Johnson & Johnson at TD Cowen Healthcare Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Joshua Jennings - TD Cowen - Analyst : <_ALACRA_META_ABSTRACT>So I think at the end of 2023, at the enterprise review event, you had recently taken the Chairman seat of the MedTech franchise. And you've posted that the end markets for Johnson & Johnson's Med Devices business were growing about 5% to 7%. We've seen procedure volumes and pricing trends remains solid since then and maybe a little bit more volatility in some regions internationally. But how should investors think about that end market kind of WAMGR range that you put forward then? Is there any new assumptions or any kind of delineation US versus OUS within that 5% to 7% range?

Question: Joshua Jennings - TD Cowen - Analyst : Excellent. And just as you've said off in this kind of acceleration of organic revenue growth journey that's in play and increasing the weighted average market growth rate that the portfolio is levered to. There's also been a portfolio optimization strategy. I think that's executed annually is my understanding. But maybe just talk about is pruning a big element in terms of continuing to sustain an acceleration or stability in that 5% to 7% range or here at the top end of that.

Question: Joshua Jennings - TD Cowen - Analyst : Great. And is -- when these decisions are made -- I mean, I'm assuming that you're looking at the portfolio. And as you said, maybe the business unit would be in better hands or the product would be in better hands with someone else. But is it really a combination of a lower growth asset and a lower margin profile asset where that you look to prune? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 4:10PM, JNJ.N - Johnson & Johnson at TD Cowen Healthcare Conference And just to piggyback on that, maybe you can just talk about the margin expansion initiatives. I know you have an orthopedic kind of reconstruction effort going on. But -- I have to layer two questions in one, but maybe just how the pruning strategy is made, just thinking about the margin of assets that may be divested going forward historically? And then just the operating margin expansion potential for the MedTech business going forward.

Question: Joshua Jennings - TD Cowen - Analyst : Excellent. And that mark, as you mentioned, is -- can be achieved despite the higher level of R&D investment is my understanding. And you mentioned earlier in one of your answers about going from $3.1 billion in R&D to $3.7 billion. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 4:10PM, JNJ.N - Johnson & Johnson at TD Cowen Healthcare Conference Maybe just help us think through post consumer spend, the new J&J with pharma and med device silos. Is that -- was that a driver that unlocked increased investment into the MedTech franchise? Maybe just help us think through the strategy of that increased R&D investment. Is the corporation sacrificing pharm R&D for MedTech R&D? Or is it just MedTech business is accelerating and there are more R&D dollars to spend because of the volume growth?

Question: Joshua Jennings - TD Cowen - Analyst : That's great. And I think we've seen some examples of the potential synergies of having the pharma MedTech businesses under the same roof over the years, but more acutely with the bladder cancer asset. You also have MONARCH in the lung cancer diagnosis and treatment initiative. But maybe you can talk us through how should investors think about kind of the leading drivers that support what you just laid on the table about the synergies and the complementary nature of the pharma and MedTech businesses under one roof?

Question: Joshua Jennings - TD Cowen - Analyst : Excellent. Thanks for that download. You mentioned earlier about the build-out of the cardiovascular franchise through some external M&A. I mean Biosense Webster has been crown jewel within the J&J MedTech business for decades. And there was a strategic decision, maybe 2016, 2017 to divest Cordis. And now you're revitalizing the cardiovascular effort and portfolio. The V-Wave acquisition gets you into interventional heart failure, which one of your competitors, Edwards is grouping into structural heart, which it is. And I mean, is that the first foray into structural heart? Maybe just share with us your view of the structural heart universe and then how deep Johnson & Johnson could go ultimately. I mean it's a high-growth segment with massive TAMs.

Question: Joshua Jennings - TD Cowen - Analyst : Excellent. And maybe to stick with the cardiovascular unit and Biosense Webster, your team has done a thorough job of informing investors on the VARIPULSE limited launch pause and then restart. Love to just -- a high-level question, just to get you here and your team's view on the confidence that Biosense Webster can maintain its leadership and from VARIPULSE through OMNYPULSE and building out the catheter portfolio and just your dominant presence within the mapping segment as well.

Question: Joshua Jennings - TD Cowen - Analyst : I wanted to just circle back to one of your comments really just back on the M&A strategy and you mentioned that Abiomed was when it was kind of a medium swing. I mean a larger swing is clearly the larger swing than Abiomed. But are there any parameters in terms of how big of a swing J&J could take as you're pursuing this effort and secure your CEO's legacy of driving the medical device franchise to higher performance levels?

Question: Joshua Jennings - TD Cowen - Analyst : Understood. Do you think you and your team have put on the tape that there's aspirations to become a market leader in robotics over time. Johnson & Johnson has had success commercializing the VELYS robotic system in orthopedics, the MONARCH system and urology and bronchoscopy indications. Maybe just help us understand -- I know you guys don't break out system placements or revenue contributions from those two robotic systems. But maybe just current state of affairs, how impactful have robotic launch has been to the MedTech franchisees that they're introduced into? And then maybe we can move forward in terms of how you see the evolution of the Johnson & Johnson's robotic portfolio.

Question: Joshua Jennings - TD Cowen - Analyst : You answered my follow-up question within your download there, but maybe to build on it, and I'm just thinking about in front of the OTTAVA acquisition, you talked about wound closure and biosurgery. But any other drivers for kind of improved performance from the Ethicon unit, a big revenue base, as you called out $10 billion. So it's a law of large numbers, a heavy lift. But what are the other drivers where we can see improved performance in front of the OTTAVA approval and then commercialization?

Question: Joshua Jennings - TD Cowen - Analyst : Great. Maybe the last question. We'll try and sneak in here as the clock is winding down. I mean you led the team that established J&J as a market-leading MedTech business in Asia before becoming the Global Chairman in 2023. Maybe you could share your outlook on the China medical devices market and how J&J is viewing the China opportunity still massive volume opportunity, some pricing turbulence with volume-based pricing initiatives. But I'd love to hear your thoughts.

Question: Joshua Jennings - TD Cowen - Analyst : Well, Tim, can't thank you enough. I appreciate the time and the downloads that you provided, great to see in person. And looking forward to tracking J&J's MedTech business over the course of this year.