, 2022 | | Total
Change | | Operations
Change | | Currency
Change |
OTC(1) | | $ | 1,642 | | | $ | 1,461 | | | 12.4 | % | | 15.8 | % | | (3.4) | % |
| Skin Health/Beauty | | 1,110 | | | 1,012 | | | 9.7 | | | 13.1 | | | (3.4) | |
| Oral Care | | 361 | | | 366 | | | (1.3) | | | 2.1 | | | (3.4) | |
| Baby Care | | 359 | | | 355 | | | 1.0 | | | 6.5 | | | (5.5) | |
| Women’s Health | | 217 | | | 228 | | | (4.8) | | | 4.1 | | | (8.9) | |
| Wound Care/Other | | 164 | | | 164 | | | (0.1) | | | 2.5 | | | (2.6) | |
| Total Consumer Health Sales | | $ | 3,852 | | | $ | 3,586 | | | 7.4 | % | | 11.3 | % | | (3.9) | % |
The OTC franchise achieved operational growth of 17.1% as compared to the prior year fiscal first quarter. Growth was driven by upper respiratory products, TYLENOL and MOTRIN and IMODIUM and PEPCID products in digestive health.
The Skin Health/Beauty franchise experienced an operational decline of 11.0%15.8% as compared to the prior year fiscal first quarter. The declinegrowth was driven by externalprice actions, exceptionally high Cough/Cold/Flu incidences primarily in Europe, and one-time supply constraints, the DR. CI:LABO - Sedona divestiturereplenishment reflected in Asia PacificTYLENOL, MOTRIN, NICORETTE and competitive pressures. The decline was partially offset by U.S. category recovery and strength in the Latin America and Asia Pacific regions.IMODIUM.
The Oral CareSkin Health/Beauty franchise experienced anachieved operational declinegrowth of 10.2%13.1% as compared to the prior year fiscal first quarter. The declinegrowth was primarily driven by strategic SKU rationalizationprice actions, one-time supply replenishment and sun season pipeline fill, and e-commerce and club channel performance driven by new product innovations in theNEUTROGENA and AVEENO. The growth was partially offset by U.S. portfolio simplification and lapping prior year COVID-19 related increased demand outside the U.S.competitive pressures.
The BabyOral Care franchise experienced anachieved operational declinegrowth of 6.4%2.1% as compared to the prior year fiscal first quarter. The declinegrowth was driven by supply constraints inU.S. price actions, partially offset by category deceleration outside the U.S. and EMEA.the negative impact from suspension of personal care sales in Russia.
The Baby Care franchise achieved operational growth of 6.5% as compared to the prior year fiscal first quarter. The growth was driven by price actions, one-time supply replenishment and lapping of a prior year reserve true-up outside the U.S. The growth was partially offset by the negative impact from suspension of personal care sales in Russia.
The Women’s Health franchise achieved operational growth of 8.3%4.1% as compared to the prior year fiscal first quarter primarily driven by growthprice actions and strong performance in EMEA due to increased stocking and LATAM due to price increases.India partially offset by the negative impact from suspension of personal care sales in Russia.
The Wound Care/Other franchise experienced anachieved operational declinegrowth of 7.2%2.5% as compared to the prior year fiscal first quarter primarily driven by the professional tape divestiture along with comparison to prior year COVID-19 recovery for NEOSPORINprice actions and strong demand in the U.S. and BAND-AID® Brand Adhesive Bandages outside the U.S. This decline was partially offset by growth of U.S. BAND-AID® Brand Adhesive Bandages.Canada.
In November 2021, the Company announced its intention to separate the Company’s Consumer Health business (Kenvue as the name for the planned New Consumer Health Company), with the intention to create a new, publicly traded company. The Company is targeting completioncompany by the end of the planned separation in 18 to 24 months after the initial announcement.fiscal year 2023, pending market conditions.
Pharmaceutical
Pharmaceutical segment sales in the fiscal first quarter of 20222023 were $12.9$13.4 billion, an increase of 6.3%4.2% as compared to the same period a year ago, including an operational increase of 9.3%7.2% and a negative currency impact of 3.0%. U.S. Pharmaceutical sales increased 2.9%5.9% as compared to the same period a year ago. International Pharmaceutical sales increased by 10.3%2.4%, including operational growth of 16.7%8.6% and a negative currency impact of 6.4%6.2%. In the fiscal first quarter of 2022,2023, the net impact of acquisitions and divestitures on the Pharmaceutical segment operational sales growth was negligible. Adjustments to previous sales reserve estimates were negligible in the fiscal first quarter of 2022 and approximately $0.2 billion in the fiscal first quarter of 2021.
Major Pharmaceutical Therapeutic Area Sales** — Fiscal First Quarter Ended
| | (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | April 4, 2021 | | Total
Change | | Operations
Change | | Currency
Change | (Dollars in Millions) | | April 2, 2023 | | April 3, 2022 | | Total
Change | | Operations
Change | | Currency
Change |
| Immunology | Immunology | | $ | 4,119 | | | $ | 3,914 | | | 5.2 | % | | 7.5 | % | | (2.3) | % | Immunology | | $ | 4,112 | | | $ | 4,119 | | | (0.2) | % | | 2.5 | % | | (2.7) | % |
| REMICADE | REMICADE | | 663 | | | 777 | | | (14.7) | | | (14.2) | | | (0.5) | | REMICADE | | 487 | | | 663 | | | (26.5) | | | (25.0) | | | (1.5) | |
| SIMPONI/ SIMPONI ARIA | SIMPONI/ SIMPONI ARIA | | 571 | | | 562 | | | 1.5 | | | 4.7 | | | (3.2) | | SIMPONI/ SIMPONI ARIA | | 537 | | | 571 | | | (5.8) | | | (1.9) | | | (3.9) | |
| STELARA | STELARA | | 2,288 | | | 2,148 | | | 6.5 | | | 9.0 | | | (2.5) | | STELARA | | 2,444 | | | 2,288 | | | 6.8 | | | 9.6 | | | (2.8) | |
| TREMFYA | TREMFYA | | 590 | | | 418 | | | 41.3 | | | 44.5 | | | (3.2) | | TREMFYA | | 640 | | | 590 | | | 8.4 | | | 11.0 | | | (2.6) | |
| Other Immunology | Other Immunology | | 6 | | | 8 | | | (22.0) | | | (22.0) | | | 0.0 | Other Immunology | | 3 | | | 6 | | | (51.3) | | (51.3) | | 0.0 |
| Infectious Diseases | Infectious Diseases | | 1,297 | | | 998 | | | 30.0 | | | 33.1 | | | (3.1) | | Infectious Diseases | | 1,586 | | | 1,297 | | | 22.3 | | | 26.4 | | | (4.1) | |
| COVID-19 VACCINE | COVID-19 VACCINE | | 457 | | | 100 | | | * | | * | | * | COVID-19 VACCINE | | 747 | | | 457 | | | 63.4 | | | 70.8 | | | (7.4) | |
