Our Credo
We believe our first responsibility is to the patients, doctors and nurses,
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 provide value, reduce our costs
and maintain reasonable prices. Customers’ orders must be serviced
promptly and accurately. Our business partners must have an
opportunity to make a fair profit.
We are responsible to our employees who work with us throughout the
world. We must provide an inclusive work environment where each
person must be considered as an individual. We must respect their
diversity and dignity and recognize their merit. They must have a sense
of security, fulfillment and purpose in their jobs. Compensation must be
fair and adequate and working conditions clean, orderly and safe. We
must support the health and well-being of our employees and help them
fulfill their family and other personal 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 highly capable leaders and their actions must
be just and ethical.
We are responsible to the communities in which we live and work and to
the world community as well. We must help people be healthier by
supporting better access and care in more places around the world. We
must be good citizens — support good works and charities, better
health and education, and bear our fair share of taxes. 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, investments made for the
future 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.
Dear shareholders,
In 2024, we continued to establish Johnson & Johnson as
healthcare’s leading, most comprehensive innovation
powerhouse.
With our focus on pharmaceuticals and medical
technology, we stand alone in our ability to impact the full
spectrum of disease.
From cardiology to cancer, mental health to vision, cell
therapies to robotics, the depth and breadth of our
expertise and capabilities is unique. No company can
match our ability to deliver best-in-class solutions for
patients at every step of their journeys.
Performance and priorities
Johnson & Johnson delivered robust operational sales
growth of 7%1, 2. Full year adjusted net earnings were
$24.2 billion1. Adjusted diluted net earnings per share was
$9.981.
We continued to execute against our capital allocation
priorities and generated strong free-cash-flow of
approximately $20 billion1. This enabled Johnson &
Johnson to increase our dividend for the 62nd consecutive
year. We know this use of capital is important, and we
remain committed to returning value to our shareholders.
Our strong balance sheet also allowed Johnson & Johnson
to pursue strategic actions that will position us for
sustained, differentiated growth through the end of the
decade and beyond. Since January 2024, we invested
approximately $50 billion in research and development and
other inorganic growth opportunities, including the
recently announced planned acquisition of Intra-Cellular
Therapies.
Johnson & Johnson has long been a partner of choice for
the next generation of innovators. From major acquisitions,
including Shockwave and V-Wave in MedTech and Ambrx,
Proteologix, and the NM-26 bispecific antibody in
Innovative Medicine, to the more than 40 smaller
collaborations, partnerships, and licenses signed in 2024,
we are laying the foundation for tomorrow’s treatments
and cures with our investments today.
We also continued to strengthen our manufacturing
capacity in the United States and around the world. We
announced a $2 billion advanced technology facility in
North Carolina that will expand production of our biologic
portfolio and pipeline, and we broke ground on extensions
to our Impella heart pump facilities in Massachusetts and
Germany.
March 2025
Innovative Medicine
Innovative Medicine reported $57 billion in sales.
DARZALEX became our first brand to exceed $3 billion in
sales in a single quarter and SPRAVATO became our 26th
platform to generate at least $1 billion in annual revenue.
Other key growth drivers include ERLEADA, CARVYKTI,
and TREMFYA.
Equally impressive is our pace of innovation, which resulted
in 27 approvals in major markets. Among the most notable
were FDA approvals of TREMFYA for the treatment of
ulcerative colitis and RYBREVANT plus LAZCLUZE for
first-line treatment of EGFR-mutated advanced non-small
cell lung cancer.
We reported 18 positive readouts for registrational
studies, initiated 17 Phase III studies, and submitted 49
filings across major markets. The FDA granted priority
review designations to five indications for our innovative
medicines. This includes RYBREVANT plus LAZCLUZE for
frontline non-small cell lung cancer, DARZALEX FASPRO
for frontline transplant-eligible multiple myeloma with VRd,
nipocalimab for generalized myasthenia gravis, SPRAVATO
as a monotherapy for drug-resistant depression, and
OPSUMIT for pediatric pulmonary arterial hypertension.
MedTech
For the second year in a row, we reported more than $30
billion in MedTech sales, with particularly strong
momentum in cardiovascular.
The pace of our MedTech innovation also remained strong.
We launched 15 major products in 2024. Highlights include
the approval of our VARIPULSE pulsed field ablation
platform in several major markets and FDA clearance of
our VELYS system for both robot-assisted spine and
partial-knee surgery.
We also received an expanded FDA indication for our
Impella heart pumps to treat pediatric patients as well as
FDA clearance of Shockwave's Javelin peripheral IVL
catheter. Looking forward, we progressed 18 clinical trial
programs, including securing IDE approval of our Ottava
robotic surgical system, which allows clinical trials to begin
in the U.S.
2024 Annual Report
The power behind our success
and our future
Johnson & Johnson has an unrivaled portfolio and pipeline,
with the financial muscle, global reach, and disease
expertise to deliver the sustained pace of innovation and
growth that is our hallmark.
I am proud of the remarkable strides we made in 2024 and
energized by our boundless potential to improve and save
lives.
As we look ahead, we have a strategic advantage that is
unmatched in healthcare: the trust in our brand that has
been earned over almost 140 years. Today, we remain
committed to the principles that have always been at our
core. We are a purpose-driven company guided by Our
Credo.
And our employees around the world fuel everything we
do. Whether we are scientists, salespeople, or supply-chain
workers, everyone who works at Johnson & Johnson cares
deeply—about each other and about the patients we serve.
93% of our employees say they are willing to go the extra
mile to help Johnson & Johnson meet its goals, and
improve patients’ lives. As Chairman and CEO and a 36-
year veteran of the company, I find this inspiring. Together,
we are transforming health for humanity.
Sincerely,
Joaquin Duato
Chairman and CEO
Delivering for
Our Credo stakeholders
7%
operational sales growth1, 2
$88.8 billion
consolidated sales
~$50 billion
invested in research and development and inorganic
innovation since January 20243
26
products/platforms generating $1+ billion in annual sales
62
consecutive years of increased dividends
81
years guided by Our Credo
15
major MedTech products launched
27
Innovative Medicine approvals in major markets
~138,000
employees
2.6+ billion
doses of Vermox donated since 2006 to facilitate
treatment of intestinal worms
1
Non-GAAP measure: Operational sales growth excludes the effect of translational currency. Adjusted net earnings and adjusted diluted net
earnings per share excludes special items and intangible asset amortization expense. Free cash flow is defined as cash flow from operating
activities, less additions to property, plant and equipment. See Non-GAAP reconciliations in this Annual Report.
2
Excluding the Covid-19 vaccine.
3
Includes the amount committed toward the planned acquisition of Intra-Cellular Therapies.
2024 Annual Report
The tables below are provided to reconcile certain non-GAAP financial disclosures in the 2024
Chairman’s Letter.
Reconciliation of Non-GAAP Financial Measures
(Dollars in Millions Except Per Share Data)
2024
2023
Net Earnings from Continuing Operations, after tax- as reported
$ 14,066
$ 13,326
Pre-tax Adjustments
Litigation related
5,450
7,152
Intangible Asset Amortization expense
4,526
4,532
COVID-19 Vaccine related costs
100
663
Restructuring related
269
798
Medical Device Regulation
204
311
Acquisition, integration and divestiture related
1,226
339
Losses on securities
306
641
IPR&D impairments
211
313
Tax Adjustments
Tax impact on special item adjustments
(2,135)
(2,694)
Tax legislation and other tax related
19
28
Adjusted Net Earnings from Continuing Operations, after tax
$ 24,242
$ 25,409
Average shares outstanding (Diluted)
2,429.4
2,560.4
Adjusted net earnings per share from Continuing Operations (Diluted)
$
9.98
$
9.92
Sales Growth % 2024 vs. 2023
Total
Operational
Currency
Worldwide as reported
4.3%
5.9%
(1.6) %
COVID-19 Vaccine impact
(1.2)
(1.1)
(0.1)
Worldwide excluding COVID-19 Vaccine
5.5
7.0
(1.5)
Free Cash Flow (Dollars in Millions)
2024
Net cash flows from operating activities
$ 24,266
Less: Additions to property, plant and equipment
4,424
Free cash flow
$ 19,842
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 29, 2024
or
☐
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 of incorporation)
(I.R.S. Employer Identification No.)
One Johnson & Johnson Plaza
New Brunswick, New Jersey
08933
(Address of principal executive offices)
(Zip Code)
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
(Address of principal executive offices)
Registrant’s telephone number, including area code: (732) 524-0400
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
1.150% Notes Due November 2028
JNJ28
New York Stock Exchange
3.20% Notes Due November 2032
JNJ32
New York Stock Exchange
1.650% Notes Due May 2035
JNJ35
New York Stock Exchange
3.350% Notes Due November 2036
JNJ36A
New York Stock Exchange
3.550% Notes Due November 2044
JNJ44
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 þ No o
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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth 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, indicate 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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes ☑ No o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
The aggregate market value of the Common Stock held by non-affiliates computed by reference to the price at which the Common Stock was last sold as of
the last business day of the registrant’s most recently completed second fiscal quarter was approximately $352 billion.
On February 6, 2025, there were 2,407,616,693 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III:
Portions of the registrant’s proxy statement for its 2025 annual meeting of shareholders to be filed within 120 days after the close of the
registrant’s fiscal year (the “Proxy Statement”), are incorporated by reference to this report on Form 10-K (this “Report”).
Item
Page
Part I
1
Business
1
General
1
Segments of business
1
Geographic areas
2
Raw materials
2
Patents
2
Trademarks
3
Seasonality
3
Competition
3
Environment
3
Regulation
3
Employees and human capital management
6
Available information
8
1A.
Risk factors
9
1B.
Unresolved staff comments
17
1C.
Cybersecurity
17
2
Properties
18
3
Legal proceedings
18
4
Mine safety disclosures
18
Executive officers of the registrant
19
Part II
5
Market for registrant’s common equity, related stockholder matters and issuer purchases of
equity securities
21
6
(Reserved)
21
7
Management’s discussion and analysis of results of operations and financial condition
22
7A.
Quantitative and qualitative disclosures about market risk
42
8
Financial statements and supplementary data
43
9
Changes in and disagreements with accountants on accounting and financial disclosure
113
9A.
Controls and procedures
113
9B.
Other information
113
9C.
Disclosure regarding foreign jurisdictions that prevent inspections
113
Part III
10
Directors, executive officers and corporate governance
114
11
Executive compensation
114
12
Security ownership of certain beneficial owners and management and related stockholder matters
114
13
Certain relationships and related transactions, and director independence
115
14
Principal accountant fees and services
115
Part IV
15
Exhibits and financial statement schedules
116
16
Form 10-K summary
116
Signatures
117
Exhibit index
119
Cautionary note regarding forward-looking statements
This Annual Report on Form 10-K and Johnson & Johnson’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 and financial performance;
impact of planned acquisitions and dispositions; impact and timing of restructuring initiatives, including associated cost savings
and other benefits; the Company’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’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 secure and maintain 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 (U.S. FDA) (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
may cause 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 and healthcare market trends
•
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 payors 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, including the divestment of Kenvue Inc., may not be realized or may take longer to realize than
expected; and
•
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.
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, and the impact of such
changes on raw material prices, supply chains market volatility and the pace of product development;
•
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;
•
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;
•
The impact of global or economic changes or events, including global tensions and war; 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 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 this Annual Report on Form 10-K 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 and in Item 1A 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.
This page intentionally left blank.
Part I
Item 1. Business
General
Johnson & Johnson and its subsidiaries (the Company) have approximately 138,100 employees worldwide engaged in the
research and development, manufacture and sale of a broad range of products in the healthcare field. Johnson & Johnson is a
holding company, with operating companies conducting business in virtually all countries of the world. The Company’s primary
focus is products related to human health and well-being. Johnson & Johnson was incorporated in the State of New Jersey
in 1887.
The Chief Operating Decision Maker (CODM) is the Company's Chief Executive Officer (Principal Executive Officer). The
Executive Committee is Johnson & Johnson’s senior leadership team responsible for setting the strategy and priorities of the
Company and driving accountability at all levels. Within the strategic parameters provided by the Executive Committee, senior
management groups at U.S. and international operating companies are each responsible for their own strategic plans and the
day-to-day operations of those companies.
Segments of business
The Company is organized into two business segments: Innovative Medicine and MedTech. Additional information required by
this item is incorporated herein by reference to the narrative and tabular descriptions of segments and operating results under:
Item 7. Management’s discussion and analysis of results of operations and financial condition of this Report; and Note 17
Segments of business and geographic areas of the notes to consolidated financial statements included in Item 8 of
this Report.
Innovative Medicine
The Innovative Medicine segment is focused on the following therapeutic areas: Immunology (e.g., rheumatoid arthritis,
psoriatic arthritis, inflammatory bowel disease and psoriasis), Infectious Diseases (e.g., HIV/AIDS), Neuroscience (e.g., mood
disorders, neurodegenerative disorders and schizophrenia), Oncology (e.g., prostate cancer, hematologic malignancies, lung
cancer and bladder cancer), Cardiovascular and Metabolism (e.g., thrombosis, diabetes and macular degeneration) and
Pulmonary Hypertension (e.g., Pulmonary Arterial Hypertension). Medicines in this segment are distributed directly to retailers,
wholesalers, distributors, hospitals and healthcare professionals for prescription use. Key products in the Innovative Medicine
segment include: REMICADE (infliximab), a treatment for a number of immune-mediated inflammatory diseases; SIMPONI
(golimumab), a subcutaneous treatment for adults with moderate to severe rheumatoid arthritis, active psoriatic arthritis,
active ankylosing spondylitis and moderately active to severely active ulcerative colitis; SIMPONI ARIA (golimumab), an
intravenous treatment for adults with moderate to severe rheumatoid arthritis, active psoriatic arthritis and active ankylosing
spondylitis and active polyarticular juvenile idiopathic arthritis (pJIA) in people 2 years of age and older; STELARA
(ustekinumab), a treatment for adults and children with moderate to severe plaque psoriasis, for adults with active psoriatic
arthritis, for adults with moderately to severely active Crohn's disease and treatment of moderately to severely active
ulcerative colitis; TREMFYA (guselkumab), a treatment for adults with moderate to severe plaque psoriasis and active psoriatic
arthritis and ulcerative colitis; EDURANT (rilpivirine), PREZISTA (darunavir) and PREZCOBIX/REZOLSTA (darunavir/cobicistat),
antiretroviral medicines for the treatment of human immunodeficiency virus (HIV) in combination with other antiretroviral
products and SYMTUZA (darunavir/cobicistat/emtricitabine/tenofovir alafenamide), a once-daily single tablet regimen for the
treatment of HIV; CONCERTA (methylphenidate HCl) extended-release tablets CII, a treatment for attention deficit
hyperactivity disorder; INVEGA SUSTENNA/XEPLION (paliperidone palmitate), for the treatment of schizophrenia and
schizoaffective disorder in adults; INVEGA TRINZA/TREVICTA (paliperidone palmitate), for the treatment of schizophrenia in
patients after they have been adequately treated with INVEGA SUSTENNA for at least four months; SPRAVATO (Esketamine),
a nasal spray, used along with an oral antidepressant, to treat adults with treatment-resistant depression (TRD) and depressive
symptoms in adults with major depressive disorder (MDD) with suicidal thoughts or actions; CARVYKTI (ciltacabtagene
autoleucel), a chimeric antigen receptor (CAR)-T-cell therapy for the treatment of patients with relapsed/refractory multiple
2024 Annual Report
1
myeloma; ZYTIGA (abiraterone acetate), a treatment for patients with prostate cancer; ERLEADA (apalutamide),
a next-generation androgen receptor inhibitor for the treatment of patients with prostate cancer; IMBRUVICA (ibrutinib),
a treatment for certain B-cell malignancies, or blood cancers and chronic graft versus host disease; DARZALEX
(daratumumab), a treatment for multiple myeloma; DARZALEX FASPRO (daratumumab and hyaluronidase-fihj), a treatment for
multiple myeloma and light chain (AL) Amyloidosis; TECVAYLI (teclistamab-cqyv), a ready-to-use bispecific antibody for adults
with relapsed or refractory multiple myeloma who have received at least four prior lines of therapy; XARELTO (rivaroxaban), an
oral anticoagulant for the prevention of deep vein thrombosis (DVT), which may lead to pulmonary embolism (PE) in patients
undergoing hip or knee replacement surgery, to reduce the risk of stroke and systemic embolism in patients with nonvalvular
atrial fibrillation, and for the treatment and reduction of risk of recurrence of DVT and PE to reduce the risk of major
cardiovascular events in patients with coronary artery disease (CAD) and peripheral artery disease (PAD), for the treatment
and secondary prevention of thromboembolism in pediatric patients, and for thromboprophylaxis in pediatric patients following
the Fontan procedure; OPSUMIT (macitentan) as monotherapy or in combination, indicated for the long-term treatment of
pulmonary arterial hypertension (PAH); UPTRAVI (selexipag), the only approved oral and intravenous, selective IP receptor
agonist targeting a prostacyclin pathway in PAH. Many of these medicines were developed in collaboration with strategic
partners or are licensed from other companies and maintain active lifecycle development programs.
MedTech
The MedTech segment includes a broad portfolio of products used in the cardiovascular, orthopaedics, surgery, and vision
categories. The Cardiovascular (previously referred to as Interventional solutions) portfolio includes electrophysiology
products to treat heart rhythm disorders, the heart recovery portfolio (Abiomed) which includes technologies to treat severe
coronary artery disease requiring high-risk PCI or AMI cardiogenic shock, circulatory restoration products (Shockwave) for the
treatment of calcified coronary artery disease (CAD) and peripheral artery disease (PAD), and neurovascular care that treats
hemorrhagic and ischemic stroke. The Orthopaedics portfolio includes products and enabling technologies that support hips,
knees, trauma, spine, sports, and others. The Surgery portfolios include advanced and general surgery technologies, as well as
solutions that focus on breast aesthetics and reconstruction (Mentor). Vision products include ACUVUE brand contact lenses
and TECNIS intraocular lenses for cataract surgery. These products are distributed to wholesalers, hospitals, and retailers and
are used predominantly in the professional fields by physicians, nurses, hospitals, eye care professionals, and clinics.
Geographic areas
The Company conducts business in virtually all countries of the world with the primary focus on products related to human
health and well-being. The products made and sold in the international business include many of those described above under
Segments of Business – Innovative Medicine and MedTech. However, the principal markets, products and methods of
distribution in the international business vary with the country and the culture. The products sold in the international business
include those developed in the U.S. and by subsidiaries abroad.
Investments and activities in some countries outside the U.S. are subject to higher risks than comparable U.S. activities
because the investment and commercial climate may be influenced by financial instability in international economies, restrictive
economic policies and political and legal system uncertainties.
Raw materials
Raw materials essential to the Company's business are generally readily available from multiple sources. Where there are
exceptions, the temporary unavailability of those raw materials would not likely have a material adverse effect on the financial
results of the Company.
Patents
The Company's subsidiaries have made a practice of obtaining patent protection on their products and processes where
possible. They own, or are licensed under, a significant number of patents in the U.S. and other countries relating to their
products, product uses, formulations and manufacturing processes, which in the aggregate are believed to be of material
importance to the Company in the operation of its businesses. The Company’s subsidiaries face patent challenges from third
parties, including challenges seeking to manufacture and market generic and biosimilar versions of the Company's key
pharmaceutical products prior to expiration of the applicable patents covering those products. Significant legal proceedings
2
and claims involving the Company's patent and other intellectual property are described in Note 19 Legal proceedings—
Intellectual property of the Notes to Consolidated Financial Statements included in Item 8 of this Report.
Sales of the Company’s largest product, collectively DARZALEX (daratumumab) and DARZALEX FASPRO (daratumumab and
hyaluronidase-fihj), accounted for approximately 13.1% of the Company's total revenues for fiscal 2024. Accordingly, the
patents related to these products are believed to be material to the Company. Genmab A/S owns two patent families related
to DARZALEX, and Janssen Biotech, Inc. has an exclusive license to those patent families. The two patent families both expire
in the United States in 2029, and in Europe, compound/use patent protection in select countries extends to 2031/2032.
Janssen Biotech, Inc. owns a separate patent portfolio related to DARZALEX FASPRO.
Sales of the Company’s second largest product, STELARA (ustekinumab) accounted for approximately 11.7% of the Company's
total revenues for fiscal 2024. According to patent settlement and license agreements, the Company expects continued
launches of biosimilar versions of STELARA in Europe and the United States in 2025 which will impact the Company’s sales
of STELARA.
Trademarks
The Company’s subsidiaries have made a practice of selling their products under trademarks and of obtaining protection for
these trademarks by all available means. These trademarks are protected by registration in the U.S. and other countries where
such products are marketed. The Company considers these trademarks in the aggregate to be of material importance in the
operation of its businesses.
Seasonality
Worldwide sales do not reflect any significant degree of seasonality; however, spending has typically been heavier in the fourth
quarter of each year than in other quarters. This reflects increased spending decisions, principally for advertising and research
and development activity.
Competition
In all of their product lines, the Company's subsidiaries compete with companies both locally and globally. Competition exists
in all product lines without regard to the number and size of the competing companies involved. Competition in research,
both internally and externally sourced, involving the development and the improvement of new and existing products and
processes, is particularly significant. The development of new and innovative products, as well as protecting the underlying
intellectual property of the Company’s product portfolio, is important to the Company's success in all areas of its business.
The competitive environment requires substantial investments in continuing research.
Environment
The Company is subject to a variety of environmental laws and regulations in the United States and other jurisdictions. The
Company believes that its operations comply in all material respects with applicable environmental laws and regulations. The
Company’s compliance with these requirements is not expected to have a material effect upon its capital expenditures, cash
flows, earnings or competitive position.
Regulation
The Company’s businesses are subject to varying degrees of governmental regulation in the countries in which operations are
conducted, and the general trend is toward increasingly stringent regulation and enforcement. The Company is subject to
costly and complex U.S. and foreign laws and governmental regulations, and any adverse regulatory action may materially
adversely affect the Company's financial condition and business operations. In the U.S., the pharmaceutical product and
medical technology industries have long been subject to regulation by various federal and state agencies, primarily as to
product safety, efficacy, manufacturing, advertising, labeling and safety reporting. The exercise of broad regulatory powers by
the U.S. Food and Drug Administration (the U.S. FDA) continues to result in increases in the amounts of testing and
documentation required for U.S. FDA approval of new drugs and devices and a corresponding increase in the expense of
product introduction. Similar trends are also evident in major markets outside of the U.S.
2024 Annual Report
3
The medical device regulatory framework and the evolving privacy, data localization, and emerging cyber security laws and
regulations around the world are examples of such increased regulation. Within the U.S., an increasing number of U.S. States
have enacted comprehensive privacy laws, and federal regulators (e.g., the U.S. FDA, FTC and HHS) continue to stress the
intersection of health and privacy as a compliance and enforcement priority. In the EU, multiple directives and laws (including
NIS2, EHDS, the Data Act, the Cyber Resilience Act, and the AI Act) are rapidly changing privacy and cybersecurity compliance
requirements while introducing new enforcement risks. In addition, China has introduced broad personal information protection
and data security regulations, with more anticipated, thereby increasing China’s scrutiny of company compliance and data
transfer practices. With other jurisdictions enacting similar privacy laws, local data protection authorities will force greater
accountability on the collection, access and use of personal data in the healthcare industry. These laws can also restrict
transfers of data across borders, potentially impacting how data-driven health care solutions are developed and deployed
globally in a compliant manner. Moreover, as a result of the broad scale release and availability of Artificial Intelligence (AI)
technologies such as generative AI, a global trend towards more comprehensive and nuanced regulation to ensure the ethical
use, privacy, and security of AI is underway that includes standards for transparency, accountability, and fairness, which will
require compliance developments or enhancements.
The regulatory agencies under whose purview the Company operates have administrative powers that may subject it to actions
such as product withdrawals, recalls, seizure of products and other civil and criminal sanctions. In some cases, the Company’s
subsidiaries may deem it advisable to initiate product recalls regardless of whether it has been required or directed to.
The U.S. FDA and regulatory agencies around the globe are also increasing their enforcement activities. If the U.S. FDA were to
conclude that we are not in compliance with applicable laws or regulations, or that any of our pharmaceutical products or
medical technologies are ineffective or pose an unreasonable safety risk, the U.S. FDA could ban such products, detain or seize
adulterated or misbranded products, order a recall, repair, replacement, or refund of such products, withdraw approval for such
products, refuse to grant pending applications for marketing authorization or require certificates of foreign governments for
exports, and/or require us to notify health professionals and others that the products present unreasonable risks of substantial
harm to the public health. The U.S. FDA may also assess civil or criminal penalties against us, our officers or employees and
impose operating restrictions on a company-wide basis, or enjoin and/or restrain certain conduct resulting in violations of
applicable law. The U.S. FDA may also recommend prosecution to the U.S. Department of Justice. Any adverse regulatory
action, depending on its magnitude, may restrict us from effectively marketing and selling our products and limit our ability to
obtain future clearances, classifications or approvals, and could result in a substantial modification to our business practices
and operations. Equivalent enforcement mechanisms exist in different countries in which we conduct business.
The costs of human healthcare have been and continue to be a subject of study, investigation and regulation by governmental
agencies and legislative bodies around the world. In the U.S., attention has been focused by states, regulatory agencies and
Congress on prices, profits, overutilization and the quality and costs of healthcare generally. Laws and regulations have been
enacted to require adherence to strict compliance standards and prevent fraud and abuse in the healthcare industry. There is
increased focus on interactions and financial relationships between healthcare companies and healthcare providers. Various
state and federal transparency laws and regulations require disclosures of payments and other transfers of value made to
certain healthcare practitioners, including physicians, teaching hospitals, and certain non-physician practitioners. Federal and
foreign laws governing international business practices require strict compliance with anti-bribery standards and certain
prohibitions with respect to payments to any foreign government official. Payors and Pharmacy Benefit Managers (PBMs) are
a potent force in the marketplace, and increased attention is being paid to the impact of PBM practices on healthcare cost and
access in the U.S.
Our business has been and continues to be affected by federal and state legislation that alters the pricing, coverage, and
reimbursement landscape. At the federal level, in August 2022, President Biden signed into law the Inflation Reduction Act
(IRA), which includes provisions that effectively authorize the government to establish prices for certain high-spend
single-source drugs and biologics reimbursed by the Medicare program, starting in 2026 for Medicare Part D drugs and 2028
for Medicare Part B drugs. On August 29, 2023, the Centers for Medicare & Medicaid Services (“CMS”) published the first
“Selected Drug” list, which includes XARELTO and STELARA as well as IMBRUVICA, which is developed in collaboration and co-
commercialized in the U.S. with Pharmacyclics LLC, an AbbVie company. The Selected Drug list also included other medicines
targeting disease states that are prevalent in the Medicare population. Although CMS published an explanation for how it
determined prices for selected drugs in December 2024, uncertainty remains as to the methodology used to determine these
prices. The IRA specifies a ceiling price but not a minimum price for selected drugs and does not require CMS to use a specific
framework for determining selected drug prices. In any event, we anticipate that the selected products will be subjected to a
government-established price for the Medicare population beginning in 2026.
4
The IRA also contains provisions that impose rebates if certain prices increase at a rate that outpaces the rate of inflation,
beginning October 1, 2022, for Medicare Part D drugs and January 1, 2023, for Medicare Part B drugs. Separate IRA provisions
redesign the Medicare Part D benefit in various ways, including by shifting a greater portion of costs to manufacturers within
certain coverage phases and replacing the Part D coverage gap discount program with a new manufacturer discounting
program. Failure to comply with IRA provisions may subject manufacturers to various penalties, including civil
monetary penalties.
In July 2023, Janssen Pharmaceuticals, Inc. (Janssen) filed litigation against the U.S. Department of Health and Human
Services as well as the Centers for Medicare and Medicaid Services challenging the constitutionality of the IRA's Medicare
Drug Price Negotiation Program. The litigation requests a declaration that the IRA violates Janssen’s rights under the First
Amendment and the Fifth Amendment to the Constitution and therefore that Janssen is not subject to the IRA’s mandatory
pricing scheme. The impact of the IRA on our business and the broader pharmaceutical industry remains uncertain, as litigation
filed by Janssen and other pharmaceutical companies remains ongoing and while CMS has publicly announced the maximum fair
price for each of the selected drugs, implementation of the program is still in progress. In April 2024, Janssen appealed the
district court’s denial of its summary judgment motion to the Third Circuit.
Additionally, we expect continued scrutiny on drug pricing and government price reporting from Congress, agencies, and other
bodies at the federal and state levels, which may result in additional regulations or other mechanisms to increase pricing
transparency and controls.
There are a number of additional bills pending in Congress and healthcare reform proposals at the state level that would affect
drug pricing, including in the Medicare and Medicaid programs. This changing legal landscape has both positive and negative
impacts on the U.S. healthcare industry with much remaining uncertain as to how various provisions of federal and state law,
and potential modification or repeal of these laws, will ultimately affect the industry. The IRA and any other federal or state
legislative change could affect the pricing and market conditions for our products.
In addition, business practices in the healthcare industry have come under increased scrutiny, particularly in the U.S., by
government agencies and state attorneys general, and resulting investigations and prosecutions carry the risk of significant
civil and criminal penalties. Of note is the increased enforcement activity by data protection authorities in various jurisdictions,
particularly in the European Union, where significant fines have been levied on companies for data breaches, violations of
privacy requirements, and unlawful cross-border data transfers. In the U.S., the Federal Trade Commission has stepped up
enforcement of data privacy with several significant settlements (including settlements concerning the downstream sharing of
personal information and use and disclosure of personal health data) and there have been a material increase in class-action
lawsuits linked to the collection and use of biometric data and use of tracking technologies.
Further, the Company relies on global supply chains, and production and distribution processes, that are complex, and subject
to increasing regulatory requirements that may affect sourcing, supply and pricing of materials used in the Company's
products. These processes also are subject to complex and lengthy regulatory approvals.
