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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position and business strategy. The viewer is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Johnson & Johnson. Risks and uncertainties include, but are not limited to, economic factors, such as interest rate and currency exchange rate fluctuations; competition, including technological advances, new products and patents attained by competitors; challenges inherent in product research and development, including uncertainty of clinical success and obtaining regulatory approvals; uncertainty of commercial success for new and existing products; challenges to patents; the impact of patent expirations; the ability of the company to successfully execute strategic plans, including business plans, transactions and restructuring plans; market conditions and the possibility that the on-going share repurchase program may be delayed, suspended or discontinued; the impact of business combinations and divestitures; significant adverse litigation or government action, including related to product liability claims; changes to applicable laws and regulations, including tax laws and global health care reforms; trends toward health care cost containment; changes in behavior and spending patterns or financial distress of purchasers of health care products and services; financial instability of international economies and legal systems and sovereign risk; manufacturing difficulties or delays, internally or within the supply chain; product efficacy or safety concerns resulting in product recalls or regulatory action; increased scrutiny of the health care industry by government agencies; and the potential failure to meet obligations in compliance agreements with government bodies. A further list and description of these risks, uncertainties and other factors can be found in Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year ended January 3, 2016, including in Exhibit 99 thereto, and the company’s subsequent filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov, www.investor.jnj.com, or on request from Johnson & Johnson. Any forward-looking statement made in this presentation speaks only as of the date of this presentation. Johnson & Johnson does not undertake to update any forward-looking statement as a result of new information or future events or developments.
CAUTIONARY NOTE ON NON-GAAP FINANCIAL MEASURESThis presentation refers to certain non-GAAP financial measures. These non-GAAP financial measures should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the accompanying financial schedules of the earnings release and the Investor Relations section of the Company’s website at www.investor.jnj.com.
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OUR CREDO
We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.
“ Caring for people around the world by
anticipating their
needs, creating solutions and
experiences that help them and those
they care for live healthy, vibrant lives”
We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens – support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.
Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.
We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical.
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DID YOU KNOW?
• $13.3B in NTS
• Global leader in 7 Consumer categories
• Operations in more than 80 countries
• Iconic brands
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BEAUTY OTC BABY CARE
ORAL CARE WOUND CAREWOMEN'S HEALTH
OUR BRANDS ARE CLUSTERED IN 6 BROAD CATEGORIES
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OUR BRANDS ARE CLUSTERED IN 6 BROAD CATEGORIES
WOUND CARE
ORAL CARE
BEAUTYOTC ~30%
15%BABY CARE
8%~5%
~30%
12%
WOMEN’S HEALTH
Based on FY 2016 Consumer sales,
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OUR 12 MEGABRANDS DELIVER 65% OF SALES TODAY
2020Aspiration1
2016
~65%
~75%
$1BBrands
1. Internal estimate.
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WE ARE GLOBAL LEADERS ACROSSNUMEROUS PRODUCT SEGMENTS
• Allergy Care
• Baby Toiletries
• Digestive Remedies
• Mouthwash
• Smoking Cessation Aids
• Therapeutic Beauty• Wound Care
• Diaper Rash
• Facial Cleansers
• Feminine Care
• Sun Protection
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Source: Euromonitor FY 2015 data.
Note: Therapeutic Beauty includes hair loss treatments, acne treatments and medicated shampoos; Wound Care includes adhesive bandages, first aid kits, gauze, and tape.