| EDURANT/rilpivirine | EDURANT/rilpivirine | | 248 | | | 243 | | | 1.8 | | | 9.6 | | | (7.8) | | EDURANT/rilpivirine | | 280 | | | 248 | | | 12.8 | | | 18.0 | | | (5.2) | |
PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA | PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA | | 501 | | | 546 | | | (8.3) | | | (6.9) | | | (1.4) | | PREZISTA/ PREZCOBIX/ REZOLSTA/ SYMTUZA | | 477 | | | 501 | | | (4.8) | | | (3.7) | | | (1.1) | |
Other Infectious Diseases(2) | Other Infectious Diseases(2) | | 91 | | | 108 | | | (15.3) | | | (11.0) | | | (4.3) | | Other Infectious Diseases(2) | | 82 | | | 91 | | | (9.8) | | | (8.0) | | | (1.8) | |
| Neuroscience | Neuroscience | | 1,741 | | | 1,715 | | | 1.5 | | | 5.0 | | | (3.5) | | Neuroscience | | 1,804 | | | 1,741 | | | 3.6 | | 6.1 | | | (2.5) | |
| CONCERTA/ methylphenidate | CONCERTA/ methylphenidate | | 157 | | | 171 | | | (8.3) | | | (4.8) | | | (3.5) | | CONCERTA/ methylphenidate | | 206 | | | 157 | | | 31.4 | | | 38.2 | | | (6.8) | |
INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA | INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA | | 1,048 | | | 965 | | | 8.6 | | | 11.3 | | | (2.7) | | INVEGA SUSTENNA/ XEPLION/ INVEGA TRINZA/ TREVICTA | | 1,044 | | | 1,048 | | | (0.4) | | | 1.7 | | | (2.1) | |
| RISPERDAL CONSTA | | 129 | | | 157 | | | (17.6) | | | (13.9) | | | (3.7) | | |
| SPRAVATO | | SPRAVATO | | 131 | | | 70 | | | 86.9 | | | 88.0 | | | (1.1) | |
Other Neuroscience(2)(1) | Other Neuroscience(2)(1) | | 408 | | | 422 | | | (3.5) | | | 1.7 | | | (5.2) | | Other Neuroscience(2)(1) | | 423 | | | 467 | | | (9.4) | | | (6.9) | | | (2.5) | |
| Oncology | Oncology | | 3,950 | | | 3,570 | | | 10.6 | | | 14.9 | | | (4.3) | | Oncology | | 4,112 | | | 3,950 | | | 4.1 | | | 7.7 | | | (3.6) | |
| CARVYKTI | | CARVYKTI | | 72 | | | — | | | * | | * | | — | |
| DARZALEX | DARZALEX | | 1,856 | | | 1,365 | | | 36.0 | | | 40.3 | | | (4.3) | | DARZALEX | | 2,264 | | | 1,856 | | | 22.0 | | | 25.7 | | | (3.7) | |
| ERLEADA | ERLEADA | | 400 | | | 261 | | | 53.0 | | | 57.5 | | | (4.5) | | ERLEADA | | 542 | | | 400 | | | 35.6 | | | 40.3 | | | (4.7) | |
| IMBRUVICA | IMBRUVICA | | 1,038 | | | 1,125 | | | (7.7) | | | (3.9) | | | (3.8) | | IMBRUVICA | | 827 | | | 1,038 | | | (20.3) | | | (17.2) | | | (3.1) | |
| ZYTIGA/ abiraterone acetate | ZYTIGA/ abiraterone acetate | | 539 | | | 638 | | | (15.6) | | | (10.1) | | | (5.5) | | ZYTIGA/ abiraterone acetate | | 245 | | | 539 | | | (54.5) | | | (50.9) | | | (3.6) | |
| Other Oncology | Other Oncology | | 118 | | | 182 | | | (35.1) | | | (32.3) | | | (2.8) | | Other Oncology | | 162 | | | 118 | | | 37.4 | | | 41.0 | | | (3.6) | |
| Pulmonary Hypertension | Pulmonary Hypertension | | 852 | | | 861 | | | (1.1) | | | 1.2 | | | (2.3) | | Pulmonary Hypertension | | 872 | | | 852 | | | 2.4 | | | 5.0 | | | (2.6) | |
| OPSUMIT | OPSUMIT | | 443 | | | 450 | | | (1.6) | | | 1.1 | | | (2.7) | | OPSUMIT | | 440 | | | 443 | | | (0.7) | | | 2.3 | | | (3.0) | |
| UPTRAVI | UPTRAVI | | 325 | | | 305 | | | 6.5 | | | 7.7 | | | (1.2) | | UPTRAVI | | 362 | | | 325 | | | 11.4 | | | 12.4 | | | (1.0) | |
| Other Pulmonary Hypertension | Other Pulmonary Hypertension | | 83 | | | 105 | | | (20.8) | | | (16.8) | | | (4.0) | | Other Pulmonary Hypertension | | 70 | | | 83 | | | (16.1) | | | (9.3) | | | (6.8) | |
| Cardiovascular / Metabolism / Other | Cardiovascular / Metabolism / Other | | 910 | | | 1,044 | | | (12.8) | | | (11.9) | | | (0.9) | | Cardiovascular / Metabolism / Other | | 927 | | | 910 | | | 1.8 | | | 3.0 | | | (1.2) | |
| XARELTO | XARELTO | | 508 | | | 589 | | | (13.8) | | | (13.8) | | | — | | XARELTO | | 578 | | | 508 | | | 13.7 | | | 13.7 | | | — | |
| INVOKANA/ INVOKAMET | | 128 | | | 150 | | | (14.6) | | | (13.1) | | | (1.5) | | |
Other(1,2) | | 274 | | | 305 | | | (10.0) | | | (7.5) | | | (2.5) | | |
| Other(2) | | Other(2) | | 349 | | | 402 | | | (13.2) | | | (10.5) | | | (2.7) | |
| Total Pharmaceutical Sales | Total Pharmaceutical Sales | | $ | 12,869 | | | $ | 12,101 | | | 6.3 | % | | 9.3 | % | | (3.0) | % | Total Pharmaceutical Sales | | $ | 13,413 | | | $ | 12,869 | | | 4.2 | % | | 7.2 | % | | (3.0) | % |
* Percentage greater than 100% or not meaningful
**Certain prior year amounts have been reclassified to conform to current year presentation
(1)Inclusive of PROCRIT / EPREXRISPERDAL CONSTA which was previously disclosed separately
(2)In the fiscal first quarterInclusive of 2021, approximately $0.1 billion of certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changesINVOKANA which was previously disclosed separately
Immunology products achieved operational growth of 7.5%2.5% as compared to the same period a year ago driven by continued strong uptakemarket growth and share growth of STELARA (ustekinumab) in Crohn'sCrohn’s disease and Ulcerative Colitis partially offset by unfavorable patient mix and price. Additionally, strong growth of TREMFYA(guselkumab) was due to share declinesgains in Psoriasis and Psoriatic Arthritis and strength of TREMFYA(guselkumab) in Psoriasis and uptake in Psoriatic Arthritis. This was partially offset by lowerunfavorable patient mix. Lower sales of REMICADE (infliximab) were due to biosimilar competition.
Biosimilar versions of REMICADE have been introduced in the United States and certain markets outside the United States and additional competitors continue to enter the market. Continued infliximab biosimilar competition will result in a further reduction in sales of REMICADE.
The latest expiring United States composition of matter patent for STELARA (ustekinumab) will expireexpires in September 2023. STELARA (ustekinumab) U.S. sales in fiscal 20212022 were approximately $5.9$6.4 billion. The expirationThird parties have filed abbreviated Biologics License Applications with the FDA seeking approval to market biosimilar versions of STELARA. In the event the Company is not successful in defending its patent claims in related lawsuits, biosimilar versions of STELARA may be introduced to the market, potentially resulting in substantial market share and revenue losses. There is also risk that one or more competitors could launch a biosimilar version of the product patentat issue following regulatory approval even though one or loss of market exclusivity is likely to resultmore valid patents are in a reduction in sales.place.