2024 Annual Report
5
Employees and human capital management
As of December 29, 2024 and December 31, 2023 the number of employees was approximately:
2024
2023
Employees(1)
139,800
134,400
Full-time equivalent (FTE) positions(2)
138,100
131,900
(1)
“Employee” is defined as an individual working full-time or part-time, excluding fixed term employees, interns and co-op employees.
Employee data may not include full population from more recently acquired companies and individuals on long-term disability are excluded.
Contingent workers, contractors and subcontractors are also excluded. Shockwave has been included in the fiscal 2024 headcount in the
above table.
(2)
FTE represents the total number of full-time equivalent positions and does not reflect the total number of individual employees as some
work part-time.
Employees by region (in percentages)
34.5%
17.5%
28.0%
20.0%
Asia Pacific
EMEA
Latin America
North America
Strategy
The Company believes that its employees are critical to its continued success and are an essential element of its long-term
strategy. Management is responsible for ensuring that its policies and processes reflect and reinforce the Company's desired
corporate culture, including policies and processes related to strategy, risk management, and ethics and compliance. The
Company’s human capital management strategy is built on three fundamental focus areas:
•
Attracting and recruiting top talent
•
Developing and retaining top talent
•
Empowering and inspiring talent
Underpinning these focus areas are ongoing efforts to cultivate and foster a culture built on innovation, health, well-being and
safety, inclusion and belonging where the Company's employees are encouraged to succeed both professionally and personally
while helping the Company achieve its business goals.
Culture and employee engagement
At Johnson & Johnson, employees are guided by Our Credo, which sets forth the Company's responsibilities to patients,
consumers, customers, healthcare professionals, employees, communities and shareholders. Employees worldwide must adhere
to the Company’s Code of Business Conduct, which sets fundamental requirements and serves as a foundation for the
Company policies, procedures and guidelines, all of which provide additional guidance on expected employee behaviors in every
market where it operates. The Company conducts global surveys that offer its employees the ability to provide feedback and
valuable insight to help address potential human resources risks and identify opportunities to improve. In 2024, 94% of global
employees across 73 countries participated in Our Credo Survey which was offered in 36 languages.
6
Growth and development
To lead in the changing healthcare landscape, it is crucial that the Company continue to attract and retain top talent. In 2024,
the Company's voluntary turnover rate was 6.3%. The Company believes that its employees must be equipped with the right
knowledge and skills and be provided with opportunities to grow and develop in their careers. Accordingly, professional
development programs and educational resources are available to all employees. The Company's objective is to foster a
learning culture that helps shape each person’s unique career path while creating a robust pipeline of talent to deliver on the
Company’s long-term strategies. In furtherance of this objective, the Company deploys a global approach to ensure
development is for everyone, regardless of where they are on their career journey. To prioritize learning, the Company recently
held Johnson & Johnson's second Global Learning Day. Employees were encouraged to set aside a full day to explore skill-
building courses on J&J Learn, the new state-of-the-art learning platform.
Our workforce
As stated in Our Credo, we are responsible to our employees who work with us throughout the world. The Company is
committed to cultivating, fostering and advancing an inclusive, credo-based work environment for employees that recognizes
and rewards based on merit. The Company is dedicated to the values in Our Credo and strives to meet the needs of its
employees and stakeholders through compliance with law and the following evidence based strategies:
•
Sustain a global workforce of individuals with many different backgrounds, abilities, cultures and perspectives
•
Maintain a work environment where each person’s dignity is respected and they have an opportunity to advance based on
their merit
•
Drive innovation and growth with our business to serve markets around the world
Our approach with respect to our workforce is guided by applicable laws, internal and external insights, global best practices
and employee feedback.
Compensation and benefits
As part of the Company's total rewards philosophy, the Company offers competitive compensation and benefits to attract and
retain top talent. The Company is committed to fair treatment in its compensation and benefits for employees at all levels. The
Company observes legal minimum wage provisions and exceeds them where possible. The Company's total rewards offerings
include an array of programs to support its employees' well-being, including annual performance incentive opportunities,
pension and retirement savings programs, health and welfare benefits, paid time off, leave programs, flexible work schedules
and employee assistance programs.
Health, wellness and safety
The Company’s investment in employee health, well-being and safety is built on its conviction that advancing health for
humanity starts with advancing the health of its employees. With the right awareness, focus, practices and tools, the Company
works to ensure that all its employees around the world, as well as contingent workers, contractors and visitors to the
Company's sites, can work safely. The Company has continuously expanded health and well-being programs throughout the
Company and across the globe, incorporating new thinking and technologies to keep its offerings best-in-class and to help
employees achieve their personal health goals. The programs and practices the Company provides—physical, mental, emotional
and financial—help promote holistic employee health. The Company continues to address our employees needs through J&J
Flex, a hybrid model that empowers the Company’s office-based employees to find a balance of in-person and remote work,
while preserving the Company's culture and need for face-to-face engagement and leadership.
2024 Annual Report
7
Available information
The Company’s main corporate website address is www.jnj.com. The Company makes its SEC filings available on the
Company’s website at www.investor.jnj.com/financials/sec-filings, as soon as reasonably practicable after having been
electronically filed or furnished to the SEC. The Company's SEC filings are also available at the SEC’s website at www.sec.gov.
Investors and the public should note that the Company also announces information through its press releases and media
statements at www.jnj.com/mediacenter, investor.jnj.com and www.factsabouttalc.com. We use these websites to
communicate with investors and the public about our products, litigation and other matters. It is possible that the information
we post to these websites could be deemed to be material information. Therefore, we encourage investors and others
interested in the Company to review the information posted to these websites in conjunction with www.jnj.com, the Company's
SEC filings, press releases, public conference calls and webcasts.
In addition, the Restated Certificate of Incorporation, as amended, Amended and Restated By-Laws, the written charters of
the Audit Committee, the Compensation & Benefits Committee, the Nominating & Corporate Governance Committee, the
Regulatory Compliance & Sustainability Committee, and the Science & Technology Committee of the Board of Directors, and
the Company’s Principles of Corporate Governance, Code of Business Conduct (for employees), Code of Business Conduct &
Ethics for Members of the Board of Directors and Executive Officers, and other corporate governance materials are available
on the Company's website at www.investor.jnj.com/governance/corporate-governance-overview and will be provided without
charge to any shareholder submitting a written request, as provided above. The information on www.jnj.com, investor.jnj.com
and www.factsabouttalc.com is not, and will not be deemed, a part of this Report or incorporated into any other filings the
Company makes with the SEC.
8
Item 1A. Risk factors
An investment in the Company’s common stock or debt securities involves risks and uncertainties. The Company seeks to
identify, manage and mitigate risks to our business, but uncertainties and risks are difficult to predict and many are outside of
the Company’s control and cannot therefore be eliminated. In addition to the other information in this report and the
Company’s other filings with the SEC, investors should consider carefully the factors set forth below. Investors should be
aware that it is not possible to predict or identify all such factors and that the following is not meant to be a complete
discussion of all potential risks or uncertainties. If known or unknown risks or uncertainties materialize, the Company’s
business, results of operations or financial condition could be adversely affected, potentially in a material way.
Risks related to our business, industry and operations
The Company’s businesses operate in highly competitive product markets and competitive pressures could adversely
affect the Company’s earnings.
The Company faces substantial competition in its two operating segments and in all geographic markets. The Company’s
businesses compete with companies of all sizes on the basis of cost-effectiveness, technological innovations, intellectual
property rights, product performance, real or perceived product advantages, pricing and availability and rate of reimbursement.
The Company also competes with other market participants in securing rights to acquisitions, collaborations and licensing
agreements with third parties. Competition for rights to product candidates and technologies may result in significant
investment and acquisition costs and onerous agreement terms for the Company. Competitors’ development of more effective
or less costly products, and/or their ability to secure patent and other intellectual property rights and successfully market
products ahead of the Company, could negatively impact sales of the Company’s existing products as well as its ability to bring
new products to market despite significant prior investment in the related product development. The Company may also
experience operational and financial risk in connection with acquisitions if we are unable to fully identify potential risks and
liabilities associated with acquired businesses or products, successfully integrate operations and employees, and successfully
identify and realize synergies with existing businesses while containing acquisition-related strain on our management,
operations and financial resources.
For the Company’s Innovative Medicine businesses, loss of patent exclusivity for a product often is followed by a substantial
reduction in sales as competitors gain regulatory approval for generic, biosimilar and other competing products and enter the
market. For the Company’s MedTech businesses, technological innovation, product quality, reputation and customer service
are especially important to competitiveness. Development by other companies of new or improved products, processes and
technologies could threaten to make the Company’s products or technologies less desirable, less economical or obsolete. The
Company’s business and operations will be negatively impacted if we are unable to introduce new products or technological
advances that are safe, more effective, more effectively marketed or otherwise outperform those of our competitors.
Interruptions and delays in manufacturing operations could adversely affect the Company’s business, sales
and reputation.
The Company’s manufacturing of products requires the timely delivery of sufficient amounts of complex, high-quality
components and materials. The Company’s subsidiaries operate 64 manufacturing facilities as well as sourcing from thousands
of suppliers around the world. The Company has in the past, and may in the future, face unanticipated interruptions and delays
in manufacturing through its internal or external supply chain. Manufacturing disruptions can occur for many reasons including
regulatory action, production quality deviations or safety issues, labor disputes, labor shortages, site-specific incidents (such
as fires), natural disasters such as hurricanes and other severe weather events, raw material shortages, lack of available
inspectors, political unrest, terrorist attacks and epidemics or pandemics. Such delays and difficulties in manufacturing can
result in product shortages, declines in sales and reputational impact as well as significant remediation and related costs
associated with addressing the shortage.
The Company relies on third parties to manufacture and supply certain of our products. Any failure by or loss of a third-
party manufacturer or supplier could result in delays and increased costs, which may adversely affect our business.
The Company relies on third parties to manufacture and supply certain of our raw materials, component parts and products.
We depend on these third-party manufacturers to allocate to us a portion of their manufacturing capacity sufficient to meet
our needs, to produce products of acceptable quality and at acceptable manufacturing yields and to deliver those products to
us on a timely basis and at acceptable prices. However, we cannot guarantee that these third-party manufacturers will be able
to meet our near-term or long-term manufacturing requirements, which could result in lost sales and have an adverse effect on
our business.
2024 Annual Report
9
Other risks associated with our reliance on third parties to manufacture these products include reliance on the third party for
regulatory compliance and quality assurance, misappropriation of the Company’s intellectual property, limited ability to manage
our inventory, possible breach of the manufacturing agreement by the third party and the possible termination or nonrenewal
of the manufacturing agreement by the third party at a time that is costly or inconvenient for us. Moreover, if any of our
third-party manufacturers suffers any damage to facilities, loses benefits under material agreements, experiences power
outages, encounters financial difficulties, is unable to secure necessary raw materials from its suppliers or suffers any other
reduction in efficiency, the Company may experience significant business disruption. In the event of any such disruption, the
Company would need to seek and source other qualified third-party manufacturers, likely resulting in further delays and
increased costs which could affect our business adversely.
Counterfeit versions of our products could harm our patients and have a negative impact on our revenues, earnings,
reputation and business.
Our industry continues to be challenged by the vulnerability of distribution channels to illegal counterfeiting and the presence
of counterfeit products in a growing number of markets and over the Internet. Third parties may illegally distribute and sell
counterfeit versions of our products, which do not meet our rigorous manufacturing and testing standards. To distributors and
patients, counterfeit products may be visually indistinguishable from the authentic version. Counterfeit medicines pose a risk
to patient health and safety because of the conditions under which they are manufactured – often in unregulated, unlicensed,
uninspected and unsanitary sites – as well as the lack of regulation of their contents.
The industry’s failure to mitigate the threat of counterfeit medicines could adversely impact our business and reputation by
impacting patient confidence in our authentic products, potentially resulting in lost sales, product recalls, and an increased
threat of litigation. In addition, diversion of our products from their authorized market into other channels may result in
reduced revenues and negatively affect our profitability.
Global health crises, pandemics, epidemics, or other outbreaks could adversely disrupt or impact certain aspects of the
Company’s business, results of operations and financial condition.
We are subject to risks associated with global health crises, epidemics, pandemics and other outbreaks (such incident(s), a
health crisis or health crises). The spread of health crises have caused and may cause the Company to modify its business
practices, and take further actions as may be required by government authorities or as the Company determines are in the best
interests of our patients, customers, employees and business partners under such circumstances. Impacts to the Company
have included and may include adverse impacts to results of operations and financial condition, including lower sales and
reduced customer demand and usage of certain of our products. While the Company has robust business continuity plans in
place across our global supply chain network designed to help mitigate the impact of health crises, these efforts may not
completely prevent our business from being adversely affected in the event of a health crisis. Health crises could adversely
impact the Company’s operations, including, among other things, our manufacturing operations, supply chain, third-party
suppliers, sales and marketing, and clinical trial operations. Any of these factors could adversely affect the Company’s
business, financial results, and global economic conditions generally.
Risks related to government regulation and legal proceedings
Global sales in the Company’s Innovative Medicine and MedTech segments may be negatively impacted by healthcare
reforms and increasing pricing pressures.
Sales of the Company’s Innovative Medicine and MedTech products are significantly affected by reimbursements by
third-party payors such as government healthcare programs, private insurance plans and managed care organizations. As part
of various efforts to contain healthcare costs, these payors are putting downward pressure on prices at which products will be
reimbursed. In the U.S., increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private
sector beneficiaries, in part due to continued consolidation among healthcare providers, could result in further pricing
pressures. In addition, recent legislation and ongoing political scrutiny on pricing, coverage and reimbursement could result in
additional pricing pressures. Specifically, the Inflation Reduction Act of 2022 (IRA) has changed Medicare Part D benefit
design and has subjected certain of the Company's products to government-established pricing beginning in 2026 and may
subject additional products in the future. Failure to adhere to the government's interpretations of the law pending ongoing
litigation may expose the Company to penalties. In addition, change to Medicare Part D could have a negative impact on U.S.
Innovative Medicine sales. Further, increased third-party utilization of the 340B Federal Drug Discount Program from
expanded interpretations of the statute and program abuse may have a negative impact on the Company's financial
performance. Outside the U.S., numerous major markets, including the EU, United Kingdom, Japan and China, have pervasive
government involvement in funding healthcare and, in that regard, directly or indirectly impose price controls, limit access to, or
reimbursement for, the Company’s products, or reduce the value of its intellectual property protection.
10
We are subject to an increasing number of costly and complex governmental regulations in the countries in which
operations are conducted which may materially adversely affect the Company’s financial condition and
business operations.
As described in Item 1. Business, the Company is subject to an increasing number of extensive government laws and regulations,
investigations and legal action by national, state and local government agencies in the U.S. and other countries in which it
operates. For example, changes to the U.S. FDA’s timing or requirements for approval or clearance of our products may have a
negative impact on our ability to bring new products to market. New and changing laws, regulations, executive orders and other
directives may also impose deadlines on the Company, or its third-party suppliers, manufacturers or other partners and
providers, for which there may be insufficient time to implement changes to comply with such new regulations and may result
in manufacturing delays or other supply chain constraints. If the Company is unable to identify ways to mitigate these delays or
constraints, there may be an adverse effect on sales and access to our products.
The Company is subject to significant legal proceedings that can result in significant expenses, fines and
reputational damage.
In the ordinary course of business, Johnson & Johnson and its subsidiaries are subject to numerous claims and lawsuits
involving various issues such as product liability, patent disputes and claims that their product sales, marketing and pricing
practices violate various antitrust, unfair trade practices and/or consumer protection laws. The Company’s more significant
legal proceedings are described in Note 19 Legal proceedings under Notes to the Consolidated Financial Statements included
in Item 8 of this Report. Litigation, in general, and securities, derivative action, class action and multi-district litigation, in
particular, can be expensive and disruptive. Some of these matters may include thousands of plaintiffs, may involve parties
seeking large and/or indeterminate amounts, including punitive or exemplary damages, and may remain unresolved for several
years. For example, the Company is a defendant in numerous lawsuits arising out of the use of body powders containing talc,
primarily JOHNSON’S Baby Powder. While the Company believes it has substantial defenses in these matters, it is not feasible
to predict the ultimate outcome of litigation. The Company has been and could in the future be required to pay significant
amounts as a result of settlements or judgments in these matters, potentially in excess of accruals, including matters where
the Company could be held jointly and severally liable among other defendants. The resolution of, or increase in accruals for,
one or more of these matters in any reporting period could have a material adverse effect on the Company’s results of
operations and cash flows for that period. The Company does not purchase third-party product liability insurance; however, the
Company utilizes a wholly owned captive insurance company subject to certain limits.
Product reliability, safety and effectiveness concerns can have significant negative impacts on sales and results of
operations, lead to litigation and cause reputational damage.
Product concerns, whether raised internally or by litigants, regulators or consumer advocates, and whether or not based on
scientific evidence, can result in safety alerts, product recalls, governmental investigations, regulatory action on the part of the
U.S. FDA (or its counterpart in other countries), private claims and lawsuits, payment of fines and settlements, declining sales
and reputational damage. These circumstances can also result in damage to brand image, brand equity and consumer trust in
the Company’s products. Product recalls have in the past, and could in the future, prompt government investigations and
inspections, the shutdown of manufacturing facilities, continued product shortages and related sales declines, significant
remediation costs, reputational damage, possible civil penalties and criminal prosecution.
The Company faces significant regulatory scrutiny, which imposes significant compliance costs and exposes the
Company to government investigations, legal actions and penalties.
The rapid increase in new government laws and regulations imposes significant compliance costs to the Company and a failure
of the Company to timely implement changes to comply with these new laws may expose the Company to investigations, legal
actions or penalties. Regulatory issues regarding compliance with current Good Manufacturing Practices (cGMP) (and
comparable quality regulations in foreign countries) by manufacturers of drugs and devices can lead to fines and penalties,
product recalls, product shortages, interruptions in production, delays in new product approvals and litigation. In addition, the
marketing, pricing and sale of the Company’s products are subject to regulation, investigations and legal actions including
under the Federal Food, Drug, and Cosmetic Act, the Medicaid Rebate Program, federal and state false claims acts, state
unfair trade practices acts and consumer protection laws. Scrutiny of healthcare industry business practices by government
agencies and state attorneys general in the U.S., and any resulting investigations and prosecutions, carry risk of significant civil
and criminal penalties including, but not limited to, debarment from participation in government healthcare programs. Any such
debarment could have a material adverse effect on the Company’s business and results of operations. The most significant
current investigations and litigation brought by government agencies are described in Note 19 Legal proceedings—Government
proceedings under Notes to the Consolidated Financial Statements included in Item 8 of this Report.
2024 Annual Report
11
Changes in tax laws or exposures to additional tax liabilities could negatively impact the Company’s operating results.
Changes in tax laws or regulations around the world, including in the U.S. and as led by the Organization for Economic
Cooperation and Development, such as the enactment by certain EU and non-EU countries, and the anticipated enactment by
additional countries, of a global minimum tax, could negatively impact the Company’s effective tax rate and results of
operations. A change in statutory tax rate or certain international tax provisions 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 tax laws or
regulations 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.
See Note 8 Income taxes under Notes to the Consolidated Financial Statements included in Item 8 of this Report for
additional information.
The Company conducts business and files tax returns in numerous countries and is addressing tax audits and disputes with
many tax authorities. 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.
The Company regularly assesses the likely outcomes of its tax audits and disputes to determine the appropriateness of its tax
reserves. However, any tax authority could take a position on tax treatment that is contrary to the Company’s expectations,
which could result in tax liabilities in excess of reserves.
Risks related to our intellectual property
The Company faces increased challenges to intellectual property rights central to its business.
The Company owns or licenses a significant number of patents and other proprietary rights relating to its products and
manufacturing processes. These rights are essential to the Company’s businesses and the inability of the Company to secure
and maintain these rights may have a detrimental impact on the Company’s financial results. Public policy, both within and
outside the U.S., has become increasingly unfavorable toward intellectual property rights. The Company cannot be certain that
it will secure and maintain adequate patent protection for new products and technologies in the United States and other
important markets.
Competitors routinely challenge the validity or extent of the Company’s owned or licensed patents and proprietary rights
through litigation, interferences, oppositions and other proceedings, such as inter partes review (IPR) proceedings before the
United States Patent & Trademark Office (USPTO). These proceedings absorb resources and can be protracted as well as
unpredictable. In addition, others may claim the Company has infringed their intellectual property rights, including copyrights,
patents, or trademarks, and/or has misappropriated their trade secrets, any of which could result in an injunction and/or the
need to pay past damages and future royalties and adversely affect the competitive position and sales of our products.
The Company has faced increasing patent challenges from third parties seeking to manufacture and market generic and
biosimilar versions of the Company’s key pharmaceutical products prior to expiration of the applicable patents covering those
products. In the event the Company is not successful in defending its patents against such challenges, or upon the “at-risk”
launch by the generic or biosimilar firm of its product, the Company can lose a major portion of revenues for the referenced
product in a very short period of time. Current legal proceedings involving the Company’s patents and other intellectual
property rights are described in Note 19 Legal proceedings—Intellectual property under Notes to the Consolidated Financial
Statements included in Item 8 of this Report.
12
Risks related to product development, regulatory approval
and commercialization
Significant challenges or delays in the Company’s innovation, development and implementation of new products,
technologies and indications could have an adverse impact on the Company’s long-term success.
The Company’s continued growth and success depends on its ability to innovate and develop new and differentiated products
and services that address the evolving healthcare needs of patients, providers and consumers. Development of successful
products and technologies is also necessary to offset revenue losses when the Company’s existing products lose market share
due to various factors such as competition and loss of patent exclusivity. New products introduced within the past five years
accounted for approximately 25% of 2024 sales. The Company cannot be certain when or whether it will be able to develop,
license or otherwise acquire companies, products and technologies, whether particular product candidates will be granted
regulatory approval, and, if approved, whether the products will be commercially successful.
The Company pursues product development through internal research and development as well as through collaborations,
acquisitions, joint ventures and licensing or other arrangements with third parties. In all of these contexts, developing new
products, particularly pharmaceutical and biotechnology products and medical devices, requires significant investment of
resources over many years. Only a very few biopharmaceutical research and development programs result in commercially
viable products. The process depends on many factors including the ability to: discern patients’ and healthcare providers’
future needs; develop promising new compounds, strategies and technologies; achieve successful clinical trial results; secure
effective intellectual property protection; obtain regulatory approvals on a timely basis; and, if and when they reach the
market, successfully differentiate the Company’s products from competing products and approaches to treatment. Moreover,
the development and regulatory approval of new products may be delayed due to limits on federal agency budgets or
personnel, including reductions to the U.S. FDA’s budget, employees, and operations, which may lead to slower response times
and longer review periods. After approval, new products or enhancements to existing products may not be accepted quickly or
significantly in the marketplace due to product and price competition, changes in customer preferences or healthcare
purchasing patterns, resistance by healthcare providers or uncertainty over third-party reimbursement. Even following initial
regulatory approval, the success of a product can be adversely impacted by safety and efficacy findings in larger real-world
patient populations, as well as market entry of competitive products.
The Company leverages the use of data science, machine learning and other forms of AI and emerging technologies across
varying parts of its business and operations, and the introduction and incorporation of AI may result in unintended
consequences or other new or expanded risks and liabilities. AI technology is continuously evolving, and the AI technologies we
develop and adopt may become obsolete earlier than planned. Our investments in these technologies may not result in the
benefits we anticipate or enable us to obtain or maintain a competitive advantage. The application of AI in our business is
emerging and evolving alongside new laws and regulations that may entail significant costs or ultimately limit our ability to
continue the use of these technologies. These technologies also carry inherent risks related to data privacy and security
further described below.
Risks related to financial and economic market conditions
The Company faces a variety of financial, economic, legal, social and political risks associated with conducting
business internationally.
The Company’s extensive operations and business activity throughout the world are accompanied by certain financial,
economic, legal, social and political risks, including those listed below.
Foreign currency exchange: In fiscal 2024, approximately 43% of the Company’s sales occurred outside of the U.S., with
approximately 23% in Europe, 5% in the Western Hemisphere, excluding the U.S., and 15% in the Asia-Pacific and Africa region.
Changes in non-U.S. currencies relative to the U.S. dollar impact the Company’s revenues and expenses. While the Company
uses financial instruments to mitigate the impact of fluctuations in currency exchange rates on its cash flows, unhedged
exposures continue to be subject to currency fluctuations. In addition, the weakening or strengthening of the U.S. dollar may
result in significant favorable or unfavorable translation effects when the operating results of the Company’s non-U.S. business
activity are translated into U.S. dollars.
Inflation and currency devaluation risks: The Company faces challenges in maintaining profitability of operations in economies
experiencing high inflation rates. Specifically, the Company has accounted for operations in Argentina, Turkey, Venezuela and
Egypt (beginning in the fiscal fourth quarter of 2024) as highly inflationary, as the prior three-year cumulative inflation rate
surpassed 100%. While the Company strives to maintain profit margins in these areas through cost reduction programs,
productivity improvements and periodic price increases, it might experience operating losses as a result of continued inflation.
2024 Annual Report
13
In addition, the impact of currency devaluations in countries experiencing high inflation rates or significant currency exchange
fluctuations could negatively impact the Company’s operating results.
Illegal importation of pharmaceutical products: The illegal importation of pharmaceutical products from countries where
government price controls or other market dynamics result in lower prices may adversely affect the Company’s sales and
profitability in the U.S. and other countries in which the Company operates. With the exception of limited quantities of
prescription drugs for personal use, foreign imports of pharmaceutical products are illegal under current U.S. law. However, the
volume of illegal imports continues to rise as the ability of patients and other customers to obtain the lower-priced imports has
grown significantly.
Anti-bribery and other regulations: The Company is subject to various federal and foreign laws that govern its international
business practices with respect to payments to government officials. Those laws include the U.S. Foreign Corrupt Practices
Act (FCPA), which prohibits U.S. publicly traded companies from promising, offering, or giving anything of value to foreign
officials with the corrupt intent of influencing the foreign official for the purpose of helping the Company obtain or retain
business or gain any improper advantage. The Company’s business is heavily regulated and therefore involves significant
interaction with foreign officials. Also, in many countries outside the U.S., the healthcare providers who prescribe human
pharmaceuticals are employed by the government and the purchasers of human pharmaceuticals are government entities;
therefore, the Company’s interactions with these prescribers and purchasers are subject to regulation under the FCPA. In
addition to the U.S. application and enforcement of the FCPA, various jurisdictions in which the Company operates have laws
and regulations, including the U.K. Bribery Act 2010, aimed at preventing and penalizing corrupt and anticompetitive behavior.
Enforcement activities under these laws could subject the Company to additional administrative and legal proceedings and
actions, which could include claims for civil penalties, criminal sanctions, and administrative remedies, including exclusion from
healthcare programs.
Other financial, economic, legal, social and political risks. Other risks inherent in conducting business globally include:
•
local and regional economic environments and policies in the markets that we serve, including interest rates, monetary
policy, inflation, economic growth, recession, commodity prices, and currency controls or other limitations on the ability to
expatriate cash;
•
protective economic policies taken by governments, such as trade protection measures, increased antitrust reporting
requirements and enforcement activity, and import/export licensing requirements;
•
compliance with local regulations and laws including, in some countries, regulatory requirements restricting the Company’s
ability to manufacture or sell its products in the relevant market;
•
diminished protection of intellectual property and contractual rights in certain jurisdictions;
•
potential nationalization or expropriation of the Company’s foreign assets;
•
political or social upheavals, economic instability, repression, or human rights issues; and
•
geopolitical events, including natural disasters, disruptions to markets due to war, armed conflict, terrorism, epidemics
or pandemics.
Due to the international nature of the Company's business, geopolitical or economic changes or events, including global
tensions and war, could adversely affect our business, results of operations or financial condition.
As described above, the Company has extensive operations and business activity throughout the world. Global tensions,
conflict and/or war among any of the countries in which we conduct business or distribute our products may result in foreign
currency volatility, decreased demand for our products in affected countries, and challenges to our global supply chain related
to increased costs of materials and other inputs for our products and suppliers. Most recently, we have experienced, and
expect to continue to experience, impacts to the Company's business resulting from the Russia-Ukraine war, rising conflict in
the Middle East as well as increasing tensions between the U.S. and China. In response to heightened conflict, such as the
Russia-Ukraine war, governments may impose export controls and broad financial and economic sanctions. Our business and
operations may be further impacted by the imposition of tariffs, trade protection measures or other policies adopted by any
country that favor domestic companies and technologies over foreign competitors. Additional sanctions or other measures
may be imposed by the global community, including but not limited to limitations on our ability to file, prosecute and maintain
patents, trademarks and other intellectual property rights. Furthermore, in some countries, such as in Russia, action may be
taken that allows companies and individuals to exploit inventions owned by patent holders from the United States and many
other countries without consent or compensation and we may not be able to prevent third parties from practicing the
Company's inventions in Russia or from selling or importing products in and into Russia. In addition, the U.S. government
recently announced tariffs on products manufactured in several jurisdictions, including China, Mexico and Canada, and has
14
made announcements regarding the potential imposition of tariffs on other jurisdictions. While certain of the announced tariffs
have been delayed, the U.S. government may in the future pause, reimpose or increase tariffs, and countries subject to such
tariffs have and in the future may impose reciprocal tariffs or other restrictive trade measures in response. Any of these
actions could increase uncertainties and associated risks relating to the Company’s global operations.
Weak financial performance, failure to maintain a satisfactory credit rating or disruptions in the financial markets could
adversely affect our liquidity, capital position, borrowing costs and access to capital markets.
We currently maintain investment grade credit ratings with Moody’s Investors Service and Standard & Poor’s Ratings Services.
Rating agencies routinely evaluate us, and their ratings of our long-term and short-term debt are based on a number of factors.
Any downgrade of our credit ratings by a credit rating agency, whether as a result of our actions or factors which are beyond
our control, can increase the cost of borrowing under any indebtedness we may incur, reduce market capacity for our
commercial paper or require the posting of additional collateral under our derivative contracts. There can be no assurance that
we will be able to maintain our credit ratings, and any additional actual or anticipated changes or downgrades in our credit
ratings, including any announcement that our ratings are under review for a downgrade, may have a negative impact on our
liquidity, capital position and access to capital markets.
Other risks
Our business depends on our ability to recruit and retain talented and highly skilled employees.
Our continued growth requires us to recruit and retain talented employees representing many different backgrounds,
experiences, and skill sets. The market for highly skilled workers and leaders in our industry is extremely competitive and our
ability to compete depends on our ability to hire, develop and motivate highly skilled personnel in all areas of our organization.
Maintaining our brand and reputation, as well as a credo-based work environment enables us to attract top talent. If we are less
successful in our recruiting efforts, or if we cannot retain highly skilled workers and key leaders, our ability to develop and
deliver successful products and services may be adversely affected. In addition, effective succession planning is important to
our long-term success. Any unsuccessful implementation of our succession plans or failure to ensure effective transfer of
knowledge and smooth transitions involving key employees could adversely affect our business, financial condition, or results
of operations.
Climate change or legal, regulatory or market measures to address climate change may negatively affect our business and
results of operations.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere
could present risks to our operations, including an adverse impact on global temperatures, weather patterns and the frequency
and severity of extreme weather and natural disasters. Natural disasters and extreme weather conditions, such as a hurricane,
tornado, earthquake, wildfire or flooding, may pose physical risks to our facilities and disrupt the operation of our supply chain.
The impacts of the changing climate on water resources may result in water scarcity, limiting our ability to access sufficient
high-quality water in certain locations, which may increase operational costs.
Concern over climate change may also result in new or additional legal or regulatory requirements designed to reduce
greenhouse gas emissions and/or mitigate the effects of climate change on the environment. If such laws or regulations are
more stringent than current legal or regulatory obligations, we may experience disruption in, or an increase in the costs
associated with sourcing, manufacturing and distribution of our products, which may adversely affect our business, results of
operations or financial condition. Further, the impacts of climate change have an influence on customer preferences, and
failure to provide climate-friendly products could potentially result in loss of market share.
An information security incident, including a cybersecurity breach, could have a negative impact on the Company’s
business or reputation.
To meet business objectives, the Company relies on both internal information technology (IT) systems and networks, and those
of third parties and their vendors, to process and store sensitive data (including confidential research, business plans, financial
information, intellectual property, and personal data that may be subject to legal protection) to ensure the continuity of the
Company’s supply chain and operations, and as part of many of the products we deliver to customers. The extensive range of
information security and cybersecurity threats, which affect companies globally, pose a persistent risk to the security and
availability of these systems and networks, including to customer products that are connected to or rely on such systems and
networks, and the confidentiality, integrity, and availability of the Company’s sensitive data. The Company assesses these
threats, responds to attacks and breaches that it has experienced, and makes investments to increase internal protection,
detection, and response capabilities, as well as ensure the Company’s third-party providers have required capabilities and
2024 Annual Report
15
controls, to address this risk. Because of the frequently changing attack techniques, along with the increased volume and
sophistication of the attacks, there is the potential for the Company to be adversely impacted. This impact could result in
reputational, competitive, operational or other business harm as well as financial costs and regulatory action. Also, increasing
use of AI could increase these risks. The Company maintains cybersecurity insurance in the event of an information security or
cyber incident; however, the coverage may not be sufficient to cover all financial, legal, business or reputational losses.
As a result of increased global tensions, the Company expects there will continue to be, an increased risk of information
security or cybersecurity incidents, including cyberattacks perpetrated by adversaries of countries where the Company
maintains operations. Given the potential sophistication of these attacks, the Company may not be able to address the threat
of information security or cybersecurity incidents proactively or implement adequate preventative measures and we may not
be able to detect and address any such disruption or security breach promptly, or at all, which could adversely affect
customers that use our products, our business, results of operations or financial condition. Moreover, these threats could also
impact our third-party partners resulting in compromise of the Company's IT systems, networks and data which could
negatively affect the Company.
A breach of privacy laws or unauthorized access, loss or misuse of personal data could have a negative impact on the
Company’s business or reputation.
The Company is subject to privacy and data protection laws and regulations across the globe that impose broad compliance
obligations on the collection, possession, use, storage, access, disclosure, transfer, deletion and protection of personal data.
Breach of the requirements of these laws and regulations could result in substantial fines, penalties, governmental actions,
private right of actions, including class actions, and damage to our reputation and business. New privacy laws are expected
globally, together with greater privacy enforcement by governmental authorities globally, particularly on data localization
requirements and data transfers including international data flows. The Company has established privacy compliance programs
and controls with which our businesses worldwide are required to comply. However, with many technology and data-driven
initiatives evolving across the Company, involving multiple vendors and third parties, there are threats that could impact our
business operations and research activities, including potential risks of unauthorized access and loss of personal data as well as
legislative actions imposing limitations and controls on the use and sharing of personal data as well as on cross border
data flows.
16
Item 1B. Unresolved staff comments
Not applicable.
Item 1C. Cybersecurity
Risk management and strategy
The Company has documented cybersecurity policies and standards, assesses risks from cybersecurity threats, and monitors
information systems for potential cybersecurity issues. To protect the Company’s information systems from cybersecurity
threats, the Company uses various security tools supporting protection, detection, and response capabilities. The Company
maintains a cybersecurity incident response plan to help ensure a timely, consistent response to actual or attempted
cybersecurity incidents impacting the Company.
The Company also identifies and assesses third-party risks within the enterprise, and through the Company's use of third-party
service providers, across a range of areas including data security and supply chain through a structured third-party risk
management program.
The Company maintains a formal information security training program for all employees that includes training on matters such
as phishing and email security best practices. Employees are also required to complete mandatory training on data privacy.
To evaluate and enhance its cybersecurity program, the Company periodically utilizes third-party experts to undertake
maturity assessments of the Company’s information security program.
To date, the Company is not aware of any cybersecurity incident that has had or is reasonably likely to have a material impact
on the Company’s business or operations; however, because of the frequently changing attack techniques, along with the
increased volume and sophistication of the attacks, there is the potential for the Company to be adversely impacted. This
impact could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory
action. Refer to the risk factor captioned An information security incident, including a cybersecurity breach, could have a
negative impact to the Company’s business or reputation in Part I, Item 1A. Risk factors for additional description of
cybersecurity risks and potential related impacts on the Company.
Governance - management’s responsibility
The Company takes a risk-based approach to cybersecurity and has implemented cybersecurity controls designed to address
cybersecurity threats and risks. The Chief Information Officer (CIO), who is a member of the Company’s Executive Committee,
and the Chief Information Security Officer (CISO) are responsible for assessing and managing cybersecurity risks, including
security incident detection, response, and recovery.
The Company’s CISO, in coordination with the CIO, is responsible for leading the Company’s cybersecurity program and
management of cybersecurity risk. The current CISO has over twenty-five years of experience in information security, and his
background includes technical experience, strategy and architecture focused roles, cyber and threat experience, and various
leadership roles.
Governance - board oversight
The Company’s Board of Directors oversees the overall risk management process, including cybersecurity risks, directly and
through its committees. The Regulatory Compliance & Sustainability Committee (RCSC) of the board is primarily responsible
for oversight of risk from cybersecurity threats and oversees compliance with applicable laws, regulations and Company
policies related to, among others, privacy and cybersecurity.
RCSC meetings include discussions of specific risk areas throughout the year including, among others, those relating to
cybersecurity. The CISO provides quarterly updates each year to RCSC on cybersecurity matters. These reports include an
overview of the cybersecurity threat landscape, key cybersecurity initiatives to improve the Company’s risk posture, changes
in the legal and regulatory landscape relative to cybersecurity, and overviews of certain cybersecurity incidents that have
occurred within the Company and within the industry.
2024 Annual Report
17
Item 2. Properties
The Company's subsidiaries operate 64 manufacturing facilities occupying approximately 9.6 million square feet of floor
space. The manufacturing facilities are used by the industry segments of the Company’s business approximately as follows:
Segment
Square Feet
(in thousands)
Innovative Medicine
4,696
MedTech
4,911
Worldwide Total
9,607
Within the U.S., four facilities are used by the Innovative Medicine segment and 19 by the MedTech segment. Outside of the
U.S., 14 facilities are used by the Innovative Medicine segment and 27 by the MedTech segment.
The locations of the manufacturing facilities by major geographic areas of the world are as follows:
Geographic Area
Number of
Facilities
Square Feet
(in thousands)
United States
23
2,892
Europe
21
4,521
Western Hemisphere, excluding U.S.
7
898
Africa, Asia and Pacific
13
1,296
Worldwide Total
64
9,607
In addition to the manufacturing facilities discussed above, the Company maintains numerous office and warehouse facilities
throughout the world.
The Company's subsidiaries generally seek to own, rather than lease, their manufacturing facilities, although some, principally in
non-U.S. locations, are leased. Office and warehouse facilities are often leased. The Company also engages
contract manufacturers.
The Company is committed to maintaining all of its properties in good operating condition.
Segment information on additions to property, plant and equipment is contained in Note 17 Segments of business and
geographic areas of the Notes to Consolidated Financial Statements included in Item 8 of this Report.
Item 3. Legal proceedings
The information called for by this item is incorporated herein by reference to the information set forth in Note 19 Legal
proceedings of the Notes to Consolidated Financial Statements included in Item 8 of this Report.
Item 4. Mine safety disclosures
Not applicable.
18
Executive officers of the registrant
Listed below are the executive officers of the Company. There are no family relationships between any of the executive
officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which
the executive officer was selected. At the annual meeting of the Board of Directors, the executive officers are elected by the
Board to hold office for one year and until their respective successors are elected and qualified, or until earlier resignation
or removal.
Vanessa Broadhurst, 56
Member, Executive Committee; Executive Vice President, Global Corporate Affairs
Ms. V. Broadhurst was named Executive Vice President, Global Corporate Affairs and appointed to the
Executive Committee in 2022. Ms. Broadhurst rejoined the Company in 2017 and was appointed Company
Group Chairman, Global Commercial Strategy Organization in 2018. From 2013 to 2017, she held General
Manager roles at Amgen in Inflammation & Cardiovascular, and Cardiovascular & Bone. Prior to her roles at
Amgen, she served in various leadership roles at the Company from 2005-2013.
Joaquin Duato, 62
Chairman of the Board; Chief Executive Officer
Mr. J. Duato became Chairman of the Board of Directors in 2023 subsequent to his appointments as Chief
Executive Officer and Director in 2022. Mr. Duato was appointed to the Executive Committee in 2016
when he was named Executive Vice President, Worldwide Chairman, Pharmaceuticals and subsequently
served as Vice Chairman of the Executive Committee. Mr. Duato first joined the Company in 1989 with
Janssen-Farmaceutica S.A. (Spain), a subsidiary of the Company, and held executive positions of increasing
responsibility in all business sectors and across multiple geographies and functions.
Elizabeth Forminard, 54
Member, Executive Committee; Executive Vice President, Chief Legal Officer
Ms. E. Forminard was appointed Executive Vice President, Chief Legal Officer and a member of the
Executive Committee in 2022. Ms. Forminard joined the Company in 2006, serving in roles of increasing
responsibility including General Counsel Medical Devices & Diagnostics, General Counsel Consumer Group
& Supply Chain, Worldwide Vice President Corporate Governance, and in her immediate past role as
General Counsel Pharmaceuticals.
Kristen Mulholland, 58
Member, Executive Committee; Executive Vice President, Chief Human Resources Officer
Ms. K. Mulholland was appointed Executive Vice President, Chief Human Resources Officer and appointed
to the Executive Committee in 2024. She joined the company in 2005 and has held HR leadership positions
across the full breadth of the company including MedTech, Innovative Medicines, our Corporate Functions
and Corporate HR Services including Performance and Development and most recently, Global
Total Rewards.
John C. Reed, M.D., Ph.D., 66
Member, Executive Committee; Executive Vice President, Innovative Medicine, R&D
Dr. J. C. Reed joined the Company in 2023 as Executive Vice President, Innovative Medicine, R&D and a
member of the Executive Committee. Prior to joining the Company, Dr. Reed held executive leadership
positions at Sanofi (2018-2022) and Roche (2013-2018), serving on their respective executive committees.
He also served as CEO of Sanford-Burnham Medical Research Institute (now Sanford Burnham Prebys)
where he established multiple therapeutic area-aligned research centers and platform technology centers.
2024 Annual Report
19
Tim Schmid, 55
Member, Executive Committee; Executive Vice President, Worldwide Chairman, MedTech
Mr. T. Schmid was appointed Executive Vice President, Worldwide Chairman, MedTech and a member of
the Executive Committee in 2023. He joined the Company in 1993 and has served in leadership positions
throughout Johnson & Johnson MedTech, including Chief Strategic Customer Officer and President of
Ethicon, and most recently served as Company Group Chairman MedTech Asia Pacific from 2018-2023.
James Swanson, 59
Member, Executive Committee; Executive Vice President, Chief Information Officer
Mr. J. Swanson was appointed Executive Vice President, Chief Information Officer and a member of the
Executive Committee in 2022. He rejoined the Company in 2019 as Chief Information Officer of Johnson &
Johnson from Bayer Crop Science, where he served as a member of the Executive Leadership Team and as
Chief Information Officer and Head of Digital Transformation. From 1996 to 2005, Mr. Swanson held
positions of increasing responsibility at the Company, including Project Manager, Director IT, Sr. Director
IT and Vice President, Chief Information Officer.
Jennifer L. Taubert, 61
Member, Executive Committee; Executive Vice President, Worldwide Chairman, Innovative Medicine
Ms. J. L. Taubert was appointed Executive Vice President, Worldwide Chairman, Innovative Medicine
(formerly Pharmaceuticals) and a member of the Executive Committee in 2018. She joined the Company in
2005 as Worldwide Vice President and held several executive positions of increasing responsibility in the
Pharmaceuticals sector, including Company Group Chairman, North America, and Company Group
Chairman, The Americas from 2012-2018.
Kathryn E. Wengel, 59
Member, Executive Committee; Executive Vice President, Chief Technical Operations & Risk Officer
Ms. K. E. Wengel was appointed Executive Vice President, Chief Technical Operations & Risk Officer in
2023, subsequent to her appointment to the Executive Committee in 2018 when she was named as
Executive Vice President, Chief Global Supply Chain Officer. Ms. Wengel first joined the Company in 1988
as Project Engineer and Engineering Supervisor at Janssen, a subsidiary of the Company. During her tenure
with the Company, she has held a variety of strategic leadership and executive positions, including in roles
within operations, quality, engineering, new products, information technology, and other technical and
business functions.
Joseph J. Wolk, 58
Member, Executive Committee; Executive Vice President, Chief Financial Officer
Mr. J. J. Wolk was appointed Executive Vice President, Chief Financial Officer and a member of the
Executive Committee in 2018. He first joined the Company in 1998 as Finance Manager, Business
Development for Ortho-McNeil, a subsidiary of the Company. During his tenure at the Company, he has
held a variety of senior leadership roles in several segments and functions across the Company's
subsidiaries, including Vice President, Finance and Chief Financial Officer of the Janssen Pharmaceutical
Companies, and Vice President, Investor Relations.
20
Part II
Item 5. Market for registrant’s common equity, related
stockholder matters and issuer purchases of equity securities
As of February 6, 2025, there were 114,147 record holders of common stock of the Company. Additional information called for
by this item is incorporated herein by reference to the following sections of this Report: Note 16 “Common Stock, Stock
Option Plans and Stock Compensation Agreements” of the Notes to Consolidated Financial Statements included in Item 8;
and Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Equity
Compensation Plan Information.”
Issuer purchases of equity securities
The following table provides information with respect to common stock purchases by the Company during the fiscal fourth
quarter of 2024. 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 fourth quarter.
Fiscal Period
Total Number
of Shares
Purchased(1)
Avg. Price
Paid Per
Share
Total Number of Shares (or
Units) Purchased as Part
of Publicly Announced
Plans or Programs
Maximum Number (or Approximate
Dollar Value) of Shares (or Units)
that May Yet Be Purchased Under
the Plans or Programs
September 30, 2024 through
October 27, 2024
621,412
$163.13
—
—
October 28, 2024 through
November 24, 2024
831,866
$158.98
—
—
November 25, 2024 through
December 29, 2024
150,000
$152.96
—
—
Total
1,603,278
—
(1)
During the fiscal fourth quarter of 2024, the Company repurchased an aggregate of 1,603,278 shares of Johnson & Johnson Common
Stock in open-market transactions, all of which were purchased as part of a systematic plan to meet the needs of the Company’s
compensation programs.
Item 6. Reserved
2024 Annual Report
21
Item 7. Management’s discussion and analysis of results of
operations and financial condition
Organization and business segments
Description of the company and business segments
Johnson & Johnson and its subsidiaries (the Company) have approximately 138,100 employees worldwide engaged in the
research and development, manufacture and sale of a broad range of products in the healthcare field. The Company conducts
business in virtually all countries of the world with the primary focus on products related to human health and well-being.
The Company is organized into two business segments: Innovative Medicine and MedTech. The Innovative Medicine segment is
focused on the following therapeutic areas: Immunology, Infectious Diseases, Neuroscience, Oncology, Pulmonary
Hypertension, and Cardiovascular and Metabolism. Products in this segment are distributed directly to retailers, wholesalers,
distributors, hospitals and healthcare professionals for prescription use. The MedTech segment includes a broad portfolio of
products used in the Orthopaedic, Surgery, Cardiovascular (previously referred to as Interventional Solutions) and Vision fields.
These products are distributed to wholesalers, hospitals and retailers, and used principally in the professional fields by
physicians, nurses, hospitals, eye care professionals and clinics.
The Chief Operating Decision Maker (CODM) is the Company's Chief Executive Officer (Principal Executive Officer).The
Executive Committee is Johnson & Johnson’s senior leadership team responsible for setting the strategy and priorities of the
Company and driving accountability at all levels. Within the strategic parameters provided by the Executive Committee, senior
management groups at U.S. and international operating companies are each responsible for their own strategic plans and the
day-to-day operations of those companies.
In all of its product lines, the Company competes with other companies both locally and globally, throughout the world.
Competition exists in all product lines without regard to the number and size of the competing companies involved.
Competition in research, involving the development and the improvement of new and existing products and processes,
is particularly significant. The development of new and innovative products, as well as protecting the underlying intellectual
property of the Company's product portfolio, is important to the Company’s success in all areas of its business. The
competitive environment requires substantial investments in continuing research.
Management’s objectives
With Our Credo as the foundation, the Company believes health is everything. The Company's strength in healthcare
innovation empowers us to build a world where complex diseases are prevented, treated, and cured, where treatments are
smarter and less invasive, and solutions are personal. Through the Company's expertise in Innovative Medicine and MedTech,
the Company is uniquely positioned to innovate across the full spectrum of healthcare solutions today to deliver the
breakthroughs of tomorrow, and profoundly impact health for humanity.
New products introduced within the past five years accounted for approximately 25% of 2024 sales. In 2024, $17.2 billion was
invested in research and development reflecting management’s commitment to create life-enhancing innovations and to create
value through partnerships that will profoundly impact of health for humanity.
Our approximately 138,100 employees are critical drivers of the Company’s success. Employees are empowered and inspired to
lead with Our Credo and purpose as guides. This allows every employee to use the Company’s reach and size to advance the
Company’s purpose, and to also lead with agility and urgency. Leveraging the extensive resources across the enterprise
enables the Company to innovate and execute with excellence. This ensures the Company can remain focused on addressing
the unmet needs of society every day and invest for an enduring impact, ultimately delivering value to its patients, consumers
and healthcare professionals, employees, communities and shareholders.
22
Research &
development
$ In Billions
17.2
15.1
2024
2023
Acquisitions*
(net of cash acquired)
$ In Billions
16.9
0.5
2024
2023
Dividends paid
per share
In Dollars
4.91
4.70
2024
2023
*
Includes business combinations and
asset acquisitions
Results of operations
Analysis of consolidated sales
For discussion on results of operations and financial condition pertaining to the fiscal years 2023 and 2022 see the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Item 7. Management's discussion and analysis of
results of operations and financial condition. Prior periods disclosed herein were recast to reflect the continuing operations of
the Company.
In 2024, worldwide sales increased 4.3% to $88.8 billion as compared to an increase of 6.5% in 2023. These sales changes
consisted of the following:
Sales increase/(decrease) due to:
2024
2023
Volume
5.9%
6.8%
Price
0.0
0.6
Currency
(1.6)
(0.9)
Total
4.3%
6.5%
The net impact of acquisitions and divestitures on the worldwide sales growth was a positive impact of 0.5% in 2024 and a
positive impact of 1.5% in 2023.
Sales by U.S. companies were $50.3 billion in 2024 and $46.4 billion in 2023. This represents increases of 8.3% in 2024
and 10.6% in 2023. In the fiscal 2024, acquisitions and divestitures had a net positive impact of 0.7% on the U.S. operational
sales growth. Sales by international companies were $38.5 billion in 2024 and $38.7 billion in 2023. This represents a decrease
of 0.5% in 2024 and an increase of 1.9% in 2023. In fiscal 2024, acquisitions and divestitures had a net positive impact of 0.2%
on the international operational sales growth. In fiscal 2024, the impact of the Covid-19 Vaccine sales decline on the
international operational sales was a negative 2.6%.
The five-year compound annual growth rates for worldwide, U.S. and international sales were 5.4%, 6.8% and 3.8%,
respectively. The ten-year compound annual growth rates for worldwide, U.S. and international sales were 4.0%, 5.4%
and 2.5%, respectively.
2024 Annual Report
23
In 2024, sales by companies in Europe experienced a decline of 1.0% as compared to the prior year, which included an
operational decline of 0.6% and a negative currency impact of 0.4%. In fiscal 2024, the net impact of the Covid-19 Vaccine on
the European regions change in operational sales was a negative 4.7%. Sales by companies in the Western Hemisphere,
excluding the U.S., achieved growth of 3.6% as compared to the prior year, which included operational growth of 20.4%, and a
negative currency impact of 16.8%. Sales by companies in the Asia-Pacific, Africa region experienced a decline of 1.2% as
compared to the prior year, including operational growth of 2.3% offset by a negative currency impact of 3.5%.
In 2024, the Company utilized three wholesalers distributing products for both segments that represented approximately
20.5%, 15.6% and 12.3% of the total gross revenues. In 2023, the Company had three wholesalers distributing products for
both segments that represented approximately 18.2%, 15.1% and 14.2% of the total gross revenues.
2024 Sales by geographic region (in billions)
$20.2
$4.7
$13.6
$50.3
Europe
Western
Hemisphere
(ex. U.S.)
Asia-Pacific,
Africa
U.S.
2024 Sales by segment (in billions)
$57.0
$31.9
Innovative
Medicine
MedTech
Note: values may have been rounded
Analysis of sales by business segments
Innovative Medicine segment
Innovative Medicine segment sales in 2024 were $57.0 billion, an increase of 4.0% from 2023, which included operational
growth of 5.7% and a negative currency impact of 1.7%. U.S. sales were $34.0 billion, an increase of 9.0%. International sales
were $23.0 billion, a decrease of 2.5%, which included operational growth of 1.3% offset by a negative currency impact of
3.8%. In 2024, acquisitions and divestitures had a net negative impact of 0.1% on the operational sales growth of the
worldwide Innovative Medicine segment. In fiscal 2024, the net impact of the Covid-19 Vaccine on the total Innovative
Medicine and International change in operational sales was a negative 1.8% and 4.2%, respectively.
24
Major Innovative Medicine therapeutic area sales:
(Dollars in Millions)
2024
2023
Total
Change
Operations
Change
Currency
Change
Total Immunology
$17,828
$18,052
(1.2%)
0.4%
(1.6) %
REMICADE
1,605
1,839
(12.8)
(11.4)
(1.4)
SIMPONI/SIMPONI ARIA
2,190
2,197
(0.3)
4.5
(4.8)
STELARA
10,361
10,858
(4.6)
(3.4)
(1.2)
TREMFYA
3,670
3,147
16.6
18.1
(1.5)
Other Immunology
3
11
(74.1)
(74.1)
—
Total Infectious Diseases
3,396
4,418
(23.1)
(22.7)
(0.4)
COVID-19 VACCINE
198
1,117
(82.4)
(82.4)
0.0
EDURANT/rilpivirine
1,272
1,150
10.6
10.6
0.0
PREZISTA/PREZCOBIX/REZOLSTA/
SYMTUZA
1,712
1,854
(7.7)
(7.1)
(0.6)
Other Infectious Diseases
214
297
(27.6)
(25.0)
(2.6)
Total Neuroscience
7,115
7,140
(0.4)
1.3
(1.7)
CONCERTA/methylphenidate
641
783
(18.1)
(15.1)
(3.0)
INVEGA SUSTENNA/XEPLION/INVEGA
TRINZA/TREVICTA
4,222
4,115
2.6
3.4
(0.8)
SPRAVATO
1,077
689
56.4
56.8
(0.4)
Other Neuroscience
1,175
1,553
(24.3)
(20.7)
(3.6)
Total Oncology
20,781
17,661
17.7
19.8
(2.1)
CARVYKTI
963
500
92.7
92.7
0.0
DARZALEX
11,670
9,744
19.8
22.2
(2.4)
ERLEADA
2,999
2,387
25.6
27.3
(1.7)
IMBRUVICA
3,038
3,264
(6.9)
(5.2)
(1.7)
TECVAYLI
549
395
38.8
39.8
(1.0)
ZYTIGA /abiraterone acetate
631
887
(28.8)
(25.0)
(3.8)
Other Oncology
931
484
92.5
94.3
(1.8)
Total Pulmonary Hypertension
4,282
3,815
12.3
14.1
(1.8)
OPSUMIT
2,184
1,973
10.7
11.9
(1.2)
UPTRAVI
1,817
1,582
14.9
16.1
(1.2)
Other Pulmonary Hypertension
281
260
7.9
18.3
(10.4)
Total Cardiovascular / Metabolism / Other
3,562
3,671
(3.0)
(2.6)
(0.4)
XARELTO
2,373
2,365
0.3
0.3
—
Other
1,189
1,306
(8.9)
(7.8)
(1.1)
Total Innovative Medicine Sales
$56,964
54,759
4.0%
5.7%
(1.7) %
2024 Annual Report
25
Immunology products sales were $17.8 billion in 2024, representing a decrease of 1.2% as compared to the prior year. The
decline of STELARA (ustekinumab) sales was driven by share loss primarily due to European biosimilar entrants. Lower sales of
REMICADE (infliximab) was due to continued biosimilar competition. The growth of TREMFYA (guselkumab) was due to market
growth and share gains.
Sales of STELARA in the United States were approximately $6.7 billion in fiscal 2024. Third parties have filed abbreviated
Biologics License Applications with the FDA seeking approval to market biosimilar versions of STELARA. The Company has
settled certain litigation under the Biosimilar Price Competition and Innovation Act of 2009. According to patent settlement
and license agreements, the Company expects continued launches of biosimilar versions of STELARA in Europe and the United
States in 2025 which will impact the Company’s sales of STELARA.
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.
Infectious disease products sales were $3.4 billion in 2024, a decline of 23.1% as compared to the prior year primarily driven by
a decline in COVID-19 vaccine revenue.
Neuroscience products sales were $7.1 billion in 2024, representing a decrease of 0.4% as compared to the prior year primarily
driven by a decline in Other Neuroscience. The decline was partially offset by the growth of SPRAVATO (esketamine) driven by
the ongoing launch and increased physician and patient demand.
Oncology products achieved sales of $20.8 billion in 2024, representing an increase of 17.7% as compared to the prior year.
Strong sales of DARZALEX (daratumumab) were driven by continued share gains and market growth. Growth of ERLEADA
(apalutamide) was primarily due to continued share gains and market growth. Sales of CARVYKTI (ciltacabtagene autoleucel)
were driven by continued share gains, capacity expansion and manufacturing efficiencies. Additionally, sales from the ongoing
launches of TECVAYLI (teclistamab-cqyv), TALVEY (talquetamab-tgvs) and RYBREVANT (amivantamab), included in Other
Oncology, contributed to the growth. Growth was partially offset by ZYTIGA (abiraterone acetate) due to loss of exclusivity
and IMBRUVICA (ibrutinib) due to global competitive pressures.
Pulmonary Hypertension products sales were $4.3 billion, representing an increase of 12.3% as compared to the prior year.
Sales growth of both OPSUMIT (macitentan) and UPTRAVI (selexipag) was driven by market growth and share gains. Growth in
Other Pulmonary Hypertension was driven by OPSYNVI (macitentan/tadalafil).
Cardiovascular/Metabolism/Other products sales were $3.6 billion, a decline of 3.0% as compared to the prior year driven by
declines in Other.
The Company maintains a policy that no end customer will be permitted direct delivery of product to a location other than the
billing location. This policy impacts 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 certain
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.