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WITH >50% OF SALES OUTSIDE OF NORTH AMERICA
45%
10%
NORTH AMERICA
LATIN AMERICA
ASIA PACIFIC
EMEA
28%
17%
2016 Net Trade Sales
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OUR 2016 COMMITMENTS
1. Grow topline faster than the market
2. Expand our profit margin to reach
benchmark levels
3. Accelerate growth through acquisitions
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GROWING FASTER THAN THE MARKET IN 2016
+4.2%
+2.9%
PEER COMPOSITEGROWTH2:
NTS GROWTH1:
1. Operational growth excluding Acquisitions and Divestitures, additional 2015 shipping days and impact of Venezuela2. GSR data and internal analysis3. Source: Neilson market data
MARKET GROWTH3:
+3.2%
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2016 MARKET SHARE
4.0
4.0
1.5
1.1
0.8
1.9
OTC
Beauty
Oral Care
Feminine Care
Wound Care
Baby
Source: ACT NTS Dec 2016 in USD
NTS ($ billions)
+0.4
Share Growth (% pts)
----
+0.6
+0.3
+0.2
-1.8
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WE ARE DELIVERING MAJOR IMPROVEMENTS IN PROFITABILITY
Adjusted Income Before Tax*
+560BPS
2015 2016
*NON-GAAP measure
14.3%
19.9%
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WE ARE ACCELERATING GROWTH THROUGH ACQUISITIONS
Premium Hair Global Allergy
Light Therapy Derma-Cosmetics
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OUR 2016 COMMITMENTS
1. Grow topline faster than the market
2. Expand our profit margin to reach
benchmark levels
3. Accelerate growth through acquisitions
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CLEAR RIGHT TO WIN
1. Strong portfolio of enduring brands
2. Playing in attractive, growing categories
3. Powerful strategy that drives
competitive advantage
GROWING THROUGH INSIGHT-LED INNOVATION, ENDORSED BY PROFESSIONALS
#1 Allergist recommended brand
Dentist recommended mouthwash#1
Recommended by doctors and moms#1
Brand of OTC pain reliever hospitals use most#1
Pediatrician recommended brand of ibuprofen#1
70 Years relied on by doctors
Dermatologist recommended#1
Hospital recommended#1
Years recommended by dermatologists70
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Our total consumer categories represent ~$350B globally
PLAYING IN LARGE STRUCTURALLY ATTRACTIVE CATEGORIES
2015 Market Sizes ($B)
BABY CARE
$15
OTC
$100
Source: Euromonitor FY 2015 data
BEAUTY
$160
WOMEN’S HEALTH
$30
$40ORAL CARE
WOUND CARE
$3
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…THAT ARE GROWING FASTER THAN CONSUMER PACKAGED GOODS AVERAGE
5 Year Sales CAGR1
BABY CARE
6%
OTC
BEAUTY3
WOMEN’S HEALTH
ORAL CARE4
WOUND CARE
5%
6%
7%
4%
3%
1. Source: Euromonitor, 2010-2015 CAGR
2. Consumer Packaged Goods Five Year Sales CAGR3. Excludes cosmetics 4. Excludes toothbrush & toothpaste
Our categories are growing a weighted average of >4% versus CPG2 market growth of 3~4%
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FAVORABLE CONSUMER TRENDS
HEALTHY BEAUTY
AGING POPULATION
NATURAL / ORGANICS
OTC SELF-CARE SOLUTIONS
MILLENNIALS ARE DIGITAL / SOCIAL NATIVES
LIFESTYLE HEALTH ISSUES DISCIPLINED GEOGRAPHIC PORTFOLIOMANAGEMENT
135 MILLION NEW BIRTHS/YEAR
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OUR STRATEGY POSITIONS US TO BE ASIGNIFICANT CONTRIBUTOR TO J&J
$13.3B
Profitability119.9%
2016
Revenue
1. Adjusted Income Before Tax by Segment (Non-GAAP Measure).
1~2pts
Growing earnings faster than sales
2017–2020
Above market growth per year
Target
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FUNDAMENTAL PRINCIPLES GUIDING OUR STRATEGY
Change the rules of the game through global, transformational, science-based innovation
Create an ecosystem that builds enduring, loyal relationships with consumers over time
Make our brands more available to our consumers wherever they are
Drive profitability and margin expansion
Further leverage acquisitions to accelerate growth
TRANSFORMATIONAL SCIENCE-BASED INNOVATION
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Leader in R&D Productivity
Partner of Choice Professional
Endorsement Brand Loyalty
FOCUS ON FEWER& BIGGER
Differentiated InnovationWith Global Scale
EXCELLENCEIN SCIENCE
Regulatory andClinical Excellence
EXTERNALFOCUS
Engage World’s BestInnovators and Scientists
DESIGNTHINKING
Consumer andPatient-centric Solutions
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FOCUS ON FEWER & BIGGER IDEAS
# of projects by Launch Year
Data indexed to 2015 number of projects and portfolio value
2015 2016 2017 2018
-50%
Estimated Portfolio Value by Launch Year
2015 2016 2017 2018
3xvs.
2015
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EXCELLENCE IN SCIENCE: POWERFUL SUN PROTECTION
Leader in Prevention Leader in Protection Strong Professional Endorsement
1 in every 3cancers diagnosed
globally is a Skin Cancer
1 person dies fromMelanoma every
57minutes(in the US)
#1 Dermatologist recommended
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EXTERNAL FOCUS: LIGHT THERAPY
•Miniaturized LED light based device•Commonly used in Dermatologist offices•Disruptive technology
Neutrogena Light Therapy Acne Mask Winning Clinical Efficacy
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BUILDING A CONNECTED ECOSYSTEM
DigitalEcosystem
Analytics
Precision Marketing
Trigger-based
Marketing
InfluencerMarketing
“Virtual”professional
detailing
EXPAND DIGITAL ECOSYSTEM: JOHNSON’S BEDTIME
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• Johnson's Bedtime app delivers on-demand sleep support via a mobile device
• Soon to be launched on Amazon Echo
• Scientifically proven bedtime routine has helped hundreds of thousands of babies across 18 countries.