Infectious disease products achieved operational growth of 33.1%26.4% as compared to the same period a year ago. Growth was primarily driven by the contribution of the COVID-19 vaccine.vaccine revenue (which is now substantially complete) and EDURANT (rilpivirine) sales. This was partially offset by lower sales of PREZISTA and PREZCOBIX/REZOLSTA (darunavir/cobicistat) due to increased competition and loss of exclusivity of PREZISTAin certain countries outside the U.S.
Neuroscience products achieved operational sales growth of 6.1% as compared to the same period a year ago. Growth of SPRAVATO (esketamine) was driven by ongoing launches in the U.S. and Europe as well as increased patient demand. Paliperidone long-acting injectables growth was due to the strength of INVEGA SUSTENNA/XEPLION (paliperidone palmitate) and INVEGA TRINZA/TREVICTA driven by new patient starts and persistence of treatment as well as the launch of INVEGA HAFYERA/BYANNLI. This was partially offset by the XEPLION loss of exclusivity in the European Union.
Oncology products achieved operational sales growth of 7.7% as compared to the same period a year ago. Strong sales of DARZALEX (daratumumab) were driven by share gains in all regions, continued market growth, and strong FASPRO adoption. Growth of ERLEADA (apalutamide) was due to continued strong share gains, market growth, and increased penetration from new launches. Sales of CARVYKTI (ciltacabtagene autoleucel) were driven by continued market share gains and the ongoing phased launch. Growth was partially offset by ZYTIGA (abiraterone acetate) due to loss of exclusivity and IMBRUVICA (ibrutinib) due to global competitive pressures.
Pulmonary Hypertension achieved operational sales growth of 5.0% as compared to the same period a year ago. Growth of Paliperidone long-acting injectables INVEGA SUSTENNA/XEPLION (paliperidone palmitate) and INVEGA TRINZA/TREVICTASales growth was due to patient mix, new patient startsmarket and persistence of treatment as well as the launch of INVEGA HAFYERA.
Oncology products achieved operational salesvolume growth of 14.9% as compared to the same period a year ago. Contributors to the growth were strong sales of DARZALEX (daratumumab) driven by share gains in all regions, continued strong market growth, and solid uptake of the subcutaneous formulation; the continued global launch uptake of ERLEADA (apalutamide) and IMBRUVICA (ibrutinib) growth in all regions outside the U.S. In the U.S. IMBRUVICA (ibrutinib) declined due to competitive pressures from novel oral agents.
Pulmonary Hypertension achieved operational sales growth of 1.2% as compared to the same period a year ago. Sales growth of OPSUMIT (macitentan) and UPTRAVI (selexipag) were due to demand and share gainsOPSUMIT (macitentan) partially offset by COVID-19 related market constraints as well as entrantsdeclines in Other Pulmonary Hypertension.
Cardiovascular / Metabolism / Other products experienced anachieved operational declinegrowth of 11.9%3.0% as compared to the same period a year ago. The declinegrowth of XARELTO (rivaroxaban) was primarily attributable to lower sales of XARELTO due to a one-timedriven by favorable prior period pricing adjustment in the fiscal first quarter of 2021patient mix and INVOKANA/INVOKAMET (canagliflozin) due to continuedmarket growth partially offset by share erosion.loss.
Starting in the second quarter of fiscal 2022, theThe Company updated itsmaintains a policy so that no end customer will be permitted to direct delivery of product to a location other than the billing location. The updatedThis policy will impactimpacts contract pharmacy transactions involving non-grantee 340B covered entities for most of the Company’s drugs, subject to multiple exceptions. Both grantee and non-grantee covered entities can maintain unlimitedcertain contract pharmacy arrangements under policy exceptions. The Company has been and will continue to offer 340B discounts to covered entities on all of its covered outpatient drugs, and it believes its policy will improve its ability to identify inappropriate duplicate discounts and diversion prohibited by the 340B statute. The 340B Drug Pricing Program is a U.S. federal government program requiring drug manufacturers to provide significant discounts on covered outpatient drugs to covered entities. This policy update could have potentialhad discount and volume implications going forward.
MedTech*MedTech
The MedTech segment sales in the fiscal first quarter of 20222023 were $7.0$7.5 billion, an increase of 5.9%7.3% as compared to the same period a year ago, which included operational growth of 8.5%11.0% and a negative currency impact of 2.6%3.7%. U.S. MedTech sales increased 5.6%16.6%. International MedTech sales increaseddecreased by 6.3%0.6%, including operational growth of 11.1% and6.2% offset by a negative currency impact of 4.8%6.8%. In the fiscal first quarter of 2022,2023, the net impact of acquisitions and divestitures on the MedTech segment operational sales growth was a negative 0.1%.positive 4.6%, related to the Abiomed acquisition.
Major MedTech Franchise SalesSales** — Fiscal First Quarter Ended
| | (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | April 4, 2021 | | Total
Change | | Operations
Change | | Currency
Change | (Dollars in Millions) | | April 2, 2023 | | April 3, 2022 | | Total
Change | | Operations
Change | | Currency
Change |
| Surgery | Surgery | | $ | 2,434 | | | $ | 2,372 | | | 2.6 | % | | 5.0 | % | | (2.4) | % | Surgery | | $ | 2,434 | | | $ | 2,434 | | | 0.0 | % | | 4.1 | % | | (4.1) | % |
| Advanced | Advanced | | 1,146 | | | 1,118 | | | 2.5 | | | 4.5 | | | (2.0) | | Advanced | | 1,118 | | | 1,146 | | | (2.5) | | | 1.6 | | | (4.1) | |
| General | General | | 1,288 | | | 1,254 | | | 2.7 | | | 5.5 | | | (2.8) | | General | | 1,316 | | | 1,288 | | | 2.2 | | | 6.4 | | | (4.2) | |
| Orthopaedics | Orthopaedics | | 2,188 | | | 2,113 | | | 3.5 | | | 5.6 | | | (2.1) | | Orthopaedics | | 2,245 | | | 2,188 | | | 2.6 | | | 5.1 | | | (2.5) | |
| Hips | Hips | | 389 | | | 356 | | | 9.3 | | | 11.3 | | | (2.0) | | Hips | | 390 | | | 389 | | | 0.4 | | | 2.7 | | | (2.3) | |
| Knees | Knees | | 339 | | | 317 | | | 6.7 | | | 8.8 | | | (2.1) | | Knees | | 368 | | | 339 | | | 8.7 | | | 11.3 | | | (2.6) | |
| Trauma | Trauma | | 748 | | | 733 | | | 2.1 | | | 4.2 | | | (2.1) | | Trauma | | 757 | | | 748 | | | 1.2 | | | 3.4 | | | (2.2) | |
| Spine, Sports & Other | Spine, Sports & Other | | 712 | | | 707 | | | 0.6 | | | 2.7 | | | (2.1) | | Spine, Sports & Other | | 729 | | | 712 | | | 2.4 | | | 5.2 | | | (2.8) | |
| Interventional Solutions | | Interventional Solutions | | 1,503 | | | 1,092 | | | 37.6 | | | 41.9 | | | (4.3) | |
| Electrophysiology | | Electrophysiology | | 1,092 | | | 1,002 | | | 9.1 | | | 13.3 | | | (4.2) | |
Abiomed | | Abiomed | | 324 | | | — | | | * | | * | | — | |
Other Interventional Solutions | | Other Interventional Solutions | | 87 | | | 90 | | | (3.9) | | | 1.1 | | | (5.0) | |
| Vision | Vision | | 1,257 | | | 1,145 | | | 9.8 | | | 13.9 | | | (4.1) | | Vision | | 1,300 | | | 1,257 | | | 3.4 | | | 7.6 | | | (4.2) | |
| Contact Lenses/Other | Contact Lenses/Other | | 910 | | | 857 | | | 6.2 | | | 10.6 | | | (4.4) | | Contact Lenses/Other | | 953 | | | 910 | | | 4.7 | | | 9.3 | | | (4.6) | |
| Surgical | Surgical | | 347 | | | 288 | | | 20.4 | | | 23.8 | | | (3.4) | | Surgical | | 347 | | | 347 | | | 0.1 | | | 3.1 | | | (3.0) | |
| Interventional Solutions | | 1,092 | | | 949 | | | 15.1 | | | 17.4 | | | (2.3) | | |
| | Total MedTech Sales | Total MedTech Sales | | $ | 6,971 | | | $ | 6,579 | | | 5.9 | % | | 8.5 | % | | (2.6) | % | Total MedTech Sales | | $ | 7,481 | | | $ | 6,971 | | | 7.3 | % | | 11.0 | % | | (3.7) | % |
*Previously referred Percentage greater than 100% or not meaningful
**Certain prior year amounts have been reclassified to as Medical Devicesconform to current year presentation
The Surgery franchise achieved operational sales growth of 5.0%4.1% as compared to the prior year fiscal first quarter. The operational growth in Advanced Surgery was primarily driven by Endocutterthe following: Biosurgery global procedure recovery, the strength from new products and Biosurgerya differentiated portfolio; and Energy products attributable to market recovery, market expansion and the success of new products. Growth of Endocutter products was offset by COVID-19 market slow down in the Asia Pacific region and competitive pressuresdouble digit growth in the U.S. Energywith improved procedure volumes and strength of new products growth was flat to the prior year fiscal first quarter with market recovery and new product penetration mostlypartially offset by COVID-19 market slow downsvolume-based procurement in Asia Pacific.China and product supply challenges; partially offset by Endocutter decline primarily due to volume-based procurement in China, competitive pressures predominately in the U.S. and supply challenges partially offset by positive uptake from recently launched products. The operational growth in General Surgery was primarily driven by market recovery, strength of the Suture portfolio,improved procedure volumes coupled with technology penetration and technology penetration.benefits from differentiated Wound Closure portfolio.
The Orthopaedics franchise achieved operational sales growth of 5.6%5.1% as compared to the prior year fiscal first quarter. The operational growth in hips reflects global procedure recovery and strength across the market recovery, continued strengthportfolio. This was partially offset by impacts of the portfolio including the ACTIS stemvolume-based procurement in China and enabling technologies – KINCISE and VELYS Hip Navigation and momentum in the U.S. Ambulatory Surgery Center channel.supply challenges. The operational growth in knees was primarily driven by marketglobal procedure recovery, strength of the ATTUNE portfolio and uptakepull through related to the VELYS Robotic assisted solution. This was partially offset by impacts of new products and momentumvolume-based procurement in the U.S. Ambulatory Surgery Center channel.China. The operational growth in Trauma was driven by global market recoverythe adoption of recently launched products. This was partially offset by softer procedure volumes compared to the prior year and uptakeimpacts of new products.volume-based procurement in China. The operational growth in Spine, Sports & Other was primarily driven by recovery across most specialties,market growth and positive new productsproduct performance in Sports, Spine & VELYS Digital Solutions, shoulders and a prior year China distribution channel change. Growthspine. This was partially offset by market softnessimpacts of volume-based procurement in China and continued competitive pressures in Spine.
The Interventional Solutions franchise achieved operational sales growth of 41.9% as compared to the prior year fiscal first quarter which includes sales from Abiomed acquired on December 22, 2022. Electrophysiology grew by double digits in all regions except Asia Pacific which reflects the impacts of COVID-19 procedure disruption and volume-based procurement in China.
The Vision franchise achieved operational sales growth of 13.9%7.6% as compared to the prior year fiscal first quarter. The Contact Lenses/Other operational growth was due toprimarily driven by the market recovery, new productscontinued strong performance in the ACUVUE OASYS 1-Day family (including recent launches) and the U.S. benefit related to a current year forward buy ahead of a list price increase. The growtheffective commercial execution. This was partially offset by the negative impact from prior year stocking.supply challenges. The Surgical operational growth was primarily due to market recovery and uptake of recently launched products.
The Interventional Solutions franchise achieved operational sales growth of 17.4% as compared to the prior year fiscal first quarter driven by the market recovery, success of new productsstrength in Monofocal IOLs partially offset by softer refractive and commercial strategies.premium IOL markets and supply challenges.
ANALYSIS OF CONSOLIDATED EARNINGS BEFORE PROVISION FOR TAXES ON INCOME
Consolidated earningsearnings/loss before provision for taxes on income for the fiscal first quarter of 20222023 was $5.9a loss of $0.7 billion representing 25.0%(3.0)% of sales as compared to $7.4earnings of $5.9 billion in the fiscal first quarter of 2021,2022, representing 33.3%25.0% of sales.sales primarily driven by the $6.9 billion charge related to the talc settlement proposal.
Cost of Products Sold
(Dollars in billions. Percentages in chart are as a percent to total sales)
Q1 20222023 versus Q1 20212022
Cost of products sold increased as a percent to sales primarily driven by:
•Unfavorable volume/one-time COVID-19 vaccine manufacturing related exit costs and mix in the MedTech segmentPharmaceutical business
•Commodity inflation and Abiomed amortization in the Consumer Health segmentMedTech business
The intangible asset amortization expense included in cost of products sold for the fiscal first quarters of 2023 and 2022 and 2021 was $1.1$1.2 billion and $1.2$1.1 billion, respectively.
Selling, Marketing and Administrative Expenses
(Dollars in billions. Percentages in chart are as a percent to total sales)
Q1 2022 versus Q1 2021
Selling, Marketing and Administrative Expenses increased as a percent to sales driven by:
•Higher brand marketing expenses in the Pharmaceutical and Consumer Health businesses
Research and Development Expense
(Dollars in billions. Percentages in chart are as a percent to total sales)
Q1 20222023 versus Q1 20212022
Selling, Marketing and Administrative Expenses decreased as a percent to sales primarily driven by:
•A reduction in brand marketing expenses in the Pharmaceutical business
Research and Development increasedExpense
(Dollars in billions. Percentages in chart are as a percent to total sales)
Q1 2023 versus Q1 2022
Research and Development decreased as a percent to sales driven by:
•General a reduction in COVID-19 Vaccine related expenses
partially offset by
•portfolio progression in the Pharmaceutical business
In-Process Research and Development (IPR&D)
In the fiscal first quarter of 2023, the Company recorded a charge of approximately $0.1 billion associated with the IPR&D acquired with Pulsar Vascular in 2016. In the fiscal first quarter of 2022, the Company recorded an intangible asset impairment charge of approximately $0.6 billion related to an in-process research and development asset, bermekimab (JnJ-77474462), an investigational drug for the treatment of Atopic Dermatitis (AD) and Hidradenitis Suppurativa (HS). Additional information regarding efficacy of the AD indication became available which led the Company to the decision to terminate the development of bermekimab for AD. The Company acquired all rights to bermekimab from XBiotech, Inc. in the fiscal year 2020.