26
During 2024, the Company advanced its pipeline with several regulatory submissions and approvals for new drugs and
additional indications for existing drugs as follows:
Product Name
(Chemical Name)
Indication
US
Approval
EU
Approval
US
Filing
EU
Filing
BALVERSA (erdafitinib)
Treatment of Patients with Locally Advanced or
Metastatic Urothelial Carcinoma and Selected Fibroblast
Growth Factor Receptor Gene Alterations (THOR)
•
•
CARVYKTI (ciltacabtagene
autoleucel)
Treatment for Relapsed and Refactor multiple myeloma
with 1-3 PL (CARTITUDE-4)
•
•
DARZALEX (daratumumab)
Treatment for frontline multiple myeloma transplant
eligible (PERSEUS)
•
•
DARZALEX (daratumumab)
Treatment for frontline multiple myeloma transplant
ineligible (CEPHEUS)
•
•
DARZALEX (daratumumab)
Treatment as subcutaneous monotherapy for high-risk
smoldering multiple myeloma (AQUILA)
•
•
EDURANT (rilpivirine)
Treatment for pediatric patients (2-12 years old) with HIV
•
•
IMBRUVICA (ibrutinib)
Treatment for frontline MCL (Triangle)
•
nipocalimab
Treatment for Generalized Myasthenia Gravis
•
•
OPSUMIT (macitentan)
Treatment for pediatric pulmonary arterial hypertension
(TOMORROW)
•
•
OPSYNVI (macitentan/
tadalafil STCT)
Treatment for pulmonary arterial hypertension
•
•
REKAMBYS
Treatment for Adolescents HIV
•
RYBREVANT (amivantamab)
In Combination with Chemotherapy for the First-Line
Treatment of Adult Patients with Advanced Non-Small
Cell Lung Cancer with Activating EGFR Exon 20 Insertion
Mutations (PAPILLON)
•
•
RYBREVANT (amivantamab)
Treatment for subcutaneous (PALOMA-3)
•
•
RYBREVANT / LAZCLUZE
Treatment for Non-Small Cell Lung Cancer (MARIPOSA)
•
•
RYBREVANT
Treatment for Non-Small Cell Lung Cancer 2L
(MARIPOSA-2)
•
•
SIMPONI (golimumab)
Treatment of Patients with Pediatric Ulcerative Colitis
•
•
SPRAVATO (esketamine)
monotherapy
Treatment of Patients with Treatment Resistant
Depression (TRD4005)
•
STELARA (ustekinumab)
Treatment of Patients with Pediatric Crohn's Disease
•
TREMFYA (guselkumab)
Treatment of Patients with Ulcerative Colitis (QUASAR)
•
•
TREMFYA (guselkumab)
Subcutaneous Induction for treatment of patients with
Ulcerative Colitis (ASTRO)
•
TREMFYA (guselkumab)
Subcutaneous Induction for treatment of patients with
Crohn's Disease (GRAVITI)
•
•
TREMFYA (guselkumab)
Treatment of Patients with Crohn's Disease (GALAXI)
•
•
TREMFYA (guselkumab)
Treatment of Patients with Pediatric Psoriasis
•
UPTRAVI (selexipag)
Treatment of Patients with Pediatric Pulmonary Arterial
Hypertension (SALTO)
•
2024 Annual Report
27
MedTech segment
The MedTech segment sales in 2024 were $31.9 billion, an increase of 4.8% from 2023, which included operational growth of
6.2% and a negative currency impact of 1.4%. U.S. sales were $16.3 billion, an increase of 6.9% as compared to the prior year.
International sales were $15.5 billion, an increase of 2.6% as compared to the prior year, which included operational growth of
5.4% and a negative currency impact of 2.8%. In 2024, the net impact of acquisitions and divestitures on the MedTech
segment worldwide operational sales growth was a positive 1.5% primarily related to the Shockwave acquisition.
Major MedTech franchise sales:
(Dollars in Millions)
2024
2023
Total
Change
Operations
Change
Currency
Change
Surgery
$9,845
10,037
(1.9) %
0.1%
(2.0) %
Advanced
4,488
4,671
(3.9)
(2.0)
(1.9)
General
5,358
5,366
(0.2)
2.0
(2.2)
Orthopaedics
9,158
8,942
2.4
3.0
(0.6)
Hips
1,638
1,560
5.0
5.6
(0.6)
Knees
1,545
1,456
6.1
6.5
(0.4)
Trauma
3,049
2,979
2.3
2.9
(0.6)
Spine, Sports & Other
2,926
2,947
(0.7)
(0.1)
(0.6)
Cardiovascular (1)
7,707
6,350
21.4
22.8
(1.4)
Electrophysiology
5,267
4,688
12.3
14.0
(1.7)
Abiomed
1,496
1,306
14.5
14.9
(0.4)
Shockwave (2)
564
—
*
*
—
Other Cardiovascular
380
356
6.9
8.4
(1.5)
Vision
5,146
5,072
1.5
3.0
(1.5)
Contact Lenses/Other
3,733
3,702
0.8
2.6
(1.8)
Surgical
1,413
1,370
3.2
4.3
(1.1)
Total MedTech Sales
$31,857
30,400
4.8%
6.2%
(1.4) %
(1)
Previously referred to as Interventional Solutions
(2)
Acquired on May 31, 2024
*
Percentage greater than 100% or not meaningful
The Surgery franchise sales were $9.8 billion in 2024, representing a decrease of 1.9% from 2023. The decline in Advanced
Surgery was primarily due to China volume-based procurement across all platforms and competitive pressures in Energy and
Endocutters. This was partially offset by the strength of the portfolio and commercial execution in Biosurgery as well as the
strength of new products in Endocutters. Growth in General Surgery was primarily driven by technology penetration and
benefits from the differentiated Wound Closure portfolio as well as increased procedure volume. This growth was offset by
the negative impact of currency and the Acclarent divestiture.
The Orthopaedics franchise sales were $9.2 billion in 2024, representing an increase of 2.4% from 2023. The fiscal 2024
includes a one-time revenue recognition timing change related to certain products across all Orthopaedic platforms in the U.S.
which positively impacted the worldwide Orthopaedics franchise growth as well as the negative impact from the near-term
revenue disruption related to the previously announced Orthopaedics restructuring. The growth in Hips reflects continued
strength of the portfolio primarily in the Anterior approach, and global procedure growth. The growth in Knees was primarily
driven by the ATTUNE portfolio, pull through related to the VELYS Robotic assisted solution and global procedure growth.
Growth in Trauma was driven by the adoption of recently launched products. The decline in Spine, Sports & Other was primarily
driven by competitive pressures and impacts from China volume-based procurement. This was partially offset by growth in the
U.S. market.
28
The Cardiovascular franchise, which includes sales from Shockwave Medical (Shockwave) acquired on May 31, 2024, achieved
sales of $7.7 billion in 2024, representing an increase of 21.4% from 2023. Electrophysiology growth was driven by global
procedure growth, new product performance and commercial execution. This was partially offset by the impacts of volume-
based procurement in China and competitive pressures in Pulsed Field Ablation catheters in the U.S. Abiomed sales reflect the
strength of all major commercialized regions driven by the continued adoption of Impella 5.5 and Impella RP.
The Vision franchise achieved sales of $5.1 billion in 2024, representing an increase of 1.5% from 2023. Contact Lenses/Other
growth was primarily driven by price actions, continued strong performance in the ACUVUE OASYS 1-Day family of products
(including recent launches), impacts from a one-time change in contract shipping terms in the U.S. and lapping of prior year
impacts of Russian sanctions partially offset by U.S. distributor stocking dynamics. Surgical growth was primarily driven by the
continued strength of recent innovations and commercial execution partially offset by China volume-based procurement and
competitive pressures in the U.S.
Analysis of consolidated earnings before provision for taxes on income
Consolidated earnings before provision for taxes on income was $16.7 billion and $15.1 billion for the years 2024 and 2023,
respectively. As a percent to sales, consolidated earnings before provision for taxes on income was 18.8% and 17.7%, in 2024
and 2023, respectively.
Earnings before provision for taxes
$16.7
$15.1
18.8%
17.7%
2024
2023
(Dollars in billions. Percentages in chart are as a percent to total sales)
Cost of products sold and selling, marketing and administrative expenses:
Cost of products sold
$27.5
$26.6
30.9%
31.2%
2024
2023
Selling, marketing & administrative
$22.9
$21.5
25.7%
25.2%
2024
2023
(Dollars in billions. Percentages in chart are as a percent to total sales)
2024 Annual Report
29
Cost of products sold:
Cost of products sold decreased as a percent to sales driven by:
•
Lower one-time COVID-19 vaccine supply network related exit costs in 2024 ($0 in 2024 versus $0.2 billion 2023) in the
Innovative Medicine business
•
Prior year restructuring related excess inventory costs in the MedTech business
partially offset by
•
The fair value Inventory step-up of $0.4 billion related to the business combination accounting associated with Shockwave
The intangible asset amortization expense included in cost of products sold was $4.5 billion for both fiscal years 2024
and 2023.
Selling, Marketing and Administrative expense:
Selling, Marketing and Administrative Expenses increased as a percent to sales driven by:
•
Increased commercial investment in the Innovative Medicine business
partially offset by
•
Optimization efforts related to the residual costs associated with the Kenvue separation
Research and Development expense:
Research and development expense by segment of business was as follows:
2024
2023
(Dollars in Millions)
Amount
% of Sales*
Amount
% of Sales*
Innovative Medicine
$13,529
23.8%
$11,963
21.8%
MedTech
3,703
11.6
3,122
10.3
Total research and development expense
$17,232
19.4%
$15,085
17.7%
Percent increase/(decrease) over the prior year
14.2%
6.7%
*As a percent to segment sales
Research and development activities represent a significant part of the Company's business. These expenditures relate to the
processes of discovering, testing and developing new products, upfront payments and developmental milestones, improving
existing products, as well as ensuring product efficacy and regulatory compliance prior to launch. The Company remains
committed to investing in research and development with the aim of delivering high quality and innovative products.
Research and Development increased as a percent to sales primarily driven by:
•
Acquired in-process research & development expense of $1.25 billion to secure the global rights to the NM26 bispecific
antibody (Yellow Jersey acquisition) and pipeline advancement in the Innovative Medicine business
•
Acquired in-process research & development expense of $0.5 billion from the V-Wave acquisition in the MedTech business
In-Process Research and Development Impairments (IPR&D): In the fiscal year 2024, the Company recorded a charge of
approximately $0.2 billion associated with the M710 (biosimilar) asset acquired as part of the acquisition of Momenta
Pharmaceuticals in 2020. There was also a partial impairment of this asset for $0.2 billion in the fiscal 2023. This asset is now
fully impaired.
Other (Income) Expense, Net: 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, investment (income)/loss related to employee benefit programs, gains and
losses on divestitures, certain transactional currency gains and losses, acquisition and divestiture related costs, litigation
accruals and settlements, as well as royalty income.
30
Other (income) expense, net for the fiscal year 2024 reflected less expense of $1.9 billion as compared to the prior year
primarily due to the following:
(Dollars in Billions)(Income)/Expense
2024
2023
Change
Litigation related(1)
$5.5
6.9
(1.4)
Acquisition, Integration and Divestiture related(2)
0.8
0.3
0.5
Changes in the fair value of securities(3)
0.3
0.6
(0.3)
COVID-19 vaccine manufacturing exit related costs
0.1
0.4
(0.3)
Monetization of royalty rights
(0.3)
0.0
(0.3)
Employee benefit plan related
(0.9)
(1.4)
0.5
Other
(0.8)
(0.2)
(0.6)
Total Other (Income) Expense, Net
$4.7
6.6
(1.9)
(1)
The fiscal years 2024 and 2023 include charges primarily for talc matters (See Note 19 to the Consolidated Financial Statements for more
details). The fiscal year 2023 includes favorable intellectual property related litigation settlements of approximately $0.3 billion.
(2)
The fiscal year 2024 is primarily related to the acquisition of Shockwave. The fiscal year 2023 is primarily related to the impairment of
Ponvory and one-time integration costs related to the acquisition of Abiomed.
(3)
The fiscal year 2024 includes the loss of $0.4 billion on the completion of the debt for equity exchange of the retained stake in Kenvue.
The fiscal year 2023 includes $0.4 billion related to the unfavorable change in the fair value of the remaining stake in Kenvue and $0.4
billion related to the partial impairment of Idorsia convertible debt and the change in the fair value of the Idorsia equity securities held.
Interest (Income) Expense: Interest income in the fiscal years 2024 and 2023 was $1.3 billion. Interest expense in the fiscal
years 2024 and 2023 was $0.8 billion. Cash, cash equivalents and marketable securities totaled $24.5 billion at the end of
2024, and averaged $23.7 billion as compared to the cash, cash equivalents and marketable securities total of $22.9 billion and
$22.6 billion average balance in 2023. The total debt balance at the end of 2024 was $36.6 billion with an average debt
balance of $33.0 billion as compared to $29.3 billion at the end of 2023 and an average debt balance of $34.5 billion. The
higher debt balance was due to the senior unsecured notes issued by the Company in the fiscal second quarter of 2024. The
net proceeds from this offering were used to fund the Shockwave acquisition which closed on May 31, 2024 and for general
corporate purposes.
Income before tax by segment
Income (loss) before tax by segment of business were as follows:
Income Before Tax
Segment Sales
Percent of Segment
Sales
(Dollars in Millions)
2024
2023
2024
2023
2024
2023
Innovative Medicine
$18,919
18,246
56,964
54,759
33.2%
33.3
MedTech
3,740
4,669
31,857
30,400
11.7
15.4
Segment earnings before tax(1)
22,659
22,915
88,821
85,159
25.5
26.9
Less: Expenses not allocated to segments(2)
5,972
7,853
Worldwide income before tax
$16,687
15,062
88,821
85,159
18.8%
17.7
(1)
See Note 17 to the Consolidated Financial Statements for more details.
(2)
Amounts not allocated to segments include interest (income) expense and general corporate (income) expense. The fiscal years 2024 and
2023 include charges for talc matters of approximately $5.1 billion and $7.0 billion, respectively. The fiscal 2024 includes a loss of
approximately $0.4 billion related to the debt to equity exchange of the Company's remaining shares of Kenvue Common Stock.
The fiscal year 2023 includes an approximately $0.4 billion unfavorable change in the fair value of the retained stake in Kenvue.
2024 Annual Report
31
Innovative Medicine segment:
In 2024, the Innovative Medicine segment income before tax as a percent to sales was 33.2% versus 33.3% in 2023. The
decrease in the income before tax as a percent of sales was primarily driven by the following:
•
Acquired in-process research and development expense of $1.25 billion to secure the global rights to the NM26
bispecific antibody
•
Litigation expense of $0.4 billion in 2024, primarily related to Risperdal Gynecomastia, versus favorable litigation related
items of $0.1 billion in 2023
•
Increased research and development to advance the pipeline
•
Increased commercial investment in selling and marketing expenses
partially offset by
•
Monetization of royalty rights of $0.3 billion in 2024
•
Lower one-time COVID-19 Vaccine related exit costs of $0.1 billion in 2024 versus $0.7 billion in 2023
•
Lower amortization expense of $0.2 billion in 2024 versus 2023
•
Restructuring charges of $0.1 billion in 2024 versus $0.5 billion in 2023
•
A gain of $0.1 billion in 2024 as compared to a loss of $0.4 billion in 2023 related to changes in the fair value of securities
MedTech segment:
In 2024, the MedTech segment income before tax as a percent to sales was 11.7% versus 15.4% in 2023. The decrease in the
income before tax as a percent to sales was primarily driven by the following:
•
Acquisition and integration related costs of $1.0 billion in 2024 (primarily related to the Shockwave acquisition) versus $0.2
billion in 2023 related to Abiomed
•
Acquired in-process research and development expense of $0.5 billion from the V-Wave acquisition in 2024
•
Higher amortization expense of $0.2 billion in 2024 related to Shockwave
partially offset by
•
A gain of $0.2 billion related to the Acclarent divestiture in 2024
•
Restructuring related charge of $0.2 billion in 2024 versus $0.3 billion in 2023
Restructuring: In the fiscal year 2023, the Company completed a prioritization of its research and development (R&D)
investment within the Innovative Medicine segment to focus on the most promising medicines with the greatest benefit to
patients. This resulted in the exit of certain programs within therapeutic areas. The R&D program exits are primarily in
infectious diseases and vaccines including the discontinuation of its respiratory syncytial virus (RSV) adult vaccine program,
hepatitis and HIV development. The pre-tax restructuring charge of approximately $0.1 billion in the fiscal year 2024 was
recorded in Restructuring on the Consolidated Statement of Earnings, and included the termination of partnered and non-
partnered development program costs, asset impairments and asset divestments. The pre-tax restructuring charge of
approximately $0.5 billion in the fiscal year 2023, of which $449 million was recorded in Restructuring and $30 million was
recorded in Cost of products sold on the Consolidated Statement of Earnings, and included the termination of partnered and
non-partnered program costs and asset impairments. Total project costs of approximately $0.6 billion have been recorded
since the restructuring was announced. The program was completed in the fiscal fourth quarter of 2024.
32
In the fiscal year 2023, the Company initiated a restructuring program of its Orthopaedics franchise within the MedTech
segment to streamline operations by exiting certain markets, product lines and distribution network arrangements. The pre-tax
restructuring expense of $0.2 billion in the fiscal year 2024, of which $132 million was recorded in Restructuring and $35
million was recorded in Cost of products sold on the Consolidated Statement of Earnings, primarily included costs related to
market and product exits. The pre-tax restructuring expense of $0.3 billion in the fiscal year 2023, of which $40 million was
recorded in Restructuring and $279 million was recorded in Cost of products sold on the Consolidated Statement of Earnings,
primarily included inventory and instrument charges related to market and product exits. Total project costs of approximately
$0.5 billion have been recorded since the restructuring was announced.
See Note 20 to the Consolidated Financial Statements for additional details related to the restructuring programs.
Provision for Taxes on Income: The worldwide effective income tax rate from continuing operations was 15.7% in 2024 and
11.5% in 2023. For discussion related to the fiscal year 2024 provision for taxes refer to Note 8 to the Consolidated
Financial Statements.
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
Development (OECD) Pillar Two Framework that was supported by over 130 countries worldwide. Several EU and non-EU
countries have enacted Pillar Two legislation with an initial effective date of January 1, 2024, with other aspects of the law
effective in 2025 or later. In the fiscal year 2024, the net impact of Pillar Two legislation was less than 1.0% to the Company’s
effective tax rate. While countries continue to enact new provisions or issue new regulations, based on current guidance, the
Company expects the net impact of Pillar Two in fiscal year 2025 to be up to 1.0% to the Company’s effective tax rate.
Liquidity and capital resources
Liquidity & cash flows
Cash and cash equivalents were $24.1 billion at the end of 2024 as compared to $21.9 billion at the end of 2023.
The primary sources and uses of cash that contributed to the $2.2 billion increase were:
(Dollars in billions)
$21.9
Q4 2023 Cash and cash equivalents balance
24.3
cash generated from operating activities
(18.6)
net cash used by investing activities
(3.1)
net cash used by financing activities
(0.4)
effect of exchange rate and rounding
$24.1
Q4 2024 Cash and cash equivalents balance
In addition, the Company had $0.4 billion in marketable securities at the end of fiscal year 2024 and $1.1 billion at the end of
fiscal year 2023. See Note 1 to the Consolidated Financial Statements for additional details on cash, cash equivalents and
marketable securities.
Cash flow from operations of $24.3 billion was the result of:
(Dollars In billions)
$14.1
Net Earnings
8.4
non-cash expenses and other adjustments primarily for depreciation and amortization, stock-based compensation,
asset write-downs and charges for acquired in-process research and development assets partially offset by net
gain on sale of assets/businesses and the deferred tax provision
1.7
a decrease in other current and non-current assets
1.6
an increase in accounts payable and accrued liabilities
(1.5)
an increase in accounts receivable and inventories
$24.3
Cash flow from operations
2024 Annual Report
33
Cash flow used for investing activities of $18.6 billion was primarily due to:
(Dollars in billions)
$(4.4)
additions to property, plant and equipment
(15.1)
acquisitions, net of cash acquired
0.7
proceeds from the disposal of assets/businesses, net
(1.8)
acquired in-process research and development assets
0.7
net sales of investments
1.5
credit support agreements activity, net
(0.2)
other (including capitalized licenses and milestones)
$(18.6)
Net cash used for investing activities
Cash flow used for financing activities of $3.1 billion was primarily due to:
(Dollars in billions)
$(11.8)
dividends to shareholders
(2.4)
repurchase of common stock
11.0
net proceeds from short and long-term debt
0.8
proceeds from stock options exercised/employee withholding tax on stock awards, net
0.3
credit support agreements activity, net
(1.0)
settlement of convertible debt acquired from Shockwave
$(3.1)
Net cash used for financing activities
The following table summarizes cash taxes paid net of refunds:
(Dollars in Millions)
2024
2023
2022
U.S. Federal (1)
$3,815
4,722
2,158
U.S. State and Local taxes
341
236
216
Total U.S.
$4,156
4,958
2,374
Total Foreign
2,558
3,616
2,849
Total cash taxes paid net of refunds
$6,714
$8,574
$5,223
(1)
Includes TCJA foreign undistributed earnings payments of $2.0 billion in fiscal year 2024, $1.5 billion in fiscal year 2023 and $0.8 billion in
fiscal year 2022
As of December 29, 2024, the Company's notes payable and long-term debt was in excess of cash, cash equivalents and
marketable securities. As of December 29, 2024, the net debt position was $12.1 billion as compared to the prior year of $6.4
billion. The debt balance at the end of 2024 was $36.6 billion as compared to $29.3 billion in 2023. In the fiscal second quarter
of 2024, the Company issued senior unsecured notes for a total of $6.7 billion. For additional details on borrowings, see Note 7
to the Consolidated Financial Statements. The net proceeds from this offering were used to fund the Shockwave acquisition
which closed on May 31, 2024, and for general corporate purposes. Considering recent market conditions, 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 remaining balance to be paid on the agreement to settle opioid litigation for
approximately $1.5 billion and the approximately $11.6 billion ($13.5 billion nominal) reserve for talc matters (See Note 19 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.
On May 8, 2023, Kenvue, completed an initial public offering (the IPO) resulting in the issuance of 198,734,444 shares of its
common stock, par value $0.01 per share (the Kenvue Common Stock), at an initial public offering of $22.00 per share for net
proceeds of $4.2 billion. The excess of the net proceeds from the IPO over the net book value of the Johnson & Johnson
34
divested interest was $2.5 billion and was recorded to additional paid-in capital. As of the closing of the IPO, Johnson
& Johnson owned approximately 89.6% of the total outstanding shares of Kenvue Common Stock and at July 2, 2023, the
non-controlling interest of $1.3 billion associated with Kenvue was reflected in equity attributable to non-controlling interests
in the consolidated balance sheet.
On August 23, 2023, Johnson & Johnson completed the disposition of an additional 80.1% ownership of Kenvue Common
Stock through an exchange offer, which resulted in Johnson & Johnson acquiring 190,955,436 shares of the Company’s
common stock in exchange for 1,533,830,450 shares of Kenvue Common Stock. The $31.4 billion of Johnson & Johnson
common stock received in the exchange offer is recorded in Treasury stock. Following the exchange offer, the Company
owned 9.5% of the total outstanding shares of Kenvue Common Stock that was recorded in other assets within continuing
operations at the fair market value of $4.3 billion as of August 23, 2023 and $3.9 billion as of December 31, 2023.
Johnson & Johnson divested net assets of $11.6 billion as of August 23, 2023, and the accumulated other comprehensive loss
attributable to the Consumer Health business at that date was $4.3 billion. Additionally, at the date of the exchange offer,
Johnson & Johnson decreased the non-controlling interest by $1.2 billion to record the deconsolidation of Kenvue.
This resulted in a gain on the exchange offer of $21.0 billion that was recorded in Net earnings from discontinued operations,
net of taxes in the consolidated statements of earnings for the fiscal third quarter of 2023. This one-time gain includes a
gain of $2.8 billion on the Kenvue Common Stock retained by Johnson & Johnson. The gain on the exchange offer qualifies as a
tax-free transaction for U.S. federal income tax purposes.
On May 15, 2024, the Company issued $3.6 billion aggregate principal amount of commercial paper and received $3.6 billion of
net cash proceeds to be used for general corporate purposes. On May 17, 2024, the Company completed a Debt-for-Equity
Exchange of its remaining 182,329,550 shares of Kenvue Common Stock for the outstanding Commercial Paper. Upon
completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged and the Company no longer
owns any shares of Kenvue Common Stock. This exchange resulted in a loss of approximately $0.4 billion recorded in Other
(income) expense.
The following table summarizes the Company’s material contractual obligations and their aggregate maturities as of
December 29, 2024: To satisfy these obligations, the Company intends to use cash from operations.
(Dollars in Millions)
Tax Legislation
(TCJA)
Debt Obligations
Interest on
Debt Obligations
Total
2025
$2,536
1,749
1,075
5,360
2026
—
1,999
1,030
3,029
2027
—
2,385
1,021
3,406
2028
—
2,275
977
3,252
2029
—
1,444
922
2,366
After 2029
—
22,548
8,921
31,469
Total
$2,536
32,400
13,946
48,882
For tax matters, see Note 8 to the Consolidated Financial Statements. For the proposed talc settlement payments, see Note
19 to the Consolidated Financial Statements.
2024 Annual Report
35
Financing and market risk
The Company uses financial instruments to manage the impact of foreign exchange rate changes on cash flows. Accordingly,
the Company enters into forward foreign exchange contracts to protect the value of certain foreign currency assets and
liabilities and to hedge future foreign currency transactions primarily related to product costs. Gains or losses on these
contracts are offset by the gains or losses on the underlying transactions. A 10% appreciation of the U.S. Dollar from the
December 29, 2024 market rates would increase the unrealized value of the Company’s forward contracts by $0.2 billion.
Conversely, a 10% depreciation of the U.S. Dollar from the December 29, 2024 market rates would decrease the unrealized
value of the Company’s forward contracts by $0.2 billion. In either scenario, the gain or loss on the forward contract would be
offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future anticipated earnings
and cash flows.
The Company hedges the exposure to fluctuations in currency exchange rates, and the effect on certain assets and liabilities in
foreign currency, by entering into currency swap contracts. A 1% change in the spread between U.S. and foreign interest rates
on the Company’s interest rate sensitive financial instruments would either increase or decrease the unrealized value of the
Company’s swap contracts by approximately $1.5 billion. In either scenario, at maturity, the gain or loss on the swap contract
would be offset by the gain or loss on the underlying transaction, and therefore, would have no impact on future anticipated
cash flows.
The Company does not enter into financial instruments for trading or speculative purposes. Further, the Company has a policy
of only entering into contracts with parties that have at least an investment grade credit rating. The counterparties to these
contracts are major financial institutions and there is no significant concentration of exposure with any one counterparty.
Management believes the risk of loss is remote. The Company entered into credit support agreements (CSA) with certain
derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. See
Note 6 to the Consolidated Financial Statements for additional details on credit support agreements.
The Company invests in both fixed rate and floating rate interest earning securities which carry a degree of interest rate risk.
The fair market value of fixed rate securities may be adversely impacted due to a rise in interest rates, while floating rate
securities may produce less income than predicted if interest rates fall. A 1% (100 basis points) change in spread on the
Company’s interest rate sensitive investments would either increase or decrease the unrealized value of cash equivalents and
current marketable securities by less than $8.0 million.
The Company has access to substantial sources of funds at numerous banks worldwide. In June 2024, the Company secured a
new 364-day Credit Facility of $10 billion, which expires on June 25, 2025. Interest charged on borrowings under the credit
line agreement is based on either Secured Overnight Financing Rate (SOFR) Reference Rate or other applicable market rate as
allowed plus applicable margins. Commitment fees under the agreement are not material.
Total borrowings at the end of 2024 and 2023 were $36.6 billion and $29.3 billion, respectively. The increase in the
borrowings was due to the issuance of new debt in 2024. In 2024, net debt (cash and current marketable securities, net of
debt) was $12.1 billion compared to net debt of $6.4 billion in 2023. Total debt represented 34.0% of total capital
(shareholders’ equity and total debt) in 2024 and 30.0% of total capital in 2023. Shareholders’ equity per share at the end of
2024 was $29.70 compared to $28.57 at year-end 2023.
A summary of borrowings can be found in Note 7 to the Consolidated Financial Statements.
Dividends
The Company increased its dividend in 2024 for the 62nd consecutive year. Cash dividends paid were $4.91 per share in 2024
and $4.70 per share in 2023.
On January 2, 2025, the Board of Directors declared a regular cash dividend of $1.24 per share, payable on March 4, 2025 to
shareholders of record as of February 18, 2025.
36
Other information
Critical accounting policies and estimates
Management’s discussion and analysis of results of operations and financial condition are based on the Company’s
consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the
U.S. (GAAP). The preparation of these financial statements requires that management make estimates and assumptions that
affect the amounts reported for revenues, expenses, assets, liabilities and other related disclosures. Actual results may or may
not differ from these estimates. The Company believes that the understanding of certain key accounting policies and
estimates are essential in achieving more insight into the Company’s operating results and financial condition. These key
accounting policies include revenue recognition, income taxes, legal and self-insurance contingencies, valuation of long-lived
assets, assumptions used to determine the amounts recorded for pensions and other employee benefit plans and accounting
for stock based awards.
Revenue Recognition: The Company recognizes revenue from product sales when obligations under the terms of a contract
with the customer are satisfied; generally, this occurs with the transfer of control of the goods to customers. The Company's
global payment terms are typically between 30 to 90 days. Provisions for certain rebates, sales incentives, trade promotions,
coupons, product returns, discounts to customers and governmental clawback provisions are accounted for as variable
consideration and recorded as a reduction in sales.
Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well
as market conditions, including consideration of competitor pricing. Rebates and discounts are estimated based on contractual
terms, historical experience, patient outcomes, trend analysis and projected market conditions in the various markets served.
The Company evaluates market conditions for products or groups of products primarily through the analysis of wholesaler and
other third-party sell-through and market research data, as well as internally generated information.
Sales returns are estimated and recorded based on historical sales and returns information. Products that have lost patent
exclusivity, or that otherwise exhibit unusual sales or return patterns due to dating, competition or other marketing matters are
specifically investigated and analyzed as part of the accounting for sales return accruals.
Sales returns allowances represent a reserve for products that may be returned due to expiration, destruction in the field, or in
specific areas, product recall. In accordance with the Company’s accounting policies, the Company generally issues credit to
customers for returned goods. The Company’s sales returns reserves are accounted for in accordance with the U.S. GAAP
guidance for revenue recognition when right of return exists. Sales returns reserves are recorded at full sales value. Sales
returns in the Innovative Medicine segment are almost exclusively not resalable. Sales returns for certain franchises in the
MedTech segment are typically resalable but are not material. The Company infrequently exchanges products from inventory
for returned products. The sales returns reserve for the total Company has been approximately 1.0% of annual net trade sales
during the fiscal years 2024, 2023 and 2022.
Promotional programs, such as product listing allowances are recorded in the same period as related sales and include volume-
based sales incentive programs. Volume-based incentive programs are based on the estimated sales volumes for the incentive
period and are recorded as products are sold. These arrangements are evaluated to determine the appropriate amounts to be
deferred or recorded as a reduction of revenue. The Company also earns profit-share payments through collaborative
arrangements of certain products, which are included in sales to customers. Profit-share payments were less than 2.0% of the
total revenues in fiscal year 2024 and 2023, respectively, and less than 3.0% of the total revenues in the fiscal year 2022 and
are included in sales to customers.