+
EXPAND DIGITAL ECOSYSTEM: NEUTROGENA SHADE FINDER
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• Neutrogena shade enhances shopper experience on our own and e-retailer sites.
• Increased revenue 2x by helping women find the right product for their skin tone.
Skincare Questions Get the Look Questions
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• Zyrtec Sneeze Trigger app reaches consumers in their local zip code during their moment of need
• Increased purchase intent +14pts
• Expanding model to include more brands, consumers and professionals
Delivering Premium Engagement through the
ALLERGY CAST® App
Capitalizing On Local Seasonality with Sneeze-
triggered Media
EXPAND DIGITAL ECOSYSTEM: ZYRTEC SNEEZE TRIGGER
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GLOBALIZING LE PETIT MARSEILLAIS Successful European expansion continues, launched in theU.S. and in Canada in 2017
E-COMMERCE: FOCUS ON FUNDAMENTALS SCANR
How to Win-Focus on
Fundamentals
SCANR
Search
Rating & Reviews
Navigation
Available Assortment
at the Right Place
Content
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BROADENING OUR REACH & DRIVING PENETRATION
• Well-distributed in key markets
• Focused on driving coverage
• Significant upside potential
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DRIVE PROFITABILITY & MARGIN EXPANSION
in savings2014-2016
>$1B
Revenue Growth
Management
Supply ChainTransformation
SG&A Optimization
Marketing Productivity
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WE ARE DELIVERING MAJOR IMPROVEMENTS IN PROFITABILITY
+560Adjusted Income Before Tax Margin1
2015 2016
2014 2015
BPS
2X2016
1. Non-GAAP measure2. Adjusted for constant exchange rates and excluding one-time items
Operating Income2
PRODUCTIVITY INITIATIVES DELIVERING MAJOR VALUE
Revenue Growth
Management
Supply ChainTransformation
SG&A Optimization
Marketing Productivity
Partnering with customers for shared value optimizing pricing, assortment, and promotion & trade terms
Consolidated media spend behind one global advertising agency
Pursuing game-changing initiatives around entire value chain
Implemented aggressive cost savings program that achieved >$250M in 1st year
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>$1B
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ACCELERATE INORGANIC GROWTH THROUGH ACQUISITIONS
Five Key Priorities
Build scale in OTC1
Enable growth in BEAUTY2
Lead in BABY with business model innovation3Accelerate growth with regional opportunities; reinvent key markets
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Invest in long-term external pipeline5
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OUR FOCUS IS TO CREATE A VIRTUOUSCYCLE OF PROFITABLE GROWTH
Drives sustainable profitable growth
over time
Revenue Growth Management P&L Productivity
Big Innovation & Brand Building
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A STRONG, CONSISTENT, SUSTAINABLE BUSINESS
33 Consecutive years of adjusted operational earnings growth1 54 Consecutive
years of dividend increases2 AAARated Balanced Sheet
Operational & investment flexibility
~75%of sales from #1 or #2 global market share position
of 10 year free cash flow returned to shareholders3
$1B 24 Brands/Platformswith > $1b in sales
of sales from products launched in past 5 years~22%
1. Non-GAAP measure; excludes intangible amortization expense, special items and the impact of translational currency2. Inclusive of the April 2016 dividend declaration3. Non-GAAP measure; defined as operating cash flow less capital spending
~70%
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TOTAL RETURN TO SHAREHOLDERS SUMMARY
1 Year 3 Year 5 Year 10 Year
As of 12/31/2016
Competitor Composite*
Consumer Competitor Composite*
S&P 500
Dow Jones Industrial Average
15.3%
-0.2%
3.6%
12.0%
16.5%
11.0%
6.3%
3.4%
8.9%
8.7%
15.3%
13.0%
9.9%
14.6%
12.9%
9.0%
7.0%
7.3%
6.9%
7.5%
Data Source: Bloomberg
* For a list of the companies included, see page 40 of company’s 2016 Proxy Statement
WE ARE WELL POSITIONED FOR SUSTAINED GROWTH
World-class: portfolio of brands in large, growing categories
Strong innovation pipeline and world-class brand building
Well-positioned to grow sales above the market while continuing to expand margins to achieve benchmark profitability
Our strategy positions us to be a significant contributor to Johnson & Johnson
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