Interest (Income) Expense
Interest (Income) Expenseincome in the fiscal first quarter of 2023 was $235 million as compared to $22 million in the fiscal first quarter of 2022 primarily due to higher rates of interest earned on cash balances. Interest expense in the fiscal first quarter of 2023 was a net interest income of $12$215 million as compared to interest expense of $48$10 million in the same period a year ago primarily due to the benefit from net investment hedging, a higher average cashdebt balance and a lower average debt balance.at higher interest rates. The balance of cash, cash equivalents, restricted cash and current marketable securities was $32.3 billion ($24.6 billion unrestricted and $7.7 billion restricted) at the end of the fiscal first quarter of 2023 as compared to $30.4 billion at the end of the fiscal first quarter of 2022 as compared to $24.6 billion at the end of the fiscal first quarter of 2021.2022. The Company’s debt position was $33.1$52.9 billion ($7.7 billion related to Kenvue debt) as of April 3, 20222, 2023, as compared to $33.6$33.1 billion the same period a year ago.
Other (Income) Expense, Net*
Q1 20222023 versus Q1 20212022
Other (income) expense, net for the fiscal first quarter of 20222023 was unfavorable by $0.8$7.3 billion as compared to the prior year primarily due to the following:
| | Fiscal First Quarter | Fiscal First Quarter | | Fiscal First Quarter | |
| (Dollars in Billions)(Income)/Expense | (Dollars in Billions)(Income)/Expense | | 2022 | | 2021 | | Change | (Dollars in Billions)(Income)/Expense | | 2023 | | 2022 | | Change |
Litigation related(1) | | Litigation related(1) | | $ | 6.9 | | | 0.0 | | | 6.9 | |
| | Consumer Health separation costs | | Consumer Health separation costs | | 0.3 | | | 0.1 | | | 0.2 | |
| COVID-19 Vaccine related exit costs | | COVID-19 Vaccine related exit costs | | 0.2 | | | 0.0 | | | 0.2 | |
| Changes in the fair value of securities | Changes in the fair value of securities | | $ | 0.4 | | | 0.0 | | | 0.4 | | Changes in the fair value of securities | | 0.1 | | | 0.4 | | | (0.3) | |
Acquisition, integration and divestiture related(1) | | 0.0 | | | (0.5) | | | 0.5 | | |
| Consumer Health separation costs | | 0.1 | | | 0.0 | | | 0.1 | | |
| Employee benefit plan related | Employee benefit plan related | | (0.3) | | | (0.2) | | | (0.1) | | Employee benefit plan related | | (0.4) | | | (0.3) | | | (0.1) | |
| Other | Other | | (0.3) | | | (0.2) | | | (0.1) | | Other | | 0.1 | | | (0.3) | | | 0.4 | |
| | Total Other (Income) Expense, Net | Total Other (Income) Expense, Net | | $ | (0.1) | | | $ | (0.9) | | | $ | 0.8 | | Total Other (Income) Expense, Net | | $ | 7.2 | | | (0.1) | | | 7.3 | |
(1) Primarily relatedRelated to divestiture gainsthe talc settlement proposal
Table of two pharmaceutical brands outside the U.S. in the fiscal first quarter of 2021.Content
*Other (income) expense, net is the account where the Company records gains and losses related to the sale and write-down of certain investments in equity securities held by Johnson & Johnson Innovation - JJDC, Inc. (JJDC), changes in the fair value of securities, gains and losses on divestitures, gains and losses on sale of assets, certain transactional currency gains and losses, acquisition-related costs, litigation accruals and settlements, investment (income)/loss related to employee benefit plans, as well as royalty income.
EARNINGS BEFORE PROVISION FOR TAXES BY SEGMENT
Income (loss) before tax by segment of business for the fiscal first quarters were as follows:
| | | | | Income Before Tax | | Segment Sales | | Percent of Segment Sales | | | Income Before Tax | | Segment Sales | | Percent of Segment Sales |
| (Dollars in Millions) | (Dollars in Millions) | | April 3, 2022 | | April 4, 2021 | | April 3, 2022 | | April 4, 2021 | | April 3, 2022 | | April 4, 2021 | (Dollars in Millions) | | April 2, 2023 | | April 3, 2022 | | April 2, 2023 | | April 3, 2022 | | April 2, 2023 | | April 3, 2022 |
| Consumer Health | Consumer Health | | $ | 686 | | | $ | 842 | | | $ | 3,586 | | | $ | 3,641 | | | 19.1 | % | | 23.1 | % | Consumer Health | | $ | 776 | | | $ | 686 | | | $ | 3,852 | | | $ | 3,586 | | | 20.1 | % | | 19.1 | % |
| Pharmaceutical | Pharmaceutical | | 3,924 | | | 5,169 | | | 12,869 | | | 12,101 | | | 30.5 | | | 42.7 | | Pharmaceutical | | 4,444 | | | 3,924 | | | 13,413 | | | 12,869 | | | 33.1 | | | 30.5 | |
| MedTech | MedTech | | 1,477 | | | 1,629 | | | 6,971 | | | 6,579 | | | 21.2 | | | 24.8 | | MedTech | | 1,445 | | | 1,477 | | | 7,481 | | | 6,971 | | | 19.3 | | | 21.2 | |
| Segment earnings before tax | Segment earnings before tax | | 6,087 | | | 7,640 | | | 23,426 | | | 22,321 | | | 26.0 | | | 34.2 | | Segment earnings before tax | | 6,665 | | | 6,087 | | | 24,746 | | | 23,426 | | | 26.9 | | | 26.0 | |
Less: Expenses not allocated to segments (1) | Less: Expenses not allocated to segments (1) | | 123 | | | 211 | | | | | | Less: Expenses not allocated to segments(1) | | 7,102 | | | 123 | | | | | |
| Less: Consumer Health separation costs | Less: Consumer Health separation costs | | 102 | | | — | | | Less: Consumer Health separation costs | | 300 | | | 102 | | |
| Worldwide income before tax | | $ | 5,862 | | | $ | 7,429 | | | $ | 23,426 | | | $ | 22,321 | | | 25.0 | % | | 33.3 | % | |
| Worldwide income/(loss) before tax | | Worldwide income/(loss) before tax | | $ | (737) | | | $ | 5,862 | | | $ | 24,746 | | | $ | 23,426 | | | (3.0) | % | | 25.0 | % |
(1)Amounts not allocated to segments include interest (income) expense and general corporate (income) expense. The fiscal first quarter of 2023 includes the incremental $6.9 billion charge related to the talc settlement proposal.
Consumer Health Segment
The Consumer Health segment income/(loss)income before tax as a percent of sales in the fiscal first quarter of 20222023 was 19.1%20.1% versus 23.1%19.1% for the same period a year ago. The decreaseincrease in the income before tax as a percent of sales in the fiscal first quarter of 20222023 as compared to the prior year was primarily driven by the following:
•An increase in brand marketing expensespricing actions
partially offset by
•Commoditycommodity inflation
Pharmaceutical Segment
The Pharmaceutical segment income before tax as a percent of sales in the fiscal first quarter of 20222023 was 30.5%33.1% versus 42.7%30.5% for the same period a year ago. The decreaseincrease in the income before tax as a percent of sales for the fiscal first quarter of 2021 as compared to the prior year was primarily driven by the following:
•An IPR&D charge of $0.6 billion in 2022 related to bermekimab (JnJ-77474462), an investigational drug for the treatment of AD and Hidradenitis Suppurativa (HS)
•Divestiture gains of $0.6 billion in 2021.