In addition, the Company enters into collaboration arrangements that contain multiple revenue generating activities. Amounts
due from collaborative partners for these arrangements are recognized as each activity is performed or delivered, based on the
relative selling price. Upfront fees received as part of these arrangements are deferred and recognized over the performance
period. See Note 1 to the Consolidated Financial Statements for additional disclosures on collaborations.
Reasonably likely changes to assumptions used to calculate the accruals for rebates, returns and promotions are not
anticipated to have a material effect on the financial statements. The Company currently discloses the impact of changes to
assumptions in the quarterly or annual filing in which there is a material financial statement impact.
2024 Annual Report
37
Below are tables that show the progression of accrued rebates, returns, promotions, reserve for doubtful accounts and reserve
for cash discounts by segment of business for the fiscal years ended December 29, 2024 and December 31, 2023.
Innovative Medicine segment
(Dollars in Millions)
Balance at
Beginning
of Period
Accruals
Payments/
Credits(2)
Balance at
End of
Period
2024
Accrued rebates (1)
$14,661
52,786
(51,667)
15,780
Accrued returns
634
845
(355)
1,124
Accrued promotions
6
3
(6)
3
Subtotal
$15,301
53,634
(52,028)
16,907
Reserve for doubtful accounts
33
14
(6)
41
Reserve for cash discounts
111
1,493
(1,495)
109
Total
$15,445
55,141
(53,529)
17,057
2023
Accrued rebates (1)
$12,289
47,523
(45,151)
14,661
Accrued returns
649
332
(347)
634
Accrued promotions
1
12
(7)
6
Subtotal
$12,939
47,867
(45,505)
15,301
Reserve for doubtful accounts
44
0
(11)
33
Reserve for cash discounts
110
1,386
(1,385)
111
Total
$13,093
49,253
(46,901)
15,445
(1)
Includes reserve for customer rebates of $187 million at December 29, 2024 and $165 million at December 31, 2023, recorded as a
contra asset.
(2)
Includes prior period adjustments
38
MedTech segment
(Dollars in Millions)
Balance at
Beginning of
Period
Accruals
Payments/
Credits
Balance at
End of
Period
2024
Accrued rebates(1)
$1,455
5,955
(5,986)
1,424
Accrued returns
125
543
(550)
118
Accrued promotions
25
62
(65)
22
Subtotal
$1,605
6,560
(6,601)
1,564
Reserve for doubtful accounts
133
31
(38)
126
Reserve for cash discounts
5
92
(91)
6
Total
$1,743
6,683
(6,730)
1,696
2023
Accrued rebates(1)
$1,470
6,241
(6,256)
1,455
Accrued returns
134
555
(564)
125
Accrued promotions
43
74
(92)
25
Subtotal
$1,647
6,870
(6,912)
1,605
Reserve for doubtful accounts
125
33
(25)
133
Reserve for cash discounts
9
96
(100)
5
Total
$1,781
6,999
(7,037)
1,743
(1)
Includes reserve for customer rebates of $704 million at December 29, 2024 and $740 million at December 31, 2023, recorded as a
contra asset.
Income Taxes: Income taxes are recorded based on amounts refundable or payable for the current year and include the results
of any difference between U.S. GAAP accounting and tax reporting, recorded as deferred tax assets or liabilities. The
Company estimates deferred tax assets and liabilities based on enacted tax regulations and rates. Future changes in tax laws
and rates may affect recorded deferred tax assets and liabilities.
The Company has unrecognized tax benefits for uncertain tax positions. The Company follows U.S. GAAP, which prescribes a
recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. Management believes that changes in these estimates would not have a material
effect on the Company's results of operations, cash flows or financial position.
The Company has recorded deferred tax liabilities on all undistributed earnings prior to December 31, 2017 from its
international subsidiaries. The Company has not provided deferred taxes on the undistributed earnings subsequent to
January 1, 2018 from certain international subsidiaries where the earnings are considered to be indefinitely reinvested. The
Company intends to continue to reinvest these earnings in those international operations. If the Company decides at a later
date to repatriate these earnings to the U.S., the Company would be required to provide for the net tax effects on these
amounts. The Company estimates that the tax effect of this repatriation would be approximately $0.5 billion under currently
enacted tax laws and regulations and at current currency exchange rates. This amount does not include the possible benefit of
U.S. foreign tax credits, which may substantially offset this cost.
See Note 1 and Note 8 to the Consolidated Financial Statements for further information regarding income taxes.
Legal and Self Insurance Contingencies: The Company records accruals for various contingencies, including legal proceedings
and product liability claims as these arise in the normal course of business. The accruals are based on management’s judgment
as to the probability of losses and, where applicable, actuarially determined estimates. The Company has self insurance through
a wholly-owned captive insurance company. In addition to accruals in the self insurance program, claims that exceed the
insurance coverage are accrued when losses are probable and amounts can be reasonably estimated.
The Company follows the provisions of U.S. GAAP when recording litigation related contingencies. A liability is recorded when a
loss is probable and can be reasonably estimated.
2024 Annual Report
39
See Notes 1 and 19 to the Consolidated Financial Statements for further information regarding product liability and
legal proceedings.
Long-Lived and Intangible Assets: The Company assesses changes, both qualitatively and quantitatively, in economic
conditions and makes assumptions regarding estimated future cash flows in evaluating the value of the Company’s property,
plant and equipment, goodwill and intangible assets. As these assumptions and estimates may change over time, it may or may
not be necessary for the Company to record impairment charges.
Employee Benefit Plans: The Company sponsors various retirement and pension plans, including defined benefit, defined
contribution and termination indemnity plans, which cover most employees worldwide. These plans are based on assumptions
for the discount rate, expected return on plan assets, mortality rates, expected salary increases, healthcare cost trend rates
and attrition rates. See Note 10 to the Consolidated Financial Statements for further details on these rates.
Stock Based Compensation: The Company recognizes compensation expense associated with the issuance of equity
instruments to employees for their services. Based on the type of equity instrument, the fair value is estimated on the date of
grant using either the Black-Scholes option valuation model or a combination of both the Black-Scholes option valuation model
and Monte Carlo valuation model, and is expensed in the financial statements over the service period. The input assumptions
used in determining fair value are the expected life, expected volatility, risk-free rate and expected dividend yield. For
performance share units, the fair market value is calculated for the two component goals at the date of grant: adjusted
operational earnings per share and relative total shareholder return. The fair values for the earnings per share goal of each
performance share unit was estimated on the date of grant using the fair market value of the shares at the time of the award,
discounted for dividends, which are not paid on the performance share units during the vesting period. The fair value for the
relative total shareholder return goal of each performance share unit was estimated on the date of grant using the Monte Carlo
valuation model. See Note 16 to the Consolidated Financial Statements for additional information.
New accounting pronouncements
Refer to Note 1 to the Consolidated Financial Statements for recently adopted accounting pronouncements and recently
issued accounting pronouncements not yet adopted as of December 29, 2024.
40
Economic and market factors
The Company is aware that its products are used in an environment where, for more than a decade, policymakers, consumers
and businesses have expressed concerns about the rising cost of healthcare. In response to these concerns, the Company has
a long-standing policy of pricing products responsibly. For the period 2014 - 2024, in the U.S., the weighted average compound
annual growth rate of the Company’s net price increases for healthcare products (prescription and over-the-counter drugs,
hospital and professional products) was below the U.S. Consumer Price Index (CPI).
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 continue to have an effect on
worldwide economies and, consequently, on the way companies operate. The Company has accounted for operations in
Argentina, Venezuela, Turkey and Egypt (beginning in the fiscal fourth quarter of 2024) as highly inflationary, as the prior
three-year cumulative inflation rate surpassed 100%. This did not have a material impact to 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.
In July 2023, Janssen Pharmaceuticals, Inc. (Janssen) filed litigation against the U.S. Department of Health and Human
Services as well as the Centers for Medicare and Medicaid Services challenging the constitutionality of the IRA's Medicare
Drug Price Negotiation Program. The litigation requests a declaration that the IRA violates Janssen’s rights under the First
Amendment and the Fifth Amendment to the Constitution and therefore that Janssen is not subject to the IRA’s mandatory
pricing scheme. The impact of the IRA on our business and the broader pharmaceutical industry remains uncertain, as litigation
filed by Janssen and other pharmaceutical companies remains ongoing and while CMS has publicly announced the maximum fair
price for each of the selected drugs, implementation of the program is still in progress. In April 2024, Janssen appealed the
district court’s denial of its summary judgment motion to the Third Circuit.
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 year 2024, including accounts receivable or inventory reserves, was not material. As of and for each of
the fiscal years ending December 29, 2024 and December 31, 2023, the business of the Company’s Russian subsidiaries
represented less than 1% of the Company’s consolidated assets and revenues. The Company does not maintain Ukraine
subsidiaries subsequent to the Kenvue separation.
In March of 2022, the Company took steps to suspend all advertising, enrollment in clinical trials, and any additional investment
in Russia. The Company continues to supply products relied upon by patients for healthcare purposes.
Conflict in the Middle East
Although the long-term implications of the conflict in the Middle East are difficult to predict at this time, the financial impact
of the conflict in the fiscal year 2024, including accounts receivable or inventory reserves, was not material. As of and for each
of the fiscal years ending December 29, 2024 and December 31, 2023, the business of the Company’s Israel subsidiaries
represented 1% of the Company’s consolidated assets and represented less than 1% of revenues.
The Company is exposed to fluctuations in currency exchange rates. A 1% change in the value of the U.S. Dollar as compared to
all foreign currencies in which the Company had sales, income or expense in 2024 would have increased or decreased the
translation of foreign sales by approximately $0.4 billion and net income by approximately $0.1 billion.
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 healthcare changes that may continue to result in pricing pressures that include
healthcare cost containment and government legislation relating to sales, promotions, pricing and reimbursement of
healthcare products.
2024 Annual Report
41
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 may continue to impact the Company’s businesses.
The Company also operates in an environment increasingly hostile to intellectual property rights. Firms have filed Abbreviated
New Drug Applications or Biosimilar Biological Product Applications with the U.S. 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. 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 will 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.
Legal proceedings
Johnson & Johnson and certain of its subsidiaries are involved in various lawsuits and claims regarding product liability,
intellectual property, commercial, employment, indemnification and other matters; governmental investigations; and other legal
proceedings that arise from time to time in the ordinary course of 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 December 29, 2024, 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, Contingencies. 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.
See Note 19 to the Consolidated Financial Statements included in Item 8 of this report for further information regarding
legal proceedings.
Common stock
The Company’s Common Stock is listed on the New York Stock Exchange under the symbol JNJ. As of February 6, 2025, there
were 114,147 record holders of Common Stock of the Company.
Item 7A. Quantitative and qualitative disclosures about
market risk
The information called for by this item is incorporated herein by reference to Item 7. Management’s discussion and analysis of
results of operations and financial condition - Liquidity and capital resources - Financing and market risk of this Report; and
Note 1 Summary of significant accounting policies - Financial instruments of the Notes to Consolidated Financial Statements
included in Item 8 of this Report.
42
Item 8. Financial statements and supplementary data
Index to audited Consolidated Financial Statements
Consolidated balance sheets
44
Consolidated statements of earnings
45
Consolidated statements of comprehensive income
46
Consolidated statements of equity
47
Consolidated statements of cash flows
48
Notes to consolidated financial statements
50
Report of independent registered public accounting firm (PCAOB ID 238)
107
Management’s report on internal control over financial reporting
110
2024 Annual Report
43
Johnson & Johnson and subsidiaries consolidated balance sheets
At December 29, 2024 and December 31, 2023
(Dollars in Millions Except Share and Per Share Amounts) (Note 1)
Assets
Current assets
Cash and cash equivalents (Notes 1 and 2)
$24,105
21,859
Marketable securities (Notes 1 and 2)
417
1,068
Accounts receivable trade, less allowances $167 (2023, $166)
14,842
14,873
Inventories (Notes 1 and 3)
12,444
11,181
Prepaid expenses and other receivables
4,085
4,514
Total current assets
55,893
53,495
Property, plant and equipment, net (Notes 1 and 4)
20,518
19,898
Intangible assets, net (Notes 1 and 5)
37,618
34,175
Goodwill (Notes 1 and 5)
44,200
36,558
Deferred taxes on income (Note 8)
10,461
9,279
Other assets
11,414
14,153
Total assets
$180,104
167,558
Liabilities and Shareholders’ Equity
Current liabilities
Loans and notes payable (Note 7)
$5,983
3,451
Accounts payable
10,311
9,632
Accrued liabilities
8,549
10,212
Accrued rebates, returns and promotions
17,580
16,001
Accrued compensation and employee related obligations
4,126
3,993
Accrued taxes on income (Note 8)
3,772
2,993
Total current liabilities
50,321
46,282
Long-term debt (Note 7)
30,651
25,881
Deferred taxes on income (Note 8)
2,448
3,193
Employee related obligations (Notes 9 and 10)
7,255
7,149
Long-term taxes payable (Note 1)
390
2,881
Other liabilities
17,549
13,398
Total liabilities
108,614
98,784
Commitments and Contingencies (Note 19)
Shareholders’ equity
Preferred stock — without par value (authorized and unissued 2,000,000 shares)
—
—
Common stock — par value $1.00 per share (Note 12) (authorized 4,320,000,000 shares; issued
3,119,843,000 shares)
3,120
3,120
Accumulated other comprehensive income (loss) (Note 13)
(11,741)
(12,527)
Retained earnings and Additional-paid-in-capital
155,791
153,843
Less: common stock held in treasury, at cost (Note 12) (712,921,000 shares and 712,765,000 shares)
75,680
75,662
Total shareholders’ equity
71,490
68,774
Total liabilities and shareholders’ equity
$180,104
167,558
2024
2023
See Notes to Consolidated Financial Statements
44
Johnson & Johnson and subsidiaries consolidated statements
of earnings
(Dollars and Shares in Millions Except Per Share Amounts) (Note 1)
2024
2023
2022
Sales to customers
$88,821
85,159
79,990
Cost of products sold
27,471
26,553
24,596
Gross profit
61,350
58,606
55,394
Selling, marketing and administrative expenses
22,869
21,512
20,246
Research and development expense
17,232
15,085
14,135
In-process research and development impairments
211
313
783
Interest income
(1,332)
(1,261)
(490)
Interest expense, net of portion capitalized (Note 4)
755
772
276
Other (income) expense, net
4,694
6,634
810
Restructuring (Note 20)
234
489
275
Earnings before provision for taxes on income
16,687
15,062
19,359
Provision for taxes on income (Note 8)
2,621
1,736
2,989
Net earnings from continuing operations
14,066
13,326
16,370
Net earnings from discontinued operations, net of tax (Note 21)
—
21,827
1,571
Net earnings
$14,066
35,153
17,941
Net earnings per share (Notes 1 and 15)
Continuing operations - basic
$5.84
5.26
6.23
Discontinued operations - basic
—
8.62
0.60
Total net earnings per share - basic
$5.84
13.88
6.83
Continuing operations - diluted
$5.79
5.20
6.14
Discontinued operations - diluted
—
8.52
0.59
Total net earnings per share - diluted
$5.79
13.72
6.73
Average shares outstanding (Notes 1 and 15)
Basic
2,407.3
2,533.5
2,625.2
Diluted
2,429.4
2,560.4
2,663.9
See Notes to Consolidated Financial Statements
2024 Annual Report
45
Johnson & Johnson and subsidiaries consolidated statements of
comprehensive income
(Dollars in Millions) (Note 1)
2024
2023
2022
Net earnings
$14,066
35,153
17,941
Other comprehensive income (loss), net of tax
Foreign currency translation
1,708
(3,221)
(1,796)
Securities:
Unrealized holding gain (loss) arising during period
2
26
(24)
Reclassifications to earnings
—
—
—
Net change
2
26
(24)
Employee benefit plans:
Prior service credit (cost), net of amortization
(154)
(149)
(160)
Gain (loss), net of amortization
541
(1,183)
1,854
Consumer settlement/ curtailment
—
23
—
Effect of exchange rates
62
(90)
111
Net change
449
(1,399)
1,805
Derivatives & hedges:
Unrealized gain (loss) arising during period
(511)
422
454
Reclassifications to earnings
(862)
(569)
(348)
Net change
(1,373)
(147)
106
Other comprehensive income (loss)
786
(4,741)
91
Comprehensive income
$14,852
30,412
18,032
The tax cost/(benefit) effects in other comprehensive income for the fiscal years 2024, 2023 and 2022 respectively: Foreign
Currency Translation; $(1.1) billion, $797 million and $(460) million; Employee Benefit Plans: $86 million, $(289) million and $461
million, Derivatives & Hedges: $(365) million, $(39) million and $30 million.
See Notes to Consolidated Financial Statements
Amounts presented for 2023 and 2022 have not been recast to exclude discontinued operations
46
Johnson & Johnson and subsidiaries consolidated statements
of equity
(Dollars in Millions) (Note 1)
Total
Retained
Earnings and
Additional
paid-in
capital
Accumulated
Other
Comprehensive
Income (Loss)
Common
Stock
Issued
Amount
Treasury
Stock
Amount
Balance, January 2, 2022
$74,023
123,060
(13,058)
3,120
(39,099)
Net earnings
17,941
17,941
Cash dividends paid ($4.45 per share)
(11,682)
(11,682)
Employee compensation and stock option plans
2,466
(974)
3,440
Repurchase of common stock
(6,035)
(6,035)
Other comprehensive income (loss), net of tax
91
91
Balance, January 1, 2023
76,804
128,345
(12,967)
3,120
(41,694)
Net earnings
35,153
35,153
Cash dividends paid ($4.70 per share)
(11,770)
(11,770)
Employee compensation and stock option plans
2,193
(336)
2,529
Repurchase of common stock
(5,054)
(5,054)
Other
(25)
(25)
Kenvue Separation /IPO (Note 21)
(23,786)
2,451
5,181
(31,418)
Other comprehensive income (loss), net of tax
(4,741)
(4,741)
Balance, December 31, 2023
68,774
153,843
(12,527)
3,120
(75,662)
Net earnings
14,066
14,066
Cash dividends paid ($4.91 per share)
(11,823)
(11,823)
Employee compensation and stock option plans
2,094
(295)
2,389
Repurchase of common stock
(2,407)
(2,407)
Other comprehensive income (loss), net of tax
786
786
Balance, December 29, 2024
$71,490
155,791
(11,741)
3,120
(75,680)
See Notes to Consolidated Financial Statements
2024 Annual Report
47
Johnson & Johnson and subsidiaries consolidated statements of
cash flows
(Dollars in Millions) (Note 1)
Cash flows from operating activities
Net earnings
$14,066
35,153
17,941
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property and intangibles
7,339
7,486
6,970
Stock based compensation
1,176
1,162
1,138
Asset write-downs
405
1,295
1,216
Charges for acquired in-process research and development assets
1,841
483
—
Gain on Kenvue separation
—
(20,984)
—
Net gain on sale of assets/businesses
(226)
(117)
(380)
Deferred tax provision
(2,183)
(4,194)
(1,663)
Credit losses and accounts receivable allowances
11
—
(17)
Changes in assets and liabilities, net of effects from acquisitions and divestitures:
Increase in accounts receivable
(406)
(624)
(1,290)
Increase in inventories
(1,128)
(1,323)
(2,527)
Increase in accounts payable and accrued liabilities
1,621
2,346
1,098
Decrease/(Increase) in other current and non-current assets
1,717
(3,480)
687
Increase/(Decrease) in other current and non-current liabilities
33
5,588
(1,979)
Net cash flows from operating activities
24,266
22,791
21,194
Cash flows from investing activities
Additions to property, plant and equipment
(4,424)
(4,543)
(4,009)
Proceeds from the disposal of assets/businesses, net
675
358
543
Acquisitions, net of cash acquired (Note 18)
(15,146)
—
(17,652)
Acquired in-process research and development assets (Note 18)
(1,783)
(470)
—
Purchases of investments
(1,726)
(10,906)
(32,384)
Sales of investments
2,462
19,390
41,609
Credit support agreements activity, net
1,517
(2,963)
(249)
Other (including capitalized licenses and milestones)
(174)
12
(229)
Net cash (used by)/from investing activities
(18,599)
878
(12,371)
Cash flows from financing activities
Dividends to shareholders
(11,823)
(11,770)
(11,682)
Repurchase of common stock
(2,432)
(5,054)
(6,035)
Proceeds from short-term debt
15,277
13,743
16,134
Repayment of short-term debt
(9,463)
(22,973)
(6,550)
Proceeds from long-term debt, net of issuance costs
6,660
—
2
Repayment of long-term debt
(1,453)
(1,551)
(2,134)
Proceeds from the exercise of stock options/employee withholding tax on stock
awards, net
838
1,094
1,329
Credit support agreements activity, net
272
(219)
(28)
2024
2023
2022
48
Settlement of convertible debt acquired from Shockwave
(970)
—
—
Proceeds of short and long-term debt, net of issuance cost, related to the debt that
transferred to Kenvue at separation
—
8,047
—
Proceeds from Kenvue initial public offering
—
4,241
—
Cash transferred to Kenvue at separation
—
(1,114)
—
Other
(38)
(269)
93
Net cash used by financing activities
(3,132)
(15,825)
(8,871)
Effect of exchange rate changes on cash and cash equivalents
(289)
(112)
(312)
Increase/(Decrease) in cash and cash equivalents
2,246
7,732
(360)
Cash and cash equivalents from continuing operations, beginning of period
21,859
12,889
13,309
Cash and cash equivalents from discontinued operations, beginning of period
—
1,238
1,178
Cash and cash equivalents, beginning of year (Note 1)
21,859
14,127
14,487
Cash and cash equivalents from continuing operations, end of period
24,105
21,859
12,889
Cash and cash equivalents from discontinued operations, end of period
—
—
1,238
Cash and cash equivalents, end of year (Note 1)
$24,105
21,859
14,127
Supplemental cash flow data
Cash paid during the year for:
Interest
$1,990
1,836
982
Interest, net of amount capitalized
1,911
1,766
933
Income taxes, inclusive of discontinued operations
6,714
8,574
5,223
Supplemental schedule of non-cash investing and financing activities
Treasury stock issued for employee compensation and stock option plans, net of
cash proceeds/ employee withholding tax on stock awards
$1,551
1,435
2,114
Acquisitions
Fair value of assets acquired
$16,091
—
18,710
Fair value of liabilities assumed
(1,632)
—
(1,058)
Net cash paid for acquisitions (Note 18)
$14,459
—
17,652
2024
2023
2022
See Notes to Consolidated Financial Statements
Amounts presented for 2023 and 2022 have not been recast to exclude discontinued operations.
2024 Annual Report
49
Notes to consolidated financial statements
1. Summary of significant accounting policies
Principles of consolidation
The consolidated financial statements include the accounts of Johnson & Johnson and its subsidiaries (the Company).
Intercompany accounts and transactions are eliminated. Columns and rows within tables may not add due to rounding.
Percentages have been calculated using actual, non-rounded figures.
Description of the company
The Company has approximately 138,100 employees worldwide engaged in the research and development, manufacture and
sale of a broad range of products in the healthcare field. The Company conducts business in virtually all countries of the world
and its primary focus is on products related to human health and well-being.
Kenvue IPO/separation and discontinued operations
On May 8, 2023, Kenvue, completed an initial public offering (the IPO) resulting in the issuance of 198,734,444 shares of its
common stock, par value $0.01 per share (the “Kenvue Common Stock”), at an initial public offering of $22.00 per share for
net proceeds of $4.2 billion. The excess of the net proceeds from the IPO over the net book value of the Johnson & Johnson
divested interest was $2.5 billion and was recorded to additional paid-in capital. As of the closing of the IPO, Johnson &
Johnson owned approximately 89.6% of the total outstanding shares of Kenvue Common Stock and at July 2, 2023, the
non-controlling interest of $1.3 billion associated with Kenvue was reflected in equity attributable to non-controlling interests
in the consolidated balance sheet in the fiscal second quarter of 2023.
On August 23, 2023, Johnson & Johnson completed the disposition of an additional 80.1% ownership of the shares of Kenvue
through an exchange offer. Following the exchange offer, the Company owned 9.5% of the shares of Kenvue which were
accounted for as an equity investment carried at fair value within continuing operations. The historical results of the Consumer
Health business (which previously represented the Consumer Health business segment) are reflected as discontinued
operations in the Company’s Consolidated Financial Statements through the date of the exchange offer (see Note 21 for
additional details). Unless otherwise indicated, the information in the notes to the Consolidated Financial Statements refer only
to Johnson & Johnson’s continuing operations.
In the fiscal second quarter of 2024 the Company completed a debt for equity exchange of the retained stake in Kenvue. Upon
completion of the debt for equity exchange, the Company no longer owns any shares of Kenvue Common Stock.
Business segments
The Company is organized into two business segments: Innovative Medicine and MedTech. The Innovative Medicine segment is
focused on the following therapeutic areas: Immunology, Infectious Diseases, Neuroscience, Oncology, Pulmonary
Hypertension, and Cardiovascular and Metabolic. Products in this segment are distributed directly to retailers, wholesalers,
distributors, hospitals and healthcare professionals for prescription use. The MedTech segment includes a broad portfolio of
products used in the Orthopaedic, Surgery, Cardiovascular (previously referred to as Interventional Solutions) and Vision fields.
These products are distributed to wholesalers, hospitals and retailers, and used principally in the professional fields by
physicians, nurses, hospitals, eye care professionals and clinics.
New accounting standards
Recently adopted accounting standards
ASU 2023-07: Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures
The Company adopted the standard in the fiscal year 2024, which requires expanded annual and interim disclosures for
significant segment expenses that are regularly provided to the chief operating decision maker and included within each
reported measure of segment profit or loss. The standard was applied retrospectively to all periods presented in the financial
statements. As this accounting standard only impacts disclosures, it did not have a material impact on the Company’s
Consolidated Financial Statements. See Note 17 for the required disclosures.
50
Recently issued accounting standards
Not adopted as of December 29, 2024
ASU 2024-03: Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses
This update requires disclosure of disaggregated information about certain income statement expense line items on an annual
and interim basis. This update will be effective for fiscal years beginning after December 15, 2026, and interim periods within
fiscal years beginning after December 15, 2027. Early adoption is permitted. As this accounting standard only impacts
disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.
ASU 2023-09: Income Taxes (Topic 740) - Improvements to Income Tax Disclosures
This update standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes and
additional income tax-related disclosures. This update is required to be effective for the Company for fiscal periods beginning
after December 15, 2024. As this accounting standard only impacts disclosures, it will not have a material impact on the
Company’s Consolidated Financial Statements.
Cash equivalents
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. The Company has a policy of making investments only with commercial institutions
that have at least an investment grade credit rating. The Company invests its cash primarily in government securities and
obligations, corporate debt securities, money market funds and reverse repurchase agreements (RRAs).
RRAs are collateralized by deposits in the form of Government Securities and Obligations for an amount not less than 102% of
their value. The Company does not record an asset or liability as the Company is not permitted to sell or repledge the
associated collateral. The Company has a policy that the collateral has at least an A (or equivalent) credit rating. The Company
utilizes a third party custodian to manage the exchange of funds and ensure that collateral received is maintained at 102% of
the value of the RRAs on a daily basis. RRAs with stated maturities of greater than three months from the date of purchase are
classified as marketable securities.
Investments
Investments classified as held to maturity investments are reported at amortized cost and realized gains or losses are reported
in earnings. Investments classified as available-for-sale debt securities are carried at estimated fair value with unrealized gains
and losses recorded as a component of accumulated other comprehensive income. Available-for-sale securities available for
current operations are classified as current assets; otherwise, they are classified as long term. Management determines the
appropriate classification of its investment in debt and equity securities at the time of purchase and re-evaluates such
determination at each balance sheet date. The Company reviews its investments for impairment and adjusts these investments
to fair value through earnings, as required.
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. The Company utilizes the straight-line method of depreciation over the
estimated useful lives of the assets:
Building and building equipment
30 years
Land and leasehold improvements
10 - 20 years
Machinery and equipment
2 - 13 years
The Company capitalizes certain computer software and development costs, included in machinery and equipment, when
incurred in connection with developing or obtaining computer software for internal use. Capitalized software costs are
amortized over the estimated useful lives of the software, which generally range from 3 to 8 years.
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51
The Company reviews long-lived assets to assess recoverability using undiscounted cash flows. When certain events or
changes in operating or economic conditions occur, an impairment assessment may be performed on the recoverability of the
carrying value of these assets. If the asset is determined to be impaired, the loss is measured based on the difference between
the asset’s fair value and its carrying value. If quoted market prices are not available, the Company will estimate fair value using
a discounted value of estimated future cash flows.
Revenue recognition
The Company recognizes revenue from product sales when obligations under the terms of a contract with the customer are
satisfied; generally, this occurs with the transfer of control of the goods to customers. The Company's global payment terms
are typically between 30 to 90 days. Provisions for certain rebates, sales incentives, trade promotions, coupons, product
returns, discounts to customers and governmental clawback provisions are accounted for as variable consideration and
recorded as a reduction in sales. The liability is recognized within Accrued rebates, returns, and promotions on the consolidated
balance sheet.
Product discounts granted are based on the terms of arrangements with direct, indirect and other market participants, as well
as market conditions, including consideration of competitor pricing. Rebates and discounts are estimated based on contractual
terms, historical experience, patient outcomes, trend analysis and projected market conditions in the various markets served.
A significant portion of the liability related to rebates is from the sale of the Company's pharmaceutical products within the
U.S., primarily the Managed Care, Medicare and Medicaid programs, which amounted to $12.3 billion and $11.5 billion as of
December 29, 2024 and December 31, 2023, respectively. The Company evaluates market conditions for products or groups
of products primarily through the analysis of wholesaler and other third-party sell-through and market research data, as well as
internally generated information.