•Net mark-to-market loss related to the changeUnfavorable changes in the fair value of securities ($0.4 billion in 2022 vs. $0.0of $0.4 billion in 2021)
•Increased Research & Development investment for general portfolio progressionLeveraging in selling and marketing expenses
partially offset by
•COVID-19 Vaccine related exit costs of $0.4 billion in 2023
•Higher brand marketing expensesRestructuring charges of $0.1 billion in 2023
•Unfavorable product mix
MedTech Segment
The MedTech segment income before tax as a percent of sales in the fiscal first quarter of 20222023 was 21.2%19.3% versus 24.8%21.2% for the same period a year ago. The decrease in the income before tax as a percent of sales for the fiscal first quarter was primarily driven by the following:
•Product mix withinHigher amortization expense of $0.1 billion in 2023 related to Abiomed
•An IPR&D charge in 2023 of approximately $0.1 billion related to the MedTech franchisesPulsar Vascular acquisition
•Acquisition costs related to Abiomed
•Commodity inflation in 2023
partially offset by
•No Restructuring charges in 2023 versus $0.1 billion in 2022
•Proactive management of costs
Restructuring
In the fiscal secondfirst quarter of 2018,2023, the Company announced plans to implement actions acrosscompleted a prioritization of its Global Supply Chain that are intended to enableresearch and development (R&D) investment within the CompanyPharmaceutical segment to focus resourceson the most promising medicines with the greatest benefit to patients. This resulted in the exit of certain programs including the discontinuation of its respiratory syncytial virus (RSV) adult vaccine program, HIV and increase investments in critical capabilities, technologies and solutions necessary to manufacture and supply its product portfoliohepatitis. The pre-tax restructuring charge of the future, enhance agility and drive growth. The Company expects these supply chain actions will include expanding its use of strategic collaborations, and bolstering its initiatives to reduce complexity, improving cost-competitiveness, enhancing capabilities and optimizing its network. Discussions regarding specific future actions are ongoing and are subject to all relevant consultation requirements before they are finalized. In total, the Company expects these actions to generate approximately $0.6 to $0.8$0.1 billion in annual pre-tax cost savings that will be substantially delivered by the endfiscal first quarter of 2022. The Company expects to record pre-tax restructuring charges2023 includes the termination of approximately $2.1 to $2.3 billion by the completion of thepartnered and non-partnered program in December 2022.costs and asset impairments. In the fiscal first quarter of 2022, the Company recorded a net pre-tax charge of $72 million, which is included on$0.1 billion related to a restructuring program of its Global Supply Chain. The Global Supply Chain program was announced in the following linessecond quarter of the Consolidated Statement of Earnings, $70 million2018 and was completed in restructuring, $16 million in cost of products sold and income of $14 million (from property sales) in other (income) expense, net. In the fiscal firstfourth quarter of 2021, the Company recorded a pre-tax charge of $104 million, which is included on the following lines of the Consolidated Statement of Earnings, $53 million in restructuring, $27 million in cost of products sold and $24 million in other (income) expense, net. Restructuring charges of approximately $1.8 billion have been recorded since the restructuring was announced.
See Note 12 to the Consolidated Financial Statements for additional details related to the restructuring.2022.
Provision for Taxes on Income
The worldwide effective income tax rate for the first fiscal three months of 2023 was 90.8% in 2023 and 12.2% in 2022.
On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and 16.6%Development (OECD) Pillar Two Framework that was supported by over 130 countries worldwide. The EU effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. A significant number of other countries are also implementing similar legislation. The Company is continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries, including those within the European Union.
Subsequent to April 2, 2023, as part of the planned separation of the Company’s Consumer Health business the Company anticipates the recognition of approximately $0.5 billion in 2021.incremental international tax costs due to the reorganization of certain international subsidiaries in the fiscal second quarter of 2023. During the fiscal year 2022,2023, the Company is expected to incur significant additional international tax costs related to the legal separation of the Consumer Health businesses.business.
For discussion related to the fiscal first quarter of 20222023 provision for taxes refer to Note 5 to the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash, and cash equivalents and restricted cash were $10.5$26.9 billion at the end of the fiscal first quarter of 20222023 as compared with $14.5$14.1 billion at the end of fiscal year 2021.2022. The primary sources and uses of cash that contributed to the $4.0$12.8 billion decreaseincrease were:
| | | | | |
| (Dollars In Billions) | |
| $ | 14.514.1 | | Q4 20212022 Cash and cash equivalents balance |
4.03.3 | | net cash generated from operating activities |
(3.6)3.3 | | net cash used bygenerated from investing activities |
(4.4)6.1 | | net cash used bygenerated from financing activities |
| 0.1 | | rounding |
| |
| |
| $ | 10.526.9 | | Q1 20222023 Cash, and cash equivalents and restricted cash balance |
In addition, the Company had $19.9$5.4 billion in marketable securities at the end of the fiscal first quarter of 20222023 and $17.1$9.4 billion at the end of fiscal year 2021.2022.
Cash flow from operations of $4.0$3.3 billion was the result of:
| | | | | |
| (Dollars In Billions) | |
| $ | 5.1 (0.1) | | Net EarningsLoss |
1.61.1 | | non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation, asset write-downs and credit losses and accounts receivable allowances partially offset by the deferred tax provision and net gain on sale of assets/businesses |
| |
(1.0)(0.6) | | an increase in accounts receivable and inventories |
| |
(2.8)(2.6) | | a decrease in accounts payable and accrued liabilities |
1.0 (0.9) | | a decreasean increase in other current and non-current assets |
0.16.3 | | an increase in other current and non-current liabilities |
| 0.1 | | Rounding |
| $ | 4.03.3 | | Cash Flow from operations |
InvestingCash flow from investing activities use of $3.6$3.3 billion of cash was primarily used for:from:
| | | | | |
| (Dollars In Billions) | |
| (0.9) | | additions to property, plant and equipment |
| |
| |
| 4.0 | | net sales of investments |
| 0.2 | | credit support agreements activity, net |
| |
| |
| $ | 3.3 | | Net cash from investing activities |
Cash flow from financing activities of $6.1 billion was primarily from:
| | | | | |
| (Dollars In Billions) | |
| $ | (0.6) | | additions to property, plant and equipment |
0.2 | | proceeds from the disposal of assets/businesses, net |
(0.3) | | acquisitions, net of cash acquired and other |
(2.7) | | net purchases of investments |
| |
(0.2) | | credit support agreements activity, net |
| |
$ | (3.6) | | Net cash used for investing activities |
Financing activities use of $4.4 billion of cash was primarily used for:
| | | | | |
(Dollars In Billions) | |
$ | (2.8)(2.9) | | dividends to shareholders |
(1.6)(3.5) | | repurchase of common stock |
0.05.2 | net proceeds from short term debt and repayment of short and long term debt |
0.37.7 | | proceeds from stock options exercised/employee withholding tax on stock awards,Kenvue long term debt, net of issuance cost |
(0.2) | |
credit support agreements activity, net | |
(0.1)$ | (0.4) | | other and rounding |
| $ | (4.4)6.1 | | Net cash used forfrom financing activities |
The Company has access to substantial sources of funds at numerous banks worldwide. In September 2021,2022, the Company secured a new 364-day Credit Facility. Total credit available to the Company approximatesFacility of $10 billion, which expires on September 8, 2022.7, 2023. In November 2022, the Company secured an additional 364-day revolving Credit Facility of $10 billion, which has an expiration of November 21, 2023. Interest charged on borrowings under the credit line agreement is based on either Term Secured Overnight Financing Rate (SOFR) Reference Rate or other applicable market ratesrate as allowed under the terms of the agreement, plus applicable margins. Commitment fees under the agreement are not material.