Sales returns are estimated and recorded based on historical sales and returns information. Products that have lost patent
exclusivity, or that otherwise exhibit unusual sales or return patterns due to dating, competition or other marketing matters are
specifically investigated and analyzed as part of the accounting for sales return accruals.
Sales returns allowances represent a reserve for products that may be returned due to expiration, destruction in the field, or in
specific areas, product recall. In accordance with the Company’s accounting policies, the Company generally issues credit to
customers for returned goods. The Company’s sales returns reserves are accounted for in accordance with the U.S. GAAP
guidance for revenue recognition when right of return exists. Sales returns reserves are recorded at full sales value. Sales
returns in the Innovative Medicine segment are almost exclusively not resalable. Sales returns for certain franchises in the
MedTech segment are typically resalable but are not material. The Company infrequently exchanges products from inventory
for returned products. The sales returns reserve for the total Company has been approximately 1.0% of annual net trade sales
during each of the fiscal years 2024, 2023 and 2022.
Promotional programs, such as product listing allowances are recorded in the same period as related sales and include
volume-based sales incentive programs. Volume-based incentive programs are based on the estimated sales volumes for the
incentive period and are recorded as products are sold. These arrangements are evaluated to determine the appropriate
amounts to be deferred or recorded as a reduction of revenue. The Company also earns profit-share payments through
collaborative arrangements of certain products, which are included in sales to customers. Profit-share payments were less than
2.0% of the total revenues in the fiscal year 2024 and 2023, respectively, and less than 3.0% of total revenues in the fiscal
year 2022 and are included in sales to customers.
See Note 17 to the Consolidated Financial Statements for further disaggregation of revenue.
Shipping and handling
Shipping and handling costs incurred were $0.9 billion, $0.9 billion and $0.8 billion in fiscal years 2024, 2023 and 2022,
respectively, and are included in selling, marketing and administrative expense. The amount of revenue received for shipping
and handling is less than 1.0% of sales to customers for all periods presented.
Inventories
Inventories are stated at the lower of cost or net realizable value determined by the first-in, first-out method.
52
Intangible assets and goodwill
The authoritative literature on U.S. GAAP requires that goodwill and intangible assets with indefinite lives be assessed annually
for impairment. The Company completed its annual impairment test for 2024 in the fiscal fourth quarter. Future impairment
tests will be performed annually in the fiscal fourth quarter, or sooner if warranted. In-process research and development
purchased as part of a business combination is accounted for as an indefinite lived intangible asset until the underlying project
is completed, at which point the intangible asset will be accounted for as a definite lived intangible asset. If warranted the
purchased in-process research and development could be written off or partially impaired depending on the
underlying program.
Intangible assets that have finite useful lives continue to be amortized over their useful lives and are reviewed for impairment
when warranted by economic conditions. See Note 5 for further details on Intangible Assets and Goodwill.
Financial instruments
As required by U.S. GAAP, all derivative instruments are recorded on the balance sheet at fair value. 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. The authoritative literature establishes a
three-level hierarchy to prioritize the inputs used in measuring fair value, with Level 1 having the highest priority and Level 3
having the lowest. 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 Company documents all relationships between hedged items and derivatives. The overall risk management strategy
includes reasons for undertaking hedge transactions and entering into derivatives. The objectives of this strategy are:
(1) minimize foreign currency exposure’s impact on the Company’s financial performance; (2) protect the Company’s cash flow
from adverse movements in foreign exchange rates; (3) ensure the appropriateness of financial instruments; and (4) manage
the enterprise risk associated with financial institutions. See Note 6 for additional information on Financial Instruments.
Leases
The Company determines whether an arrangement is a lease at contract inception by establishing if the contract conveys the
right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Right of
Use (ROU) Assets and Lease Liabilities for operating leases are included in Other assets, Accrued liabilities, and Other liabilities
on the consolidated balance sheet. The ROU Assets represent the right to use an underlying asset for the lease term and lease
liabilities represent an obligation to make lease payments arising from the lease. Commitments under finance leases are not
significant, and are included in Property, plant and equipment, Loans and notes payable, and Long-term debt on the
consolidated balance sheet.
ROU Assets and Lease Liabilities are recognized at the lease commencement date based on the present value of all minimum
lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at
commencement date in determining the present value of lease payments, when the implicit rate is not readily determinable.
Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is
reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis
over the lease term. The Company has elected the following policy elections on adoption: use of portfolio approach on leases
of assets under master service agreements, exclusion of short term leases on the balance sheet, and not separating lease and
non-lease components.
The Company primarily has operating lease for space, vehicles, manufacturing equipment and data processing equipment.
The ROU asset pertaining to leases from continuing operations was $1.1 billion and $1.0 billion in fiscal years 2024 and 2023,
respectively. The lease liability from continuing operations was $1.2 billion and $1.1 billion in fiscal years 2024 and 2023,
respectively. The operating lease costs from continuing operations were $0.2 billion in fiscal years 2024, 2023 and 2022.
Cash paid for amounts included in the measurement of lease liabilities from continuing operations were $0.2 billion in fiscal
years 2024, 2023 and 2022.
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Product liability
Accruals for product liability claims are recorded, on an undiscounted basis, when it is probable that a liability has been incurred
and the amount of the liability can be reasonably estimated based on existing information and actuarially determined estimates
where applicable. The accruals are adjusted periodically as additional information becomes available. 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. To the extent adverse 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.
The Company has self insurance through a wholly-owned captive insurance company. In addition to accruals in the self
insurance program, claims that exceed the insurance coverage are accrued when losses are probable and amounts can be
reasonably estimated.
Research and development
Research and development expenses are expensed as incurred in accordance with ASC 730, Research and Development.
Upfront and milestone payments made to third parties in connection with research and development collaborations are
expensed as incurred up to the point of regulatory approval. Payments made to third parties subsequent to regulatory approval
are capitalized and amortized over the remaining useful life of the related product. Amounts capitalized for such payments are
included in other intangibles, net of accumulated amortization.
The Company enters into collaborative arrangements, typically with other pharmaceutical or biotechnology companies, to
develop and commercialize drug candidates or intellectual property. These arrangements typically involve two (or more) parties
who are active participants in the collaboration and are exposed to significant risks and rewards dependent on the commercial
success of the activities. These collaborations usually involve various activities by one or more parties, including research and
development, marketing and selling and distribution. Often, these collaborations require upfront, milestone and royalty or profit
share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development.
Amounts due from collaborative partners related to development activities are generally reflected as a reduction of research
and development expense because the performance of contract development services is not central to the Company’s
operations. In general, the income statement presentation for these collaborations is as follows:
Nature/Type of Collaboration
Statement of Earnings Presentation
Third-party sale of product & profit share payments received
Sales to customers
Royalties/milestones paid to collaborative partner (post-
regulatory approval)*
Cost of products sold
Royalties received from collaborative partner
Other income (expense), net
Upfront payments & milestones paid to collaborative partner
(pre-regulatory approval)
Research and development expense
Research and development payments to
collaborative partner
Research and development expense
Research and development payments received from
collaborative partner or government entity
Reduction of Research and development expense
*
Milestones are capitalized as intangible assets and amortized to cost of products sold over the useful life.
For all years presented, there was no individual project that represented greater than 5% of the total annual consolidated
research and development expense other than the acquired in-process research & development expense of $1.25 billion to
secure the global rights to the NM26 bispecific antibody (Yellow Jersey acquisition) in fiscal year 2024.
The Company has a number of products and compounds developed in collaboration with strategic partners including
XARELTO, co-developed with Bayer HealthCare AG, IMBRUVICA, developed in collaboration and co-marketed with
Pharmacyclics LLC, an AbbVie company and CARVYKTI, licensed and developed in collaboration with Legend Biotech USA Inc.
and Legend Biotech Ireland Limited.
Separately, the Company has a number of licensing arrangements for products and compounds including DARZALEX, licensed
from Genmab A/S.
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Advertising
Costs associated with advertising are expensed in the year incurred and are included in selling, marketing and administrative
expenses. Advertising expenses worldwide, which comprised television, radio, print media and Internet advertising, were $0.6
billion, $0.5 billion and $0.7 billion in fiscal years 2024, 2023 and 2022, respectively.
Income taxes
Income taxes are recorded based on amounts refundable or payable for the current year and include the results of any
difference between U.S. GAAP accounting and tax reporting, recorded as deferred tax assets or liabilities. The Company
estimates deferred tax assets and liabilities based on enacted tax regulations and rates. Future changes in tax laws and rates
may affect recorded deferred tax assets and liabilities in the future.
The Company has unrecognized tax benefits for uncertain tax positions. The Company follows U.S. GAAP which prescribes a
recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. Management believes that changes in these estimates would not have a material
effect on the Company's results of operations, cash flows or financial position.
In 2017, the United States enacted into law new U.S. tax legislation, the U.S. Tax Cuts and Jobs Act (TCJA). This law included
provisions for a comprehensive overhaul of the corporate income tax code, including a reduction of the statutory corporate
tax rate from 35% to 21%, effective on January 1, 2018. The TCJA included a provision for a tax on all previously undistributed
earnings of U.S. companies located in foreign jurisdictions. Undistributed earnings in the form of cash and cash equivalents
were taxed at a rate of 15.5% and all other earnings were taxed at a rate of 8.0%. This tax is payable over 8 years and will not
accrue interest. These payments began in fiscal year 2018 and will continue through 2025. The final payment of $2.5 billion will
be made in fiscal year 2025.
The TCJA also includes provisions for a tax on global intangible low-taxed income (GILTI). GILTI is described as the excess of a
U.S. shareholder’s total net foreign income over a deemed return on tangible assets, as provided by the TCJA. In January 2018,
the FASB issued guidance that allows companies to elect as an accounting policy whether to record the tax effects of GILTI in
the period the tax liability is generated (i.e., “period cost”) or provide for deferred tax assets and liabilities related to basis
differences that exist and are expected to affect the amount of GILTI inclusion in future years upon reversal (i.e., “deferred
method”). The Company has elected to account for GILTI under the deferred method. The deferred tax amounts recorded are
based on the evaluation of temporary differences that are expected to reverse as GILTI is incurred in future periods.
The Company has recorded deferred tax liabilities on all undistributed earnings prior to December 31, 2017 from its
international subsidiaries. The Company has not provided deferred taxes on the undistributed earnings subsequent to January
1, 2018 from certain international subsidiaries where the earnings are considered to be indefinitely reinvested. The Company
intends to continue to reinvest these earnings in those international operations. If the Company decides at a later date to
repatriate these earnings to the U.S., the Company would be required to provide for the net tax effects on these amounts.
The Company estimates that the tax effect of this repatriation would be approximately $0.5 billion under currently enacted
tax laws and regulations and at current currency exchange rates. This amount does not include the possible benefit of U.S.
foreign tax credits, which may substantially offset this cost.
See Note 8 to the Consolidated Financial Statements for further information regarding income taxes.
Net earnings per share
Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could
occur if securities were exercised or converted into common stock using the treasury stock method.
Use of estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the
U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates are used when
accounting for sales discounts, rebates, allowances and incentives, product liabilities, income taxes, withholding taxes,
depreciation, amortization, employee benefits, contingencies and intangible asset and liability valuations. Actual results may or
may not differ from those estimates.
2024 Annual Report
55
The Company follows the provisions of U.S. GAAP when recording litigation related contingencies. A liability is recorded when a
loss is probable and can be reasonably estimated. The best estimate of a loss within a range is accrued; however, if no estimate
in the range is better than any other, the minimum amount is accrued.
Supplier finance program obligations
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.
Confirmed obligations under the program as of December 29, 2024, and December 31, 2023, were $0.8 billion and $0.7 billion,
respectively. The obligations are presented as Accounts payable on the Consolidated Balance Sheets.
The rollforward of the Company's valid obligations under the program were as follows:
2024
(Dollars in Millions)
Confirmed obligations - beginning of the year
$704
Invoices confirmed during the year
3,048
Confirmed invoices paid during the year
2,964
Confirmed obligations - end of the year
$788
Annual closing date
The Company follows the concept of a fiscal year, which ends on the Sunday nearest to the end of the month of December.
Normally each fiscal year consists of 52 weeks, but every five or six years the fiscal year consists of 53 weeks, and therefore
includes additional shipping days, as was the case in fiscal year 2020, and will be the case again in fiscal year 2026.
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2. Cash, cash equivalents and current marketable securities
At the end of the fiscal year 2024 and 2023, cash, cash equivalents and current marketable securities comprised:
(Dollars in Millions)
2024
Carrying
Amount
Unrecognized
Gain
Estimated
Fair Value
Cash & Cash
Equivalents
Current
Marketable
Securities
Cash
$2,918
—
2,918
2,918
—
Non-U.S. Sovereign Securities(1)
120
—
120
—
120
U.S. Reverse repurchase agreements
7,100
—
7,100
7,100
—
Money market funds
6,123
—
6,123
6,123
—
Time deposits(1)
1,045
—
1,045
1,045
—
Subtotal
$17,306
—
17,306
17,186
120
U.S. Gov't Securities
$6,815
1
6,816
6,796
20
Other Sovereign Securities
176
—
176
83
93
Corporate and other debt securities
224
—
224
40
184
Subtotal available for sale(2)
$7,215
1
7,216
6,919
297
Total cash, cash equivalents and current
marketable securities
$24,105
417
(Dollars in Millions)
2023
Carrying
Amount
Unrecognized
Loss
Estimated
Fair Value
Cash & Cash
Equivalents
Current
Marketable
Securities
Cash
$3,340
—
3,340
3,340
—
Non-U.S. Sovereign Securities(1)
522
—
522
174
348
U.S. Reverse repurchase agreements
4,377
—
4,377
4,377
—
Corporate debt securities(1)
338
—
338
189
149
Money market funds
4,814
—
4,814
4,814
—
Time deposits(1)
662
—
662
662
—
Subtotal
14,053
—
14,053
13,556
497
U.S. Gov't Securities
$8,562
—
8,562
8,259
303
U.S. Gov't Agencies
71
(1)
70
—
70
Other Sovereign Securities
5
—
5
1
4
Corporate and other debt securities
237
237
43
194
Subtotal available for sale(2)
$8,875
(1)
8,874
8,303
571
Total cash, cash equivalents and current
marketable securities
$21,859
1,068
(1)
Held to maturity investments are reported at amortized cost and realized gains or losses are reported in earnings.
(2)
Available for sale debt securities are reported at fair value with unrealized gains and losses reported net of taxes in other
comprehensive income.
Fair value of government securities and obligations and corporate debt securities were estimated using quoted broker prices
and significant other observable inputs.
2024 Annual Report
57
The contractual maturities of the available for sale debt securities at December 29, 2024 are as follows:
(Dollars in Millions)
Cost Basis
Fair Value
Due within one year
$7,204
7,205
Due after one year through five years
11
11
Due after five years through ten years
—
—
Total debt securities
$7,215
7,216
The Company invests its excess cash in both deposits with major banks throughout the world and other high-quality money
market instruments. The Company has a policy of making investments only with commercial institutions that have at least an
investment grade credit rating.
3. Inventories
At the end of fiscal years 2024 and 2023, inventories comprised:
(Dollars in Millions)
2024
2023
Raw materials and supplies
$2,337
2,355
Goods in process
2,815
1,952
Finished goods
7,292
6,874
Total inventories
$12,444
11,181
4. Property, plant and equipment
At the end of fiscal years 2024 and 2023, property, plant and equipment at cost and accumulated depreciation were:
(Dollars in Millions)
2024
2023
Land and land improvements
$718
795
Buildings and building equipment
12,317
12,375
Machinery and equipment
29,444
28,979
Construction in progress
6,289
5,627
Total property, plant and equipment, gross
$48,768
47,776
Less accumulated depreciation
28,250
27,878
Total property, plant and equipment, net
$20,518
19,898
The Company capitalizes interest expense as part of the cost of construction of facilities and equipment. Interest expense
capitalized in fiscal years 2024, 2023 and 2022 was $79 million, $70 million and $49 million, respectively.
Depreciation expense, including the amortization of capitalized interest in fiscal years 2024, 2023 and 2022 was $2.8 billion,
$2.6 billion and $2.4 billion, respectively.
Upon retirement or other disposal of property, plant and equipment, the costs and related amounts of accumulated
depreciation or amortization are eliminated from the asset and accumulated depreciation accounts, respectively. The
difference, if any, between the net asset value and the proceeds are recorded in earnings.
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5. Intangible assets and goodwill
At the end of fiscal years 2024 and 2023, the gross and net amounts of intangible assets were:
(Dollars in Millions)
2024
2023
Intangible assets with definite lives:
Patents and trademarks — gross(1)
$44,695
40,417
Less accumulated amortization
(26,124)
(24,808)
Patents and trademarks — net
$18,571
15,609
Customer relationships and other intangibles — gross
$20,310
20,322
Less accumulated amortization
(13,544)
(12,685)
Customer relationships and other intangibles — net(2)
$6,766
7,637
Intangible assets with indefinite lives:
Trademarks(1)
—
1,714
Purchased in-process research and development
12,281
9,215
Total intangible assets with indefinite lives
$12,281
10,929
Total intangible assets — net
$37,618
34,175
(1)
In September 2024, the Company announced changes to its MedTech brand identity and the $1.7 billion of trademarks associated with the
DePuy Synthes business were reclassified from indefinite lived to definite lived and will be amortized over a 25 year period.
(2)
The majority is comprised of customer relationships
Goodwill as of December 29, 2024 and December 31, 2023, as allocated by segment of business, was as follows:
(Dollars in Millions)
Innovative
Medicine
MedTech
Total
Goodwill at January 1, 2023
$10,184
25,863
36,047
Goodwill, related to acquisitions
—
—
—
Goodwill, related to divestitures
—
—
—
Currency translation/other
223
288 *
511
Goodwill at December 31, 2023
10,407
26,151
36,558
Goodwill, related to acquisitions
640
7,569
8,209
Goodwill, related to divestitures
—
(56)
(56)
Currency translation/other
(355)
(156)
(511)
Goodwill at December 29, 2024
$10,692
33,508
44,200
*
Includes purchase price allocation adjustments for Abiomed
The weighted average amortization period for patents and trademarks is approximately 12 years. The weighted average
amortization period for customer relationships and other intangible assets is approximately 18 years. The amortization expense
of amortizable assets included in Cost of products sold was $4.5 billion, $4.5 billion and $3.9 billion before tax, for the fiscal
years ended December 29, 2024, December 31, 2023 and January 1, 2023, respectively. Intangible asset write-downs are
included in Other (income) expense, net.
The estimated amortization expense related to intangible assets for approved products, before tax, for the five succeeding
years is approximately:
(Dollars in Millions)
2025
2026
2027
2028
2029
$4,000
3,400
2,800
2,200
2,200
See Note 18 to the Consolidated Financial Statements for additional details related to acquisitions and divestitures.
2024 Annual Report
59
6. 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 products 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
December 29, 2024 and December 31, 2023, the total amount of cash collateral paid by the Company under the CSA
amounted to $2.2 billion and $4.0 billion net respectively, 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 December 29, 2024, the Company had notional amounts
outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $45.1
billion, $40.5 billion and $9.0 billion, respectively. As of December 31, 2023, the Company had notional amounts outstanding
for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $42.9 billion, $39.7
billion and $10.0 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. Cash exchanged for derivatives is primarily in cash flows from
operating activities.
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 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 with due dates ranging from 2024 to 2044 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 December 29, 2024, the balance of deferred net loss on derivatives included in accumulated other comprehensive
income was $1.7 billion after-tax. For additional information, see the Consolidated Statements of Comprehensive Income and
Note 13. 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 hedges. 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.
60
The following table is a summary of the activity related to derivatives and hedges for the fiscal years ended December 29,
2024 and December 31, 2023, net of tax:
December 29, 2024
December 31, 2023
(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
$—
—
—
64
—
—
—
—
168
—
Derivatives designated as
hedging instruments
—
—
—
(64)
—
—
—
—
(168)
—
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
$—
—
—
148
—
—
—
—
130
—
Amount of gain or (loss)
recognized in AOCI
—
—
—
148
—
—
—
—
130
—
Gain (Loss) on cash flow
hedging relationship:
Forward foreign
exchange contracts:
Amount of gain or (loss)
reclassified from AOCI
into income
2
426
33
—
6
7
186
(37)
—
8
Amount of gain or (loss)
recognized in AOCI
(7)
(156)
80
—
21
10
447
(18)
—
9
Cross currency interest
rate swaps contracts:
Amount of gain or (loss)
reclassified from AOCI
into income
—
—
—
247
—
—
—
—
275
—
Amount of gain or (loss)
recognized in AOCI
$—
—
—
(597)
—
—
—
—
(156)
—
2024 Annual Report
61
As of December 29, 2024 and December 31, 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
Carrying Amount of the Hedged Liability
Cumulative Amount of Fair Value Hedging
Adjustment Included in the Carrying
Amount of the Hedged Liability
(Dollars in Millions)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Long-term Debt
$7,935
$8,862
$(1,132)
$(1,216)
The following table is the effect of derivatives not designated as hedging instrument for the fiscal years ended
December 29, 2024 and December 31, 2023:
(Dollars in Millions)
Location of Gain /(Loss)
Recognized in Income on
Derivative
Gain/(Loss)
Recognized In
Income on Derivative
Derivatives Not Designated as Hedging Instruments
December 29, 2024
December 31, 2023
Foreign Exchange Contracts
Other (income) expense
$8
(60)
The following table is the effect of net investment hedges for the fiscal years ended December 29, 2024 and
December 31, 2023:
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)
December 29, 2024
December 31, 2023
December 29, 2024
December 31, 2023
Debt
$282
(131)
Interest (income)
expense
—
—
Cross Currency
interest rate swaps
$955
642
Interest (income)
expense
—
—
The Company holds equity investments with readily determinable fair values and equity investments without readily
determinable fair values. The Company measures 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 for the fiscal years ended December 29, 2024
and December 31, 2023:
December 31, 2023
December 29, 2024
(Dollars in Millions)
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 *
$4,473
(17)
(4,005)
451
451
Equity Investments without
readily determinable value
$696
(197)
274
773
773
62
January 1, 2023
December 31, 2023
(Dollars in Millions)
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 *
$576
(368)
4,265
4,473
4,473
Equity Investments without
readily determinable value
$613
1
82
696
696
(1)
Recorded in Other Income/Expense
(2)
Other includes impact of currency
*
The December 31, 2023 balance includes the 9.5% remaining stake in Kenvue. A debt-for-equity exchange was completed in the fiscal
second quarter of 2024.
On May 15, 2024, the Company issued $3.6 billion aggregate principal amount of commercial paper and received $3.6 billion of
net cash proceeds to be used for general corporate purposes. On May 17, 2024, the Company completed a Debt-for-Equity
Exchange of its remaining 182,329,550 shares of Kenvue Common Stock for the outstanding Commercial Paper. Upon
completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged, and the Company no longer
owns any shares of Kenvue Common Stock. This exchange resulted in a loss of approximately $0.4 billion recorded in Other
(income) expense.
For the fiscal years ended December 29, 2024 and December 31, 2023 for equity investments without readily determinable
market values, $171 million and $1 million, respectively, of the changes in fair value reflected in net income were the result of
impairments. There were impacts of $26 million and $27 million, respectively, of changes in the fair value reflected in net
income due to changes in observable prices and gains on the disposal of investments.
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 to prioritize the inputs used in measuring fair value. The levels within the hierarchy are
described below with Level 1 having the highest priority and Level 3 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.
2024 Annual Report
63
The Company’s significant financial assets and liabilities measured at fair value as of the fiscal year ended December 29, 2024
and December 31, 2023 were as follows:
2024
2023
(Dollars in Millions)
Level 1
Level 2
Level 3
Total
Total(1)
Derivatives designated as hedging instruments:
Assets:
Forward foreign exchange contracts
$—
660
—
660
539
Interest rate contracts(2)
—
1,484
—
1,484
988
Total
$—
2,144
—
2,144
1,527
Liabilities:
Forward foreign exchange contracts
—
794
—
794
624
Interest rate contracts(2)
—
3,753
—
3,753
5,338
Total
$—
4,547
—
4,547
5,962
Derivatives not designated as hedging instruments:
Assets:
Forward foreign exchange contracts
$—
50
—
50
64
Liabilities:
Forward foreign exchange contracts
—
17
—
17
75
Available For Sale Other Investments:
Equity investments(3)
451
—
—
451
4,473
Debt securities(4)
—
7,216
—
7,216
8,874
Other Liabilities
Contingent Consideration(5)
$
1,217
1,217
1,092
Gross to Net Derivative Reconciliation
2024
2023
(Dollars in Millions)
Total Gross Assets
$2,194
1,591
Credit Support Agreements (CSA)
(2,172)
(1,575)
Total Net Asset
22
16
Total Gross Liabilities
4,564
6,037
Credit Support Agreements (CSA)
(4,412)
(5,604)
Total Net Liabilities
$152
433
64
Summarized information about changes in liabilities for contingent consideration is as follows:
2024
2023
2022
(Dollars in Millions)
Beginning Balance
$1,092
1,120
533
Changes in estimated fair value
88
29
(194)
Additions(6)
112
—
792
Payments/Other
(75)
(57)
(11)
Ending Balance(5)
$1,217
1,092
1,120
(1)
2023 assets and liabilities are all classified as Level 2 with the exception of equity investments of $4,473 million, which are classified as
Level 1 and contingent consideration of $1,092 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 as cash equivalents and current marketable securities.
(5)
Includes $1,217 million, $1,092 million and $1,116 million, classified as non-current other liabilities as of December 29, 2024,
December 31, 2023 and January 1, 2023, respectively. Includes $4 million classified as current liabilities as of January 1, 2023.
(6)
In fiscal year 2024, the Company recorded $105 million of contingent consideration related to Proteologix. In fiscal year 2022, the
Company recorded $704 million of contingent consideration related to Abiomed.
See Notes 2 and 7 for financial assets and liabilities held at carrying amount on the Consolidated Balance Sheet.
2024 Annual Report
65
7. Borrowings
The components of long-term debt are as follows:
(Dollars in Millions)
2024
Effective
Rate
%
2023
Effective
Rate
%
0.650% Notes due 2024
(750MM Euro 1.1090)(3)
$—
— %
$831
(3)
0.68 %
5.50% Notes due 2024
(500MM GBP 1.2756)(3)
—
—
637
(3)
6.75
2.625% Notes due 2025
750
2.63
750
2.63
0.55% Notes due 2025
999
0.57
950
0.57
2.46% Notes due 2026
1,999
2.47
1,997
2.47
2.95% Notes due 2027
927
2.96
900
2.96
0.95% Notes due 2027
1,458
0.96
1,419
0.96
1.150% Notes due 2028
(750MM Euro 1.0401)(2)/(750MM Euro 1.1090)(3)
777
(2)
1.21
828
(3)
1.21
2.90% Notes due 2028
1,498
2.91
1,497
2.91
6.95% Notes due 2029
298
7.14
298
7.14
4.80% Debentures due 2029
1,146
4.83
—
—
1.30% Notes due 2030
1,646
1.30
1,630
1.30
4.90% Debentures due 2031
1,145
4.92
—
—
3.20% Debenture due 2032
(700M EUR 1.0401)(2)
725
(2)
3.21
—
—
4.95% Debentures due 2033
499
4.95
499
4.95
4.375% Notes due 2033
854
4.24
854
4.24
4.95% Debentures due 2034
846
4.96
—
—
1.650% Notes due 2035
(1.5B Euro 1.0401)(2)/(1.5B Euro 1.1090)(3)
1,550
(2)
1.68
1,652
(3)
1.68
3.35% Debentures due 2036
(800MM EUR 1.0401)(2)
827
(2)
3.37
—
—
3.587% Notes due 2036
869
3.59
864
3.59
5.95% Notes due 2037
994
5.99
994
5.99
3.625% Notes due 2037
1,358
3.64
1,357
3.64
5.85% Debentures due 2038
697
5.85
697
5.85
3.40% Notes due 2038
993
3.42
993
3.42
4.50% Debentures due 2040
541
4.63
541
4.63
2.10% Notes due 2040
845
2.14
849
2.14
4.85% Notes due 2041
297
4.89
297
4.89
4.50% Notes due 2043
496
4.52
496
4.52
3.55% Debentures due 2044
(1B EUR 1.0401)(2)
1,030
(2)
3.58
—
—
3.73% Notes due 2046
1,978
3.74
1,977
3.74
3.75% Notes due 2047
822
3.76
832
3.76
3.500% Notes due 2048
744
3.52
743
3.52
2.250% Notes due 2050
808
2.29
826
2.29
66
5.25% Debentures due 2054
843
5.26
—
—
2.450% Notes due 2060
1,058
2.49
1,073
2.49
Other
83
—
69
—
Subtotal
32,400
(4)
3.36% (1)
27,350
(4)
2.98% (1)
Less current portion
1,749
1,469
Total long-term debt
$30,651
$25,881
(1)
Weighted average effective rate.
(2)
Translation rate at December 29, 2024.
(3)
Translation rate at December 31, 2023.
(4)
The excess of the carrying value over the fair value of debt was $2.0 billion and $1.0 billion at the end of fiscal year 2024 and fiscal year
2023, respectively.
Fair value of the long-term debt was estimated using market prices, which were corroborated by quoted broker prices and
significant other observable inputs.
The Company has access to substantial sources of funds at numerous banks worldwide. In June 2024, the Company secured a
new 364-day Credit Facility of $10 billion, which expires on June 25, 2025. Interest charged on borrowings under the credit
line agreement is based on either the Term SOFR Reference Rate or other applicable market rates as allowed under the terms
of the agreement, plus applicable margins. Commitment fees under the agreements are not material.
Throughout fiscal years 2024 and 2023, the Company continued to have access to liquidity through the commercial
paper market. Short-term borrowings and the current portion of long-term debt amounted to approximately $6.0 billion and
$3.5 billion at the end of fiscal years 2024 and 2023, respectively. The current portion of the long-term debt was $1.7 billion
and $1.5 billion in 2024 and 2023, respectively, and the remainder is commercial paper and local borrowing by
international subsidiaries.
The current debt balance as of December 29, 2024 includes $4.1 billion of commercial paper which has a weighted average
interest rate of 4.46% and a weighted average maturity of approximately two months. The current debt balance as of
December 31, 2023 includes $2.0 billion of commercial paper which has a weighted average interest rate of 5.37% and a
weighted average maturity of approximately two months.
Aggregate maturities of long-term debt obligations commencing in 2025 are:
(Dollars in Millions)
2025
2026
2027
2028
2029
After 2029
$1,749
1,999
2,385
2,275
1,444
22,548
8. Income taxes
The provision for taxes on income on continuing operations consists of:
(Dollars in Millions)
2024
2023
2022
Currently payable:
U.S. taxes
$2,200
2,705
2,274
International taxes
2,604
3,090
2,295
Total currently payable
4,804
5,795
4,569
Deferred:
U.S. taxes
(2,539)
(3,440)
(1,990)
International taxes
356
(619)
410
Total deferred
(2,183)
(4,059)
(1,580)
Provision for taxes on income
$2,621
1,736
2,989
2024 Annual Report
67
A comparison of income tax expense at the U.S. statutory rate of 21% in fiscal years 2024, 2023 and 2022, to the Company’s
effective tax rate is as follows:
(Dollars in Millions)
2024
2023
2022
U.S.
$(458)
(2,033)
4,606
International
17,145
17,095
14,753
Earnings before taxes on income:
$16,687
15,062
19,359
Tax rates:
U.S. statutory rate
21.0%
21.0
21.0
International operations(1)
(5.2)
(8.1)
(5.0)
U.S. tax settlements
1.0
(3.0)
—
U.S. taxes on international income(2)
(2.6)
(0.3)
(1.1)
U.S. state taxes
1.5
1.0
0.3
Tax benefits on share-based compensation
(0.6)
(0.8)
(1.4)
All other
0.6
1.7
1.6
Effective Rate
15.7%
11.5
15.4
(1)
International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly
Ireland, Switzerland, and Belgium, which is a favorable impact on the effective tax rate as compared with the U.S. statutory rate.
(2)
Includes the net impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under
the U.S. tax code as well as related foreign tax credits.
The fiscal year 2024 effective tax rate increased 4.2% as compared to the fiscal year 2023 effective tax rate. The primary
drivers of this change are discussed below.
In fiscal year 2024, The Company had more income in higher tax jurisdictions compared to fiscal year 2023, primarily in the
U.S. where the Company recorded a charge of approximately $5.1 billion in the fiscal year of 2024 versus approximately
$7.0 billion in the fiscal year of 2023, both for the talc matters in the United States. Both charges were recorded at an
effective U.S. tax rate of approximately 21% (for further information see Note 19 to the Consolidated Financial Statements).
Additionally in the fiscal year 2024, the effective tax rate was unfavorably impacted by legislative changes that went into
effect for Pillar Two in some of the Company's foreign jurisdictions which are reflected in International operations on the
Company’s effective tax rate reconciliation. Also in fiscal year 2024, the Company generated incremental U.S. foreign tax
credits related to income sourced and taxed outside the United States and is reflected in U.S. taxes on international income on
the Company’s effective tax rate reconciliation. In 2024, the Company finalized multi-year transfer pricing agreements with
the U.S. Internal Revenue Service (IRS) and certain other foreign jurisdictions. The U.S portion of the agreements were partially
offset by the related tax adjustments in the foreign jurisdictions which are reflected in U.S tax settlements and International
operations, respectively, on the Company’s effective rate reconciliation.
The fiscal year 2023 effective tax rate decreased 3.9% as compared to the fiscal year 2022 effective tax rate as the
Company recorded certain non-recurring favorable tax items in fiscal year 2023 when compared to the prior fiscal year.
In the fiscal fourth quarter of 2023, the Company settled the U.S. Internal Revenue Service audit for tax years 2013 through
2016 which resulted in a favorable impact to the rate of 3.0%. This settlement was partially offset by the Company recording a
$0.4 billion decrease in expected U.S. foreign tax credits, an unfavorable effective rate impact of 2.6%, which has been
reflected as a current tax expense in U.S. taxes on international income on the Company’s effective tax rate reconciliation.
In the fiscal year 2023, the Company had certain non-recurring impacts as a result of legislative tax elections made in certain
international subsidiaries which resulted in a change in the Company’s tax basis in certain assets resulting in deferred tax re-
measurements. The net impact of these non-recurring items is a net benefit of 3.4% to the Company’s annual effective tax
rate, comprised of the following items:
•
approximately $0.3 billion of tax benefit on local deferred tax assets to record the remeasurement of the increased tax
basis, this benefit has been reflected as International operations on the Company’s effective tax rate reconciliation.
This benefit was offset by approximately $0.1 billion of U.S. deferred tax expense on the GILTI deferred tax liability resulting
from the remeasurement of these deferred tax assets. This has been reflected in the “U.S. tax on international income” on
the Company’s effective tax rate reconciliation.
68
•
approximately $0.3 billion of U.S. deferred tax benefit on the GILTI deferred tax related to an election made by an
international subsidiary resulting in a decrease in local deferred tax assets. This has been reflected in the U.S. taxes on
international income on the Company’s effective tax rate reconciliation.
The Company also had lower income in higher tax jurisdictions vs. fiscal year 2022, primarily in the U.S. where the Company
recorded an approximately $7.0 billion charge related to talc matters in the United States at an effective tax rate of 21.1% (for
further information see Note 19 to the Consolidated Financial Statements).
Temporary differences and carryforwards at the end of fiscal years 2024 and 2023 were as follows:
2024 Deferred Tax
2023 Deferred Tax
(Dollars in Millions)
Asset
Liability
Asset
Liability
Employee related obligations
$372
586
Stock based compensation
717
686
Depreciation of property, plant and equipment
(833)
(902)
Goodwill and intangibles
(3,261)
(1,252)
R&D capitalized for tax
4,398
3,595
Reserves & liabilities
4,444
3,816
Inventory related
371
359
Operating loss carryforwards
2,298
2,145
Undistributed foreign earnings
1,931
(1,492)
1,801
(1,695)
Global intangible low-taxed income
(1,589)
(2,731)
Miscellaneous international
1,212
831
Miscellaneous U.S.
1,083
(4)
Total deferred income taxes
16,826
(7,175)
13,819
(6,584)
Valuation allowances
(1,638)
(1,149)
Total deferred income taxes net of valuation allowances
15,188
(7,175)
12,670
(6,584)
The Company has wholly-owned international subsidiaries that have cumulative net losses. The Company believes that it is
more likely than not that these subsidiaries will generate future taxable income sufficient to partially utilize these deferred tax
assets. In certain jurisdictions, valuation allowances have been recorded against deferred tax assets for loss carryforwards that
are not more likely than not to be realized. The net operating loss carryforwards for these international subsidiaries that do not
have an indefinite carryforward period will begin to expire in 2025 for various amounts.
The following table summarizes the activity related to valuation allowances for continuing operations:
(Dollars in Millions)
2024
2023
Beginning of year
$1,149
775
Provision
451
355
Utilization
—
(116)
Foreign currency translation
(46)
25
Net acquisitions / (dispositions/liquidations)
84
110
End of year
$1,638
$1,149
2024 Annual Report
69
The following table summarizes the activity related to unrecognized tax benefits for continuing operations:
(Dollars in Millions)
2024
2023
2022
Beginning of year
$2,485
3,716
3,210
Increases related to current year tax positions
176
239
523
Increases related to prior period tax positions
129
244
143
Decreases related to prior period tax positions
(147)
(781)
(148)
Settlements
(583)
(880)
(1)
Lapse of statute of limitations
(40)
(53)
(11)
End of year
$2,020
2,485
3,716
As of December 29, 2024 the Company had approximately $2.0 billion of unrecognized tax benefits. The Company conducts
business and files tax returns in numerous countries and currently has tax audits in progress with a number of tax authorities.
With respect to the United States, the Internal Revenue Service (IRS) has completed its audit for the tax years through 2016
and has commenced the audit for tax years 2017 through 2020. The Company recently finalized multi-year transfer pricing
agreements with the IRS and certain other foreign jurisdictions in the fiscal fourth quarter of 2024.
In other major jurisdictions where the Company conducts business, the years that remain open to tax audits go back to the
year 2013. The Company believes it is possible that some tax audits may be completed over the next twelve months by taxing
authorities in some jurisdictions. The Company anticipates a change in uncertain tax positions of approximately $200 million in
certain jurisdictions in the next twelve months due to the expected expiration of the statute of limitations. However, generally
the Company is not able to provide a reasonably reliable estimate of the timing of any other future tax payments, audit
settlements, or changes in uncertain tax positions.
The Company classifies liabilities for unrecognized tax benefits and related interest and penalties as long-term liabilities.
Interest expense and penalties related to unrecognized tax benefits are classified as income tax expense. The Company
recognized after tax interest expense of $217 million, $99 million and $136 million in fiscal years 2024, 2023 and 2022,
respectively. The total amount of accrued interest was $274 million and $264 million in fiscal years 2024 and
2023, respectively.
9. Employee related obligations
At the end of fiscal 2024 and fiscal 2023, employee related obligations recorded on the Consolidated Balance Sheets were:
(Dollars in Millions)
2024
2023
Pension benefits
$2,968
3,129
Postretirement benefits
1,920
1,963
Postemployment benefits
2,910
2,527
Deferred compensation
49
68
Total employee obligations
7,847
7,687
Less current benefits payable
592
538
Employee related obligations — non-current
$7,255
7,149
Prepaid employee related obligations of $6,046 million and $4,992 million for 2024 and 2023, respectively, are included in
Other assets on the Consolidated Balance Sheets.
70
10. Pensions and other benefit plans
The Company sponsors various retirement and pension plans, including defined benefit, defined contribution and termination
indemnity plans, which cover most employees worldwide. The Company also provides post-retirement benefits, primarily
healthcare, to all eligible U.S. retired employees and their dependents.
Many international employees are covered by government-sponsored programs and the cost to the Company is not significant.
In the U.S., non-union pension benefits for employees hired before January 1, 2015 are primarily based on the employee’s
compensation during the last five years before retirement and the number of years of service (the Final Average Pay formula).
U.S. pension benefits for employees hired after 2014, are calculated using a different formula based on employee
compensation over total years of service (the Retirement Value formula).
In January 2021, the Company announced that, effective on January 1, 2026, all eligible U.S. non-union employees, regardless
of hire date, will earn benefits under the Retirement Value formula. This amendment does not affect the benefits accrued
under the Final Average Pay formula for service before January 1, 2026.
International subsidiaries have plans under which funds are deposited with trustees, annuities are purchased under group
contracts, or reserves are provided.
The Company does not fund retiree healthcare benefits in advance and has the right to modify these plans in the future.
In 2024 and 2023 the Company used December 31, 2024 and December 31, 2023, respectively, as the measurement date for
all U.S. and international retirement and other benefit plans.
Net periodic benefit costs for the Company’s defined benefit retirement plans and other benefit plans for 2024, 2023 and
2022 include the following components:
Retirement Plans
Other Benefit Plans
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
Service cost
$948
893
1,319
277
264
320
Interest cost
1,402
1,437
908
209
214
104
Expected return on plan assets
(2,560)
(2,716)
(2,756)
(7)
(7)
(8)
Amortization of prior service cost
(184)
(184)
(184)
(2)
(2)
(5)
Recognized actuarial losses (gains)
174
(199)
650
53
23
122
Curtailments and settlements
(2)
93
1
—
(5)
—
Net periodic benefit cost (credit)
$(222)
(676)
(62)
530
487
533
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, Selling, marketing and administrative expenses, and Net earnings from discontinued operations, net of taxes if related
to the separation of Kenvue. All other components of net periodic benefit cost are presented as part of Other (income)
expense, net on the Consolidated Statement of Earnings, with the exception of certain amounts for curtailments and
settlements, which are reported in Net earnings from discontinued operations, net of taxes if related to the separation of
Kenvue (as noted above).
Unrecognized gains and losses for the U.S. pension plans are amortized over the average remaining future service for each
plan. For plans with no active employees, they are amortized over the average life expectancy. The amortization of gains and
losses for the other U.S. benefit plans is determined by using a 10% corridor of the greater of the market value of assets or the
accumulated postretirement benefit obligation. Total unamortized gains and losses in excess of the corridor are amortized
over the average remaining future service.
Prior service costs/benefits for the U.S. pension plans are amortized over the average remaining future service of plan
participants at the time of the plan amendment. Prior service cost/benefit for the other U.S. benefit plans is amortized over
the average remaining service to full eligibility age of plan participants at the time of the plan amendment.
2024 Annual Report
71
The following table represents the weighted-average actuarial assumptions:
Retirement Plans
Other Benefit Plans
Worldwide Benefit Plans
2024
2023
2022
2024
2023
2022
Net Periodic Benefit Cost
Service cost discount rate
4.39%
4.85
2.46
5.09
5.40
2.59
Interest cost discount rate
4.95%
5.25
2.80
5.12
5.43
2.64
Rate of increase in compensation levels
3.70%
3.71
4.02
4.22
4.22
4.21
Expected long-term rate of return on plan assets
7.25%
7.21
7.25
Benefit Obligation
Discount rate
4.95%
4.58
5.01
5.54
5.11
5.42
Rate of increase in compensation levels
3.70%
3.69
4.00
4.22
4.22
4.21
The Company’s discount rates are determined by considering current yield curves representing high quality, long-term fixed
income instruments. The resulting discount rates are consistent with the duration of plan liabilities. The Company's
methodology in determining service and interest cost uses duration specific spot rates along that yield curve to the plans'
liability cash flows.
The expected rates of return on plan asset assumptions represent the Company's assessment of long-term returns on
diversified investment portfolios globally. The assessment is determined using projections from external financial sources,
long-term historical averages, actual returns by asset class and the various asset class allocations by market.
The following table displays the assumed healthcare cost trend rates, for all individuals:
Healthcare Plans
2024
2023
Healthcare cost trend rate assumed for next year
9.33%
13.90%
Rate to which the cost trend rate is assumed to decline (ultimate trend)
4.02%
4.00%
Year the rate reaches the ultimate trend rate
2048
2048
The following table sets forth information related to the benefit obligation and the fair value of plan assets at fiscal year-end
2024 and 2023 for the Company’s defined benefit retirement plans and other post-retirement plans:
Retirement Plans
Other Benefit Plans
(Dollars in Millions)
2024
2023
2024
2023
Change in Benefit Obligation
Projected benefit obligation — beginning of year
$31,744
29,390
4,108
4,192
Service cost
948
893
277
264
Interest cost
1,402
1,437
209
214
Plan participant contributions
75
73
—
—
Amendments
—
(6)
—
—
Actuarial (gains) losses(1)
(1,245)
2,068
398
469
Divestitures & acquisitions(2)
—
(352)
—
1
Curtailments, settlements & restructuring
(121)
(238)
—
(332)
Benefits paid from plan(3)
(1,801)
(2,122)
(556)
(702)
Effect of exchange rates
(685)
601
(11)
2
Projected benefit obligation — end of year
$30,317
31,744
4,425
4,108
72
Change in Plan Assets
Plan assets at fair value — beginning of year
$33,607
31,496
86
78
Actual return (loss) on plan assets
2,113
3,951
15
16
Company contributions
229
268
548
694
Plan participant contributions
75
73
—
—
Settlements
(114)
(176)
—
—
Divestitures & acquisitions(2)
—
(509)
—
—
Benefits paid from plan assets(3)
(1,801)
(2,122)
(556)
(702)
Effect of exchange rates
(714)
626
—
—
Plan assets at fair value — end of year
$33,395
33,607
93
86
Funded status — end of year
$3,078
1,863
(4,332)
(4,022)
Amounts Recognized in the Company’s Balance Sheet consist of
the following:
Non-current assets
$6,046
4,992
—
—
Current liabilities
(136)
(119)
(453)
(416)
Non-current liabilities
(2,832)
(3,010)
(3,879)
(3,606)
Total recognized in the consolidated balance sheet — end of year
$3,078
1,863
(4,332)
(4,022)
Amounts Recognized in Accumulated Other Comprehensive Income
consist of the following:
Net actuarial loss
$3,903
4,962
691
354
Prior service cost (credit)
(1,051)
(1,236)
(4)
(6)
Unrecognized net transition obligation
—
—
—
Total before tax effects
$2,852
3,726
687
348
Accumulated Benefit Obligations — end of year
$28,883
30,139
(1)
The actuarial (gains)/losses for retirement plans in 2024 and 2023 were primarily driven by changes in the discount rates.
(2)
Driven by the Kenvue separation.
(3)
The fiscal years 2024 and 2023 includes approximately $400 million and $800 million, respectively, transferred to a group annuity
contract issued by a third-party insurer for the U.S. Salaried Pension Plan.
Retirement Plans
Other Benefit Plans
(Dollars in Millions)
2024
2023
2024
2023
Amounts Recognized in Net Periodic Benefit Cost and Other
Comprehensive Income
Net periodic benefit cost (credit)
$(222)
(676)
530
487
Net actuarial (gain) loss
(807)
711
389
136
Amortization of net actuarial loss
(172)
199
(53)
(22)
Prior service cost (credit)
—
(2)
—
—
Amortization of prior service (cost) credit
184
185
2
2
Effect of exchange rates
(79)
103
1
—
Total loss/(income) recognized in other comprehensive income, before tax
$(874)
1,195
339
116
Total recognized in net periodic benefit cost and other comprehensive income
$(1,096)
519
869
603
2024 Annual Report
73
The Company plans to continue to fund its U.S. Qualified Plans to comply with the Pension Protection Act of 2006.
International Plans are funded in accordance with local regulations. Additional discretionary contributions are made when
deemed appropriate to meet the long-term obligations of the plans. For certain plans, funding is not a common practice, as
funding provides no economic benefit. Consequently, the Company has several pension plans that are not funded.
In 2024, the Company contributed $122 million and $107 million to its U.S. and international pension plans, respectively.
The following table displays the funded status of the Company's U.S. Qualified & Non-Qualified pension plans and international
funded and unfunded pension plans at December 31, 2024 and December 31, 2023, respectively:
U.S. Plans
International Plans
Qualified Plans
Non-Qualified Plans
Funded Plans
Unfunded Plans
(Dollars in Millions)
2024
2023
2024
2023
2024
2023
2024
2023
Plan Assets
$22,250
22,298
—
—
11,145
11,309
—
—
Projected Benefit Obligation
18,146
19,152
1,990
2,037
10,069
10,431
112
124
Accumulated Benefit Obligation
17,726
18,557
1,949
1,982
9,115
9,498
93
102
Over (Under) Funded Status
Projected Benefit Obligation
$4,104
3,146
(1,990)
(2,037)
1,076
878
(112)
(124)
Accumulated Benefit Obligation
4,524
3,741
(1,949)
(1,982)
2,030
1,811
(93)
(102)
Plans with accumulated benefit obligations in excess of plan assets have an accumulated benefit obligation, projected benefit
obligation and plan assets of $5.8 billion, $6.1 billion and $3.2 billion, respectively, at the end of 2024, and $5.8 billion, $6.1
billion and $3.1 billion, respectively, at the end of 2023.
The following table displays the projected future benefit payments from the Company’s retirement and other benefit plans:
(Dollars in Millions)
2025
2026
2027
2028
2029
2030-2034
Projected future benefit payments
Retirement plans
$1,480
1,503
1,604
1,702
1,797
10,401
Other benefit plans
$464
478
432
445
462
2,537
The following table displays the projected future minimum contributions to the unfunded retirement plans. These amounts do
not include any discretionary contributions that the Company may elect to make in the future.
(Dollars in Millions)
2025
2026
2027
2028
2029
2030-2034
Projected future contributions
$133
135
140
145
150
815
Each pension plan is overseen by a local committee or board that is responsible for the overall administration and investment
of the pension plans. In determining investment policies, strategies and goals, each committee or board considers factors
including, local pension rules and regulations; local tax regulations; availability of investment vehicles (separate accounts,
commingled accounts, insurance funds, etc.); funded status of the plans; ratio of actives to retirees; duration of liabilities;
and other relevant factors including: diversification, liquidity of local markets and liquidity of base currency. A majority of the
Company’s pension funds are open to new entrants and are expected to be on-going plans. Permitted investments are primarily
liquid and/or listed, with little reliance on illiquid and non-traditional investments such as hedge funds.
74
The Company’s retirement plan asset allocation at the end of 2024 and 2023 and target allocations for 2025 are as follows:
Percent of
Plan Assets
Target
Allocation
Worldwide Retirement Plans
2024
2023
2025
Equity securities
55%
58%
54%
Debt securities
45
42
46
Total plan assets
100%
100%
100%
Determination of fair value of plan assets
The Plan has an established and well-documented process for determining fair values. Fair value is based upon quoted market
prices, where available. If listed prices or quotes are not available, fair value is based upon models that primarily use, as inputs,
market-based or independently sourced market parameters, including yield curves, interest rates, volatilities, equity or debt
prices, foreign exchange rates and credit curves.
While the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different
estimate of fair value at the reporting date.
Valuation hierarchy
The authoritative literature establishes a three-level hierarchy to prioritize the inputs used in measuring fair value. The levels
within the hierarchy are described in the table below with Level 1 having the highest priority and Level 3 having the lowest.
The Net Asset Value (NAV) is based on the value of the underlying assets owned by the fund, minus its liabilities, and then
divided by the number of shares outstanding.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.
Following is a description of the valuation methodologies used for the investments measured at fair value.
•
Short-term investment funds — Cash and quoted short-term instruments are valued at the closing price or the amount held
on deposit by the custodian bank. Other investments are through investment vehicles valued using the NAV provided by the
administrator of the fund. The NAV is a quoted price in a market that is not active and classified as Level 2.
•
Government and agency securities — A limited number of these investments are valued at the closing price reported on the
major market on which the individual securities are traded. Where quoted prices are available in an active market, the
investments are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available for the specific
security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or
discounted cash flows. When quoted market prices for a security are not available in an active market, they are classified as
Level 2.
•
Debt instruments — A limited number of these investments are valued at the closing price reported on the major market on
which the individual securities are traded. Where quoted prices are available in an active market, the investments are
classified as Level 1. If quoted market prices are not available for the specific security, then fair values are estimated by
using pricing models, quoted prices of securities with similar characteristics or discounted cash flows and are classified as
Level 2. Level 3 debt instruments are priced based on unobservable inputs.
•
Equity securities — Equity securities are valued at the closing price reported on the major market on which the individual
securities are traded. Substantially all equity securities are classified within Level 1 of the valuation hierarchy.
•
Commingled funds — These investment vehicles are valued using the NAV provided by the fund administrator. Assets in the
Level 2 category have a quoted market price.
•
Other assets — Other assets are represented primarily by limited partnerships. These investment vehicles are valued using
the NAV provided by the fund administrator. Other assets that are exchange listed and actively traded are classified as
Level 1, while inactively traded assets are classified as Level 2.
2024 Annual Report
75
The following table sets forth the Retirement Plans' investments measured at fair value as of December 31, 2024 and
December 31, 2023:
Quoted Prices
in Active
Markets for
Identical Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs(1)
Investments
Measured at Net
Asset Value
(Level 1)
(Level 2)
(Level 3)
Total Assets
(Dollars in Millions)
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Short-term investment
funds
$—
12
511
829
—
—
—
—
511
841
Government and
agency securities
—
—
7,885
5,985
—
—
—
—
7,885
5,985
Debt instruments
—
—
2,321
3,899
—
—
—
—
2,321
3,899
Equity securities
7,144
7,764
—
—
—
—
—
—
7,144
7,764
Commingled funds
—
—
5,004
4,967
37
43
6,190
6,672
11,231
11,682
Other assets
—
—
88
49
128
92
4,087
3,295
4,303
3,436
Investments at fair
value
$7,144
7,776
15,809
15,729
165
135
10,277
9,967
33,395
33,607
(1)
The activity for the Level 3 assets is not significant for all years presented.
The Company's Other Benefit Plans are unfunded except for U.S. commingled funds (Level 2) of $93 million and $86 million at
December 31, 2024 and December 31, 2023, respectively.
The fair value of Johnson & Johnson Common Stock directly held in plan assets was $13 million at December 31, 2024 and $14
million at December 31, 2023.
11. Savings plan
The Company has voluntary 401(k) savings plans designed to enhance the existing retirement programs covering eligible
employees. The Company matches a percentage of each employee’s contributions consistent with the provisions of the plan
for which the employee is eligible. Total Company matching contributions to the plans were $282 million, $263 million and
$257 million in fiscal years 2024, 2023 and 2022, respectively.
76
12. Capital and treasury stock
Changes in treasury stock were:
Treasury Stock
(Amounts in Millions Except Treasury Stock Shares in Thousands)
Shares
Amount
Balance at January 2, 2022
490,878
$39,099
Employee compensation and stock option plans
(20,007)
(3,440)
Repurchase of common stock
35,375
6,035
Balance at January 1, 2023
506,246
41,694
Employee compensation and stock option plans
(15,521)
(2,529)
Repurchase of common stock
31,085
5,079
Kenvue share exchange (Note 21)
190,955
31,418
Balance at December 31, 2023
712,765
75,662
Employee compensation and stock option plans
(15,027)
(2,389)
Repurchase of common stock
15,183
2,407
Balance at December 29, 2024
712,921
$75,680
Aggregate shares of common stock issued were approximately 3,119,843,000 shares at the end of fiscal years 2024, 2023
and 2022.
Cash dividends paid were $4.91 per share in fiscal year 2024, compared with dividends of $4.70 per share in fiscal year 2023,
and $4.45 per share in fiscal year 2022.
On January 2, 2025, the Board of Directors declared a regular cash dividend of $1.24 per share, payable on March 4, 2025 to
shareholders of record as of February 18, 2025.
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 shares of common stock. The repurchase program
was completed during the fiscal first quarter of 2023.
13. Accumulated other comprehensive income (loss)
Components of other comprehensive income (loss) consist of the following:
(Dollars in Millions)
Foreign
Currency
Translation
Gain/
(Loss) On
Securities
Employee
Benefit Plans
Gain/
(Loss) On
Derivatives
& Hedges
Total
Accumulated
Other
Comprehensive
Income (Loss)
January 2, 2022
$(10,017)
(3)
(2,702)
(336)
(13,058)
Net 2022 changes
(1,796)
(24)
1,805
106
91
January 1, 2023
(11,813)
(27)
(897)
(230)
(12,967)
Net 2023 changes
(3,221)
26
(1,399)
(147)
(4,741)
Kenvue Separation/IPO
4,885
—
296 *
—
5,181
December 31, 2023
(10,149)
(1)
(2,000)
(377)
(12,527)
Net 2024 changes
1,708
2
449
(1,373)
786
December 29, 2024
$(8,441)
1
(1,551)
(1,750)
(11,741)
2024 Annual Report
77
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 10 for additional details.
Gain/(Loss) On Derivatives & Hedges - reclassifications to earnings are recorded in the same account as the hedged
transaction. See Note 6 for additional details.
*
Includes impact of curtailments and settlements in connection with separation from Kenvue.
14. International currency translation
For translation of its subsidiaries operating in non-U.S. Dollar currencies, the Company has determined that the local currencies
of its international subsidiaries are the functional currencies except those in highly inflationary economies, which are defined as
those which have had compound cumulative rates of inflation of 100% or more during the past three years, or where a
substantial portion of its cash flows are not in the local currency. For the majority of the Company's subsidiaries the local
currency is the functional currency.
In consolidating international subsidiaries, balance sheet currency effects are recorded as a component of accumulated other
comprehensive income. The other current and non-current assets line within the Statement of Cash flows includes the impact
of foreign currency translation. This equity account includes the results of translating certain balance sheet assets and
liabilities at current exchange rates and some accounts at historical rates, except for those located in highly inflationary
economies (Argentina, Turkey and Venezuela). Beginning in the fiscal fourth quarter of 2024, the Company also accounted for
operations in Egypt as highly inflationary. The translation of balance sheet accounts for highly inflationary economies are
reflected in the operating results.
A rollforward of the changes during fiscal years 2024, 2023 and 2022 for foreign currency translation adjustments is included
in Note 13.
Net currency transaction gains and losses included in Other (income) expense were losses of $214 million, $366 million and
$286 million in fiscal years 2024, 2023 and 2022, respectively.
78
15. Earnings per share
The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal years ended
December 29, 2024, December 31, 2023 and January 1, 2023:
(In Millions Except Per Share Amounts)
2024
2023
2022
Basic net earnings per share from continuing operations
$5.84
5.26
6.23
Basic net earnings per share from discontinued operations
—
8.62
0.60
Total net earnings per share - basic
5.84
13.88
6.83
Average shares outstanding — basic
2,407.3
2,533.5
2,625.2
Potential shares exercisable under stock option plans
77.7
94.1
140.1
Less: shares repurchased under treasury stock method
(55.6)
(67.2)
(101.4)
Adjusted average shares outstanding — diluted
2,429.4
2,560.4
2,663.9
Diluted net earnings per share from continuing operations
5.79
5.20
6.14
Diluted net earnings per share from discontinuing operations
—
8.52
0.59
Total net earnings per share - diluted
$5.79
13.72
6.73
(Shares in Millions)
The diluted net earnings per share calculation excluded the following number of shares
related to stock options, as the exercise price of these options was greater than the
average market value of the Company’s stock.
54.1
43.0
0.0
16. Common stock, stock option plans and stock compensation agreements
At December 29, 2024, the Company had one active stock-based compensation plan, the 2022 Long-Term Incentive Plan. The
shares outstanding are for contracts under the Company's 2012 Long-Term Incentive Plan and 2022 Long-Term Incentive Plan.
The 2012 Long-Term Incentive Plan expired on April 26, 2022. All awards (stock options, restricted shares units and
performance share units) granted subsequent to that date were under the 2022 Long-Term Incentive Plan. Under the 2022
Long-Term Incentive Plan, the Company may issue up to 150 million shares of common stock, of which up to 110 million shares
of common stock may be issued subject to stock options or stock appreciation rights and up to 40 million shares of common
stock may be issued subject to full value awards. Awards will generally be counted on a 1-for-1 basis against the share reserve,
provided that if more than 40 million full value awards are granted, each full value award in excess of 40 million will be counted
on a 5-for-1 basis against the share reserve. Shares available for future grants under the 2022 Long-Term Incentive Plan were
111 million at the end of fiscal year 2024.