In March 2023, Kenvue, a wholly owned subsidiary of the Company, priced an offering of senior unsecured notes in an aggregate principal amount of $7.75 billion (See Note 4 to the Consolidated Financial Statements for additional details). The senior unsecured notes (the Notes) will be senior unsecured obligations of Kenvue and will initially be fully and unconditionally guaranteed (the Guarantees) on a senior unsecured basis by the Company. The Guarantees will terminate upon (1) the completion in all material respects of the transfer of the assets and liabilities of Johnson & Johnson’s Consumer Health Business to Kenvue and (2) Kenvue having registered equity securities. The Notes were issued in connection with Johnson & Johnson’s separation of its Consumer Health Business. Kenvue intends to use the proceeds from the offering of the Notes as partial consideration to Johnson & Johnson for the Consumer Health Business that Johnson & Johnson will transfer to Kenvue. The proceeds of the Notes offering were placed in a segregated escrow account pending the transfer of the assets and liabilities of the Consumer Health Business to Kenvue and as such, classified as restricted cash as of the balance sheet date. On April 5, 2023, the net proceeds of the Notes were released from escrow upon completion of the Consumer Health Business transfer.
Further, in March 2023, Kenvue entered into a credit agreement providing for a five-year senior unsecured revolving credit facility (the Revolving Credit Facility) in an aggregate principal amount of $4.0 billion to be made available in U.S. dollars and Euros. The Revolving Credit Facility contains representations and warranties, covenants and events of default that are customary for this type of financing, including covenants restricting the incurrence of liens and the entry into certain merger transactions. In addition, Kenvue entered into a commercial paper program (the Commercial Paper Program) of up to $4.0 billion in aggregate principal amount of commercial paper under the Commercial Paper Program. The Commercial Paper Program contains representations and warranties, covenants and default that are customary for this type of financing.
Subsequent to the fiscal first quarter, on April 24, 2023, the Company announced that Kenvue has launched a roadshow for the initial public offering (“IPO”) of 2022,151,204,000 shares of its common stock. Kenvue expects to grant the underwriters a 30-day option to purchase up to an additional 22,680,600 shares of its common stock to cover over-allotments, if any. The IPO price is currently expected to be between $20.00 and $23.00 per share. Kenvue has applied to list its common stock on the New York Stock Exchange under the symbol “KVUE.” After the completion of the IPO, Johnson & Johnson will own 1,716,160,000 shares of Kenvue’s common stock, representing 91.9% of the total outstanding shares of Kenvue’s common stock (or 90.8% if the underwriters exercise in full their over-allotment option).
As of April 2, 2023, the Company's cash, cash equivalents, restricted cash ($7.7 billion related to Kenvue) and marketable securities was approximately $32.3 billion and had approximately $52.9 billion of notes payable and long-term debt was in excess of cash, cash equivalents and marketable securities. As of April 3, 2022, the($7.7 billion related to Kenvue) for a net debt position was $2.8of $20.6 billion as compared to the prior year net debt position of $9.0$2.8 billion. Considering recent market conditions, and the on-going COVID-19 crisis, the Company has re-evaluated its operating cash flows and liquidity profile and does not foresee any significant incremental risk. The Company anticipates that operating cash flows, the ability to raise funds from external sources, borrowing capacity from existing committed credit facilities and access
to the commercial paper markets will continue to provide sufficient resources to fund operating needs, including the Company's approximate $0.9 billion in contractual supply commitments associated with its development of the COVID-19 vaccine,Company’s remaining balance to be paid on the agreement to settle opioid litigation for $5approximately $2.5 billion and the establishment of the $2$8.9 billion trustreserve (present value) for the talc related liabilitiessettlement proposal. (See Note 11 to the Consolidated Financial Statements for additional details). In addition, the Company monitors the global capital markets on an ongoing basis and from time to time may raise capital when market conditions are favorable.
Subsequent to April 3, 2022,2, 2023, the Company paid approximately $1.0$3.5 billion to the U.S. Treasury including $0.8$1.5 billion related to the current installment due on foreign undistributed earnings as part of the TCJA charge (see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2022)1, 2023), $1.4 billion in advance payments to resolve certain items under examination in its 2013 through 2016 U.S. IRS audit, and $0.2$0.6 billion primarily related to the normal estimated payment for the fiscal first quarter of 2022.2023.
Dividends
On January 4, 2022, the Board of Directors declared a regular cash dividend of $1.06 per share, payable on March 8, 2022 to shareholders of record as of February 22, 2022.
On April 19, 2022,3, 2023, the Board of Directors declared a regular cash dividend of $1.13 per share, payable on March 7, 2023, to shareholders of record as of February 21, 2023.
On April 18, 2023, the Board of Directors declared a regular cash dividend of $1.19 per share, payable on June 7, 20226, 2023, to shareholders of record as of May 24, 2022.23, 2023. The Company expects to continue the practice of paying regular quarterly cash dividends.
OTHER INFORMATION
New Accounting Pronouncements
Refer to Note 1 to the Consolidated Financial Statements for new accounting pronouncements.
Economic and Market Factors
COVID-19 considerations and business continuity
The Company has considered various internal and external factors in assessing the potential impact of COVID-19 on its business and financial results based upon information available at this time, as follows:
•Operating Model: The Company has a diversified business model across the healthcare industry with flexibility designed into its manufacturing, research and development clinical operations and commercial capabilities.
•Supply Chain: The Company continues to leverage its global manufacturing footprint and dual-source capabilities while closely monitoring and maintaining critical inventory at major distribution centers away from high-risk areas to ensure adequate and effective distribution.
•Business Continuity: The robust, active business continuity plans across the Company's network have been instrumental in preparing the Company for events like COVID-19 and the ability to meet the majority of patient and consumer needs remains uninterrupted.
•Workforce: The Company has put procedures in place to protect its essential workforce in manufacturing, distribution, commercial and research operations while ensuring appropriate remote working protocols have been established for other employees.
•Liquidity: The Company's high-quality credit rating allows the Company superior access to the financial capital markets for the foreseeable future.
•Domestic and Foreign Legislation: The Company will continue to assess and evaluate the on-going global legislative efforts to combat the COVID-19 impact on economies and the sectors in which it participates. Currently, the recent legislative acts put in place are not expected to have a material impact on the Company’s operations.
In fiscal 2021 and 2020, the Company entered into a series of contract manufacturing arrangements for vaccine production with third party contract manufacturing organizations. These arrangements provide the Company with future supplemental commercial capacity for vaccine production and potentially transferable rights to such production if capacity is not required. Amounts paid for services to be deliveredand contractually obligated to be paid to these contract manufacturing organizations of approximately $0.9 billion are reflected in the prepaid expenses and other, other assets, accrued liabilities and other liabilities accounts in the Company's consolidated balance sheet upon execution of each agreement. Additionally, the Company has entered into certain vaccine development cost sharing arrangements with government related organizations. The Company continues to evaluate the global demand for the Covid-19 vaccine and its related supply.
The Company continues to evaluate and monitor both its internal and external supply arrangements, including its contract with Emergent BioSolutions and related production activities at its Bayview, Maryland facility. The Company has established a global vaccine supply network, where, in addition to its internal manufacturing site in Leiden, the Netherlands, ten other
manufacturing sites will be involved in the production of vaccine across different countries and continents. The Company does not believe that a disruption at a vaccine manufacturing site, or the resulting delay would have a material financial impact on the Company’s consolidated financial statements or results.
Russia-Ukraine War
Although the long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time, the financial impact of the conflict in the fiscal first quarter of 2022,2023, including accounts receivable or inventory reserves, was not material. As of both the 2021 fiscal year ending January 2, 2022, and the fiscal first quarter ending April 3,2, 2023, and the 2022 fiscal year ending January 1, 2023, the business of the Company’s Ukraine subsidiaries represented less than 1% of the Company’s consolidated assets and revenues. As of both the 2021 fiscal year ending January 2, 2022, and the fiscal first quarter ending April 3,2, 2023, and the 2022 fiscal year ending January 1, 2023, the business of the Company’s Russian subsidiaries represented less than 1% of the Company’s consolidated assets and represented 1% of revenues.
The Company continued to supply its products throughout the first quarter as patients rely on manyIn early March of the products for healthcare purposes. However, in early March,2022, the Company took steps to suspend all advertising, enrollment in clinical trials, and any additional investment in Russia. Additionally, at the end of March 2022, the Company made the decision to suspend supply of personal care products in Russia. The Company continues to supply its other products as patients rely on many of the products for healthcare purposes.
The Company operates in certain countries where the economic conditions continue to present significant challenges. The Company continues to monitor these situations and take appropriate actions. Inflation rates and currency exchange rates continue to have an effect on worldwide economies and, consequently, on the way the Company operates. The Company has accounted for operations in Venezuela, Argentina and ArgentinaTurkey (beginning in the fiscal second quarter of 2022) as highly inflationary, as the prior three-year cumulative inflation rate surpassed 100%. Beginning in the fiscal second quarter of 2022, the Company will account for operations in Turkey as highly inflationary, as the prior three-year cumulative inflation rate surpassed 100%. This will not have a material impact on the Company's results in the period. In the face of increasing costs, the Company strives to maintain its profit margins through cost reduction programs, productivity improvements and periodic price increases.
Governments around the world consider various proposals to make changes to tax laws, which may include increasing or decreasing existing statutory tax rates. In connection with various government initiatives, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in other countries. A change in statutory tax rate in any country would result in the revaluation of the Company’s deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. This change would result in an expense or benefit recorded to the Company’s Consolidated Statement of Earnings. The Company closely monitors these proposals as they arise in the countries where it operates. Changes to the statutory tax rate may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.
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 healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing healthcare 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 tofaces regular intellectual property rights. Firms have filedchallenges from third parties, including generic and biosimilar manufacturers, seeking to manufacture and market generic and biosimilar versions of key pharmaceutical products prior to the expiration of the applicable patents. These challengers file Abbreviated New Drug Applications or Biosimilar Biological Productabbreviated Biologics License 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.patents. 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 willmay 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.
Item 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in its Annual Report on Form 10-K for the fiscal year ended January 2, 2022.1, 2023.
Item 4 — CONTROLS AND PROCEDURES
Disclosure controls and procedures. At the end of the period covered by this report, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Joaquin Duato, Chief Executive Officer; Chairman, Executive Committee and Joseph J. Wolk, Executive Vice President, Chief Financial Officer, reviewed and participated in this evaluation. Based on this evaluation, Messrs. Duato and Wolk concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
Internal control. During the period covered by this report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company has not experienced any material impact to its internal controls over financial reporting despite the fact that most of its employees are working remotely due to the COVID-19 pandemic. The Company proactively took actions to re-evaluate and refine its financial reporting process through additional monitoring controls to provide reasonable assurance that the financial results are reported accurately and timely. The Company continues to monitor and assess the effectiveness of the design and operation of its disclosure controls and procedures.
Part II — OTHER INFORMATION
Item 1 — LEGAL PROCEEDINGS
The information called for by this item is incorporated herein by reference to Note 11 included in Part I, Item 1, Financial Statements (unaudited) — Notes to Consolidated Financial Statements.
Item 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
On September 14, 2022, the Company announced that its Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $5.0 billion of the Company's Common Stock. Share repurchases may be made at management’s discretion from time to time on the open market or through privately negotiated transactions. The repurchase program was completed during the fiscal first quarter of 2023.
The following table provides information with respect to Common Stock purchases by the Company during the fiscal first quarter of 2022.2023. Common stock purchases on the open market are made as part of a systematic plan to meet the needs of the Company's compensation programs. The repurchases below also include the stock-for-stock option exercises that settled in the fiscal first quarter.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Month Period | | Total Number of Shares Purchased(1) | | Avg. Price
Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
| January 3, 2022 through January 30, 2022 | | 918,500 | | | 170.99 | | | | | — |
| January 31, 2022 through February 27, 2022 | | 4,728,073 | | | 168.98 | | | | | — |
| February 28, 2022 through April 3, 2022 | | 3,596,956 | | | 172.58 | | | | | — |
| Total | | 9,243,529 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Month Period | | Total Number of Shares Purchased(1) | | Avg. Price
Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
| January 2, 2023 through January 29, 2023 | | 2,507,585 | | | 176.23 | | | 635,911 | | | — |
| January 30, 2023 through February 26, 2023 | | 18,143,502 | | | 162.00 | | | 13,852,301 | | | — |
| February 27, 2023 through April 2, 2023 | | 996,230 | | | 156.52 | | | 646,230 | | | — |
| Total | | 21,647,317 | | | 163.39 | | | 15,134,442 | | | — |
(1) During the fiscal first quarter of 2022,2023, the Company repurchased an aggregate of 9,243,52921,647,317 shares of Johnson & Johnson Common Stock in open-market transactions, all of which 15,134,442 shares were purchased pursuant to the repurchase program that was publicly announced on September 14, 2022, and of which 6,512,875 shares were purchased as part of a systematic plan to meet the needs of the Company’s compensation programs.
(2) As of April 2, 2023, an aggregate of 30,546,218 shares were purchased for a total of $5.0 billion since the inception of the repurchase program announced on September 14, 2022.
Item 6 — EXHIBITS
Exhibit 10.3 Global Nonqualified Stock Option Award Agreement
Exhibit 31.1 Certification of Chief Executive Officer under Rule 13a-14(a) of the Securities Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Filed with this document.
Exhibit 31.2 Certification of Chief Financial Officer under Rule 13a-14(a) of the Securities Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 — Filed with this document.
Exhibit 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — Furnished with this document.
Exhibit 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 — Furnished with this document.
Exhibit 101:
| | | | | | | | |
| EX-101.INS | | Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| EX-101.SCH | | Inline XBRL Taxonomy Extension Schema |
| EX-101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase |
| EX-101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase |
| EX-101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase |
| EX-101.DEF | | Inline XBRL Taxonomy Extension Definition Document |
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| Exhibit 104: | | Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | |
| | JOHNSON & JOHNSON
(Registrant) |
| |
Date: April 29, 202228, 2023 | By /s/ J. J. WOLK |
| J. J. WOLK |
| | Executive Vice President, Chief Financial Officer (Principal Financial Officer) |
| | |
Date: April 29, 202228, 2023 | By /s/ R. J. DECKER Jr. |
| | R. J. DECKER Jr. |
| | Controller (Principal Accounting Officer) |