The compensation cost that has been charged against income for these plans was $1,176 million, $1,087 million and $1,028
million for fiscal years 2024, 2023 and 2022, respectively. The total income tax benefit recognized in the income statement
for share-based compensation costs was $251 million, $221 million and $177 million for fiscal years 2024, 2023 and 2022,
respectively. The Company also recognized additional income tax benefits of $94 million, $126 million and $267 million for
fiscal years 2024, 2023 and 2022, respectively, for which options were exercised or restricted shares were vested. The total
unrecognized compensation cost was $1,002 million, $907 million and $866 million for fiscal years 2024, 2023 and 2022,
respectively. The weighted average period for this cost to be recognized was 1.81 years, 1.80 years and 1.80 years for fiscal
years 2024, 2023, and 2022, respectively. Share-based compensation costs capitalized as part of inventory were insignificant
in all periods.
The Company settles employee benefit equity issuances with treasury shares. Treasury shares are replenished through market
purchases throughout the year for the number of shares used to settle employee benefit equity issuances.
2024 Annual Report
79
Stock options
Stock options expire 10 years from the date of grant and vest over service periods that range from 6 months to 4 years.
Options granted under the 2012 Long-Term Incentive Plan were granted at the average of the high and low prices of the
Company’s Common Stock on the New York Stock Exchange on the date of grant. Options granted under the 2022 Long-Term
incentive Plan were granted at the closing price of the Company’s Common Stock on the New York Stock Exchange on the
date of grant.
The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model that
uses the assumptions noted in the following table. For 2024, 2023, and 2022 grants, expected volatility represents a blended
rate of 10-year weekly historical overall volatility rate, and a 5-week average implied volatility rate based on at-the-money
traded Johnson & Johnson options with a life of 2 years. For all grants, historical data is used to determine the expected life of
the option. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant.
The average fair value of options granted was $27.67, $27.85 and $23.23, in fiscal years 2024, 2023 and 2022, respectively.
The fair value was estimated based on the weighted average assumptions of:
2024
2023
2022
Risk-free rate
4.15%
3.74%
1.98%
Expected volatility
17.85%
17.69%
18.00%
Expected life (in years)
7.0
7.0
7.0
Expected dividend yield
3.10%
2.90%
2.70%
A summary of option activity under the Plan as of December 29, 2024, is presented below:
(Shares in Thousands)
Outstanding
Shares
Weighted
Average Exercise
Price
Aggregate
Intrinsic
Value
(Dollars in Millions)
Shares at December 31, 2023
112,238
$139.88
$2,239
Options granted
13,917
157.92
Options exercised
(10,771)
107.06
Options canceled/forfeited
(2,755)
162.45
Shares at December 29, 2024
112,629
$144.69
$1,129
The total intrinsic value of options exercised was $560 million, $729 million and $1,228 million in fiscal years 2024, 2023 and
2022, respectively.
80
The following table summarizes stock options outstanding and exercisable at December 29, 2024:
(Shares in Thousands)
Outstanding
Exercisable
Exercise Price Range
Options
Average Life(1)
Weighted
Average
Exercise Price
Options
Weighted
Average
Exercise Price
$100.06 - $101.87
13,016
0.8
$101.29
13,016
$101.29
$115.67 - $129.51
18,252
2.6
122.49
18,252
122.49
$131.94 - $151.41
25,624
4.6
142.87
25,624
142.87
$157.92 - $162.75
26,391
8.6
160.33
4,269
162.75
$164.62 - $165.89
29,346
6.6
165.29
13,522
164.64
112,629
5.3
$144.69
74,683
$135.72
(1)
Average contractual life remaining in years.
Stock options outstanding at December 31, 2023 and January 1, 2023 were 112,238 and an average life of 5.5 years and
118,672 and an average life of 5.8 years, respectively. Stock options exercisable at December 31, 2023 and January 1, 2023
were 66,998 at an average price of $123.39 and 63,661 at an average price of $113.06, respectively.
Restricted share units and performance share units
The Company grants restricted share units which vest over service periods that range from 6 months to 3 years. The Company
also grants performance share units, which are paid in shares of Johnson & Johnson Common Stock after the end of a
three-year performance period. Performance shares were granted with two equally-weighted goals that directly align with or
help drive long-term total shareholder return: adjusted operational earnings per share and relative total shareholder return.
The number of shares actually earned at the end of the three-year period will vary, based only on actual performance, from 0%
to 200% of the target number of performance share units granted.
A summary of the restricted share units and performance share units activity under the Plans as of December 29, 2024 is
presented below:
(Shares in Thousands)
Outstanding
Restricted Share Units
Outstanding
Performance Share Units
Shares at December 31, 2023
12,938
2,037
Granted
6,331
906
Issued
(5,454)
(808)
Canceled/forfeited/adjusted
(774)
(122)
Shares at December 29, 2024
13,041
2,013
The average fair value of the restricted share units granted was $147.51, $152.63 and $153.67 in fiscal years 2024, 2023 and
2022, respectively, using the fair market value at the date of grant. The fair value of restricted share units was discounted for
dividends, which are not paid on the restricted share units during the vesting period. The fair value of restricted share units
issued was $833 million, $605 million and $591 million in 2024, 2023 and 2022, respectively.
The weighted average fair value of the performance share units granted was $133.76, $145.17 and $170.46 in fiscal years
2024, 2023 and 2022, calculated using the weighted average fair market value for each of the component goals at the date
of grant.
The fair values for the earnings per share goals of each performance share unit were estimated on the date of grant using the
fair market value of the shares at the time of the award discounted for dividends, which are not paid on the performance share
units during the vesting period. The fair value for the relative total shareholder return goal of each performance share unit was
estimated on the date of grant using the Monte Carlo valuation model. The fair value of performance share units issued was
$146 million, $140 million and $94 million in fiscal years 2024, 2023 and 2022, respectively.
2024 Annual Report
81
17. Segments of business and geographic areas
Following the separation of the Consumer Health business in the fiscal third quarter of 2023, the Company is now organized
into two reportable segments: Innovative Medicine and MedTech. The segment results have been recast for all periods to
reflect the continuing operations of the Company.
The Company’s chief operating decision maker (CODM) is the Chief Executive Officer (Principal Executive Officer). For the
Innovative Medicine and MedTech segments, the CODM uses segment income before tax to allocate resources (including
employees, financial, and capital resources) for each segment predominantly in the annual forecasting process. The CODM
considers planning-to-actual variances on a quarterly basis to assess performance and make decisions about allocating
resources to the segments.
INNOVATIVE MEDICINE
Immunology
U.S.
$11,355
11,539
11,036
(1.6) %
4.6
International
6,473
6,513
5,899
(0.6)
10.4
Worldwide
17,828
18,052
16,935
(1.2)
6.6
REMICADE
U.S.
1,009
1,143
1,417
(11.7)
(19.3)
U.S. Exports
98
147
204
(33.0)
(28.0)
International
497
549
722
(9.5)
(23.9)
Worldwide
1,605
1,839
2,343
(12.8)
(21.5)
SIMPONI / SIMPONI ARIA
U.S.
1,082
1,124
1,166
(3.8)
(3.6)
International
1,108
1,073
1,017
3.3
5.4
Worldwide
2,190
2,197
2,184
(0.3)
0.6
STELARA
U.S.
6,720
6,966
6,388
(3.5)
9.0
International
3,641
3,892
3,335
(6.4)
16.7
Worldwide
10,361
10,858
9,723
(4.6)
11.7
TREMFYA
U.S.
2,443
2,147
1,844
13.7
16.5
International
1,227
999
824
22.8
21.2
Worldwide
3,670
3,147
2,668
16.6
17.9
OTHER IMMUNOLOGY
U.S.
3
11
17
(74.1)
(33.8)
International
0
0
0
—
—
Worldwide
3
11
17
(74.1)
(33.8)
Infectious Diseases
U.S.
1,354
1,500
1,680
(9.8)
(10.7)
International
2,042
2,918
3,769
(30.0)
(22.6)
Worldwide
3,396
4,418
5,449
(23.1)
(18.9)
COVID-19 VACCINE
U.S.
0
0
120
—
*
International
198
1,117
2,059
(82.4)
(45.8)
Sales to Customers
% Change
(Dollars in Millions)
2024
2023
2022
’24 vs. ’23
’23 vs. ’22
82
Worldwide
198
1,117
2,179
(82.4)
(48.8)
EDURANT / rilpivirine
U.S.
31
35
36
(10.0)
(3.7)
International
1,241
1,115
972
11.2
14.8
Worldwide
1,272
1,150
1,008
10.6
14.1
PREZISTA / PREZCOBIX /
REZOLSTA / SYMTUZA
U.S.
1,311
1,446
1,494
(9.4)
(3.2)
International
401
408
449
(1.7)
(9.2)
Worldwide
1,712
1,854
1,943
(7.7)
(4.6)
OTHER INFECTIOUS DISEASES
U.S.
11
19
30
(41.0)
(34.5)
International
203
278
289
(26.7)
(3.8)
Worldwide
214
297
318
(27.6)
(6.7)
Neuroscience
U.S.
4,398
4,065
3,570
8.2
13.9
International
2,718
3,076
3,323
(11.6)
(7.5)
Worldwide
7,115
7,140
6,893
(0.4)
3.6
CONCERTA / methylphenidate
U.S.
134
230
151
(41.7)
52.5
International
507
554
493
(8.4)
12.2
Worldwide
641
783
644
(18.1)
21.6
INVEGA SUSTENNA / XEPLION / INVEGA
TRINZA / TREVICTA
U.S.
3,125
2,897
2,714
7.9
6.7
International
1,097
1,218
1,426
(9.9)
(14.6)
Worldwide
4,222
4,115
4,140
2.6
(0.6)
SPRAVATO
U.S.
929
589
328
57.8
79.7
International
148
100
46
48.2
*
Worldwide
1,077
689
374
56.4
84.1
OTHER NEUROSCIENCE
U.S.
210
349
376
(39.8)
(7.3)
International
965
1,204
1,358
(19.8)
(11.3)
Worldwide
1,175
1,553
1,734
(24.3)
(10.4)
Oncology
U.S.
10,854
8,462
6,930
28.3
22.1
International
9,926
9,199
9,052
7.9
1.6
Worldwide
20,781
17,661
15,983
17.7
10.5
CARVYKTI
U.S.
869
469
133
85.2
*
International
94
30
—
*
*
Sales to Customers
% Change
(Dollars in Millions)
2024
2023
2022
’24 vs. ’23
’23 vs. ’22
2024 Annual Report
83
Worldwide
963
500
133
92.7
*
DARZALEX
U.S.
6,588
5,277
4,210
24.8
25.4
International
5,082
4,467
3,767
13.8
18.6
Worldwide
11,670
9,744
7,977
19.8
22.2
ERLEADA
U.S.
1,282
1,065
968
20.3
10.0
International
1,717
1,322
913
29.8
44.8
Worldwide
2,999
2,387
1,881
25.6
26.9
IMBRUVICA
U.S.
1,020
1,051
1,390
(3.0)
(24.4)
International
2,018
2,214
2,394
(8.8)
(7.5)
Worldwide
3,038
3,264
3,784
(6.9)
(13.7)
TECVAYLI
U.S.
418
334
12
25.3
*
International
131
61
3
*
*
Worldwide
549
395
15
38.8
*
ZYTIGA /abiraterone acetate
U.S.
34
50
74
(32.2)
(32.1)
International
597
837
1,696
(28.6)
(50.7)
Worldwide
631
887
1,770
(28.8)
(49.9)
OTHER ONCOLOGY
U.S.
643
215
144
*
49.3
International
288
269
280
7.1
(3.9)
Worldwide
931
484
423
92.5
14.4
Pulmonary Hypertension
U.S.
3,143
2,697
2,346
16.5
15.0
International
1,140
1,117
1,071
2.0
4.3
Worldwide
4,282
3,815
3,417
12.3
11.6
OPSUMIT
U.S.
1,520
1,292
1,132
17.7
14.1
International
664
681
651
(2.4)
4.6
Worldwide
2,184
1,973
1,783
10.7
10.6
UPTRAVI
U.S.
1,511
1,326
1,104
13.9
20.1
International
307
255
218
20.1
17.3
Worldwide
1,817
1,582
1,322
14.9
19.7
OTHER PULMONARY HYPERTENSION
U.S.
112
79
110
41.8
(28.6)
International
169
182
202
(6.9)
(10.3)
Worldwide
281
260
313
7.9
(16.7)
Sales to Customers
% Change
(Dollars in Millions)
2024
2023
2022
’24 vs. ’23
’23 vs. ’22
84
Cardiovascular / Metabolism / Other
U.S.
2,866
2,906
3,042
(1.4)
(4.5)
International
696
765
845
(9.1)
(9.4)
Worldwide
3,562
3,671
3,887
(3.0)
(5.5)
XARELTO
U.S.
2,373
2,365
2,473
0.3
(4.4)
International
—
—
—
—
—
Worldwide
2,373
2,365
2,473
0.3
(4.4)
OTHER
U.S.
494
541
569
(8.8)
(5.0)
International
696
765
845
(9.1)
(9.4)
Worldwide
1,189
1,306
1,414
(8.9)
(7.6)
TOTAL INNOVATIVE MEDICINE
U.S.
33,970
31,169
28,604
9.0
9.0
International
22,994
23,590
23,959
(2.5)
(1.5)
Worldwide
56,964
54,759
52,563
4.0
4.2
MEDTECH
Cardiovascular (1)
U.S.
4,513
3,633
2,169
24.2
67.5
International
3,194
2,717
2,131
17.6
27.5
Worldwide
7,707
6,350
4,300
21.4
47.7
ELECTROPHYSIOLOGY
U.S.
2,738
2,458
2,036
11.4
20.7
International
2,529
2,230
1,901
13.4
17.3
Worldwide
5,267
4,688
3,937
12.3
19.1
ABIOMED(2)
U.S.
1,213
1,066
31
13.7
*
International
284
240
—
18.2
*
Worldwide
1,496
1,306
31
14.5
*
SHOCKWAVE(3)
U.S.
442
—
—
*
*
International
122
—
—
*
*
Worldwide
564
—
—
*
*
OTHER CARDIOVASCULAR(1)
U.S.
120
109
102
10.7
6.7
International
260
247
230
5.3
7.3
Worldwide
380
356
332
6.9
7.1
Orthopaedics
U.S.
5,689
5,525
5,321
3.0
3.8
International
3,470
3,417
3,267
1.5
4.6
Worldwide
9,158
8,942
8,587
2.4
4.1
Sales to Customers
% Change
(Dollars in Millions)
2024
2023
2022
’24 vs. ’23
’23 vs. ’22
2024 Annual Report
85
HIPS
U.S.
1,057
996
943
6.2
5.6
International
581
564
571
3.0
(1.2)
Worldwide
1,638
1,560
1,514
5.0
3.0
KNEES
U.S.
922
896
851
2.9
5.3
International
623
559
508
11.3
10.2
Worldwide
1,545
1,456
1,359
6.1
7.1
TRAUMA
U.S.
2,013
1,949
1,882
3.3
3.6
International
1,036
1,030
989
0.6
4.1
Worldwide
3,049
2,979
2,871
2.3
3.8
SPINE, SPORTS & OTHER
U.S.
1,696
1,684
1,645
0.7
2.4
International
1,230
1,263
1,198
(2.6)
5.4
Worldwide
2,926
2,947
2,843
(0.7)
3.7
Surgery
U.S.
4,003
4,031
3,897
(0.7)
3.4
International
5,842
6,006
5,793
(2.7)
3.7
Worldwide
9,845
10,037
9,690
(1.9)
3.6
ADVANCED
U.S.
1,838
1,833
1,784
0.2
2.8
International
2,650
2,837
2,785
(6.6)
1.9
Worldwide
4,488
4,671
4,569
(3.9)
2.2
GENERAL
U.S.
2,165
2,198
2,113
(1.5)
4.0
International
3,192
3,168
3,008
0.8
5.3
Worldwide
5,358
5,366
5,121
(0.2)
4.8
Vision
U.S.
2,128
2,086
1,990
2.0
4.8
International
3,018
2,986
2,859
1.1
4.5
Worldwide
5,146
5,072
4,849
1.5
4.6
CONTACT LENSES / OTHER
U.S.
1,684
1,626
1,522
3.6
6.8
International
2,049
2,076
2,022
(1.3)
2.7
Worldwide
3,733
3,702
3,543
0.8
4.5
SURGICAL
U.S.
444
460
468
(3.4)
(1.8)
International
969
910
837
6.5
8.6
Worldwide
1,413
1,370
1,306
3.2
4.9
Sales to Customers
% Change
(Dollars in Millions)
2024
2023
2022
’24 vs. ’23
’23 vs. ’22
86
TOTAL MEDTECH
U.S.
16,332
15,275
13,377
6.9
14.2
International
15,525
15,125
14,050
2.6
7.7
Worldwide
31,857
30,400
27,427
4.8
10.8
WORLDWIDE
U.S.
50,302
46,444
41,981
8.3
10.6
International
38,519
38,715
38,009
(0.5)
1.9
Worldwide
$88,821
85,159
79,990
4.3%
6.5
Sales to Customers
% Change
(Dollars in Millions)
2024
2023
2022
’24 vs. ’23
’23 vs. ’22
*
percentage greater than 100% or not meaningful
(1)
Previously referred to as Interventional Solutions
(2)
Acquired on December 22, 2022
(3)
Acquired on May 31, 2024
Income Before Tax by Segment
(Dollars in Millions)
2024 (3)
2023 (4)
2022 (5)
Innovative
Medicine
MedTech
Total
Innovative
Medicine
MedTech
Total
Innovative
Medicine
MedTech
Total
Sales to customers
$56,964
31,857
54,759
30,400
52,563
27,427
Cost of products sold
14,036
13,345
13,715
12,722
14,066
10,397
Selling, marketing and
administrative
10,906
10,812
9,842
10,476
9,714
9,537
Research and development
expense
13,529
3,703
11,963
3,122
11,642
2,493
Other segment items (1)
(426)
257
993
(589)
1,494
553
Segment income before tax
$18,919
3,740
22,659
18,246
4,669
22,915
15,647
4,447 20,094
Less: Expense not allocated
to segments (2)
5,972
7,853
735
Worldwide total
$16,687
15,062
19,359
Identifiable Assets
(Dollars in Millions)
2024
2023
Innovative Medicine
$57,070
58,324
MedTech
84,322
74,710
Total
141,392
133,034
General corporate (6)
38,712
34,524
Worldwide total
$180,104
167,558
2024 Annual Report
87
Additions to Property,
Plant & Equipment
Depreciation and
Amortization
(Dollars in Millions)
2024
2023
2022
2024
2023
2022
Innovative Medicine
$1,710
1,653
1,374
$3,760
3,847
3,687
MedTech
2,443
2,372
2,120
3,237
2,943
2,302
Segments total
4,153
4,025
3,494
6,997
6,790
5,989
Discontinued operations
—
162
303
—
383
641
General corporate
271
356
212
342
313
340
Worldwide total
$4,424
4,543
4,009
$7,339
7,486
6,970
Sales to Customers
Long-Lived Assets (7)
(Dollars in Millions)
2024
2023
2022
2024
2023
United States
$50,302
46,444
41,981
$70,670
54,832
Europe
20,212
20,410
20,664
27,267
31,616
Western Hemisphere excluding U.S.
4,714
4,549
4,108
1,728
1,491
Asia-Pacific, Africa
13,593
13,756
13,237
1,454
1,500
Segments total
88,821
85,159
79,990
101,119
89,439
General corporate
1,217
1,192
Other non long-lived assets
77,768
76,927
Worldwide total
$88,821
85,159
79,990
$180,104
167,558
See Note 1 for a description of the segments in which the Company operates.
Export sales are not significant. In fiscal year 2024, the Company utilized three wholesalers distributing products for both
segments that represented approximately 20.5%, 15.6% and 12.3% of the total gross revenues. In fiscal year 2023, the
Company had three wholesalers distributing products for both segments that represented approximately 18.2%, 15.1% and
14.2% of the total gross revenues. In fiscal year 2022, the Company had three wholesalers distributing products for all three
segments that represented approximately 18.9%, 15.0%, and 13.8% of the total gross revenues.
(1)
Other segment expenses for each reportable segment include charges related to other income and expenses, restructuring activities and
impairment charges related to in-process research and development.
(2)
Amounts not allocated to segments include interest (income)/expense and general corporate (income)/expense. The fiscal years 2024 and
2023 include charges for talc matters of approximately $5.1 billion and $7 billion, respectively (See Note 19, Legal proceedings, for
additional details). The fiscal year 2024 includes a loss of approximately $0.4 billion related to the debt to equity exchange of the
Company's remaining shares of Kenvue Common Stock. The fiscal year 2023 includes the unfavorable change in the fair value of the
retained stake in Kenvue of approximately $0.4 billion.
(3)
Innovative Medicine segment income before tax includes:
•
Acquired in-process research & development expense of $1.25 billion to secure the global rights to the NM26 bispecific antibody
(Yellow Jersey acquisition)
•
Monetization of royalty rights of $0.3 billion
•
Litigation expense of $0.3 billion primarily related to Risperdal Gynecomastia
•
An intangible asset impairment charge of approximately $0.2 billion associated with the M710 (biosimilar) asset acquired as part of the
acquisition of Momenta Pharmaceuticals in 2020.
•
A restructuring related charge of $0.1 billion
•
One-time COVID-19 Vaccine manufacturing exit related costs of $0.1 billion
•
Favorable changes in the fair value of securities of $0.1 billion
MedTech segment income before tax includes:
•
Acquisition and integration related costs of $1.0 billion primarily related to the acquisition of Shockwave
88
•
Acquired in-process research and development expense of $0.5 billion from the V-Wave acquisition
•
A gain of $0.2 billion related to the Acclarent divestiture
•
A Medical Device Regulation charge of $0.2 billion
•
A restructuring related charge of $0.2 billion
(4)
Innovative Medicine segment income before tax includes:
•
One-time COVID-19 Vaccine manufacturing exit related costs of $0.7 billion
•
A restructuring related charge of $0.5 billion
•
Unfavorable changes in the fair value of securities of $0.4 billion
•
Favorable litigation related items of $0.1 billion
•
Loss on divestiture of $0.2 billion.
•
An intangible asset impairment charge of approximately $0.2 billion related to market dynamics associated with a non-strategic asset
(M710) acquired as part of the acquisition of Momenta Pharmaceuticals in 2020.
MedTech segment income before tax includes:
•
Acquired in-process research and development expense of $0.4 billion related to the Laminar acquisition in 2023
•
A restructuring related charge of $0.3 billion
•
Acquisition and integration related costs of $0.2 billion primarily related to the acquisition of Abiomed
•
A Medical Device Regulation charge of $0.3 billion
•
Income from litigation settlements of $0.1 billion
(5)
Innovative Medicine segment income before tax includes:
•
One-time COVID-19 Vaccine manufacturing exit related costs of $1.5 billion
•
An intangible asset impairment charge of approximately $0.8 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)
acquired with the acquisition of XBiotech, Inc. in the fiscal year 2020. Additional information regarding efficacy of the AD and HS
indications became available which led the Company to the decision to terminate the development of bermekimab for AD and HS
•
Litigation expense of $0.1 billion
•
Unfavorable changes in the fair value of securities of $0.7 billion
•
A restructuring related charge of $0.1 billion
MedTech segment income before tax includes:
•
Litigation expense of $0.6 billion primarily for pelvic mesh related costs
•
A restructuring related charge of $0.3 billion
•
Acquisition and integration related costs of $0.3 billion primarily related to the acquisition of Abiomed
•
A Medical Device Regulation charge of $0.3 billion
(6) General corporate includes cash, cash equivalents, marketable securities and other corporate assets.
(7)
Long-lived assets include property, plant and equipment, net for fiscal years 2024, and 2023 of $20,518 and $19,898, respectively, and
intangible assets and goodwill, net for fiscal years 2024 and 2023 of $81,818 and $70,733, respectively.
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89
18. Acquisitions and divestitures
Subsequent to the fiscal year end 2024, the Company announced it has entered into a definitive agreement to acquire Intra-
Cellular Therapies, Inc. (Nasdaq: ITCI), a biopharmaceutical company focused on the development and commercialization of
therapeutics for central nervous system (CNS) disorders, for $132.00 per share in cash for a total equity value of
approximately $14.6 billion. The Company expects to fund the transaction through a combination of cash on hand and debt.
The closing of the transaction is expected to occur later this year subject to applicable regulatory approvals, approval by Intra-
Cellular Therapies’ stockholders and other customary closing conditions for a transaction of this type. The results of
operations will be included in the Innovative Medicine segment beginning on the acquisition date.
Business combinations
Acquisitions of a business are accounted for as business combinations applying the acquisition method of accounting. Under
this method, the assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date in
the Company’s consolidated financial statements. The excess of the purchase price over the fair value of the acquired net
assets, where applicable, is recorded as goodwill. The results of operations of these acquisitions have been included in the
Company’s financial statements from their respective dates of acquisition.
During the fiscal year 2024, certain businesses were acquired for $15.1 billion, net of cash acquired. The fiscal year 2024
acquisitions primarily included; Ambrx Biopharma, Inc., Shockwave Medical Inc., and Proteologix, Inc. The remaining acquisitions
were not material.
On June 20, 2024, the Company completed the acquisition of Proteologix, Inc., a privately held biotechnology company
focused on bispecific antibodies for immune-mediated diseases, for approximately $0.8 billion net of cash acquired, with
potential for an additional milestone payment. The results of operations are included in the Innovative Medicine segment as of
the acquisition date. The fair value of the acquisition was allocated to assets acquired of $1.2 billion, primarily non-amortizable
intangible assets, inclusive of purchased IPR&D, for $0.9 billion, goodwill for $0.3 billion, and $0.3 billion of liabilities assumed
which included $0.1 billion related to a contingent consideration. The preliminary purchase price allocation is subject to any
subsequent valuation adjustments within the measurement period. A probability of success factor ranging from 30% to 45%
was used in the fair value calculation to reflect inherent regulatory and commercial risk of the IPR&D. The discount rate applied
was approximately 16%. The goodwill is primarily attributable to synergies expected to arise from the business acquisition and
is not expected to be deductible for tax purposes. Acquisition related costs before tax for the fiscal 2024 were not material.
On May 31, 2024, the Company completed the acquisition of Shockwave Medical Inc. (SWAV)(Shockwave), a leading, first-to-
market provider of innovative intravascular lithotripsy (IVL) technology for the treatment of calcified coronary artery disease
(CAD) and peripheral artery disease (PAD) in an all-cash merger transaction. The Company acquired all the outstanding shares
of Shockwave’s common stock for $335.00 per share through a merger of Shockwave with a subsidiary of the Company. The
results of operations were included in the MedTech segment as of the acquisition date.
90
Details of the fair value amounts recognized for assets acquired and liabilities assumed as of the purchase date and at the end
of fiscal year 2024, which includes measurement period adjustments, are included in the table below. As the acquisition
occurred in May 2024, 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.
(Dollars in Billions)
May 31, 2024
December 29, 2024
Assets acquired:
Cash
$1.1
$1.1
Goodwill
7.5
7.6
Amortizable intangibles
5.3
5.3
IPR&D
0.6
0.6
Inventory
0.5
0.5
Other assets
0.5
0.4
Total assets acquired
$15.5
$15.5
Liabilities assumed:
Deferred taxes
$1.5
$1.5
Notes payable*
1.0
1.0
Accrued liabilities**
0.4
0.4
Total liabilities assumed
$2.9
$2.9
Net assets acquired
$12.6
$12.6
Net assets acquired as of May 31, 2024
$12.6
Less: Cash acquired
1.1
Equity awards settled
0.6
Settlement of Note payable*
1.0
Total enterprise value as of June 30, 2024
$13.1
*
Represents the convertible debt which was subsequently paid in the fiscal second quarter of 2024.
** Includes $0.2 billion of equity awards
The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be
deductible for tax purposes. Acquisition related costs before tax for the fiscal 2024 were $0.9 billion of which $0.4 billion was
related to the fair value of the inventory step-up and was recorded in Cost of products sold and $0.5 billion primarily related to
equity awards and was recorded in Other (income) expense. The amortizable intangible assets were primarily comprised of
already in-market CAD and PAD IVL products with the average weighted lives of 14 years. The IPR&D assets were valued for
technology programs for unapproved products. The value of the IPR&D was calculated using a probability-adjusted cash flow
projection discounted for the risk inherent in such projects with the weighted average probability of success factors of
approximately 50%. The discount rate applied was 9.0%.
On March 7, 2024, the Company completed the acquisition of Ambrx Biopharma, Inc., (Ambrx), a clinical-stage
biopharmaceutical company with a proprietary synthetic biology technology platform to design and develop next-generation
antibody drug conjugates (ADCs), in an all-cash merger transaction for a total equity value of approximately $2.0 billion, or
$1.8 billion net of cash acquired. The Company acquired all of the outstanding shares of Ambrx’s common stock for $28.00 per
share through a merger of Ambrx with a subsidiary of the Company. The results of operations were included in the Innovative
Medicine segment as of the acquisition date. The fair value of the acquisition was allocated to assets acquired of $2.3 billion,
primarily non-amortizable intangible assets, inclusive of purchased IPR&D, for $1.9 billion, goodwill for $0.3 billion and liabilities
assumed of $0.5 billion, which includes deferred taxes of $0.4 billion. The preliminary purchase price allocation is subject to
any subsequent valuation adjustments within the measurement period. A probability of success factor ranging from 40% to
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91
70% was used in the fair value calculation to reflect inherent regulatory and commercial risk of the IPR&D. The discount rate
applied was approximately 17%. The goodwill is primarily attributable to synergies expected to arise from the business
acquisition and is not expected to be deductible for tax purposes. Acquisition related costs before tax for the fiscal year 2024
were not material.
During the fiscal year 2023, the Company did not make any acquisitions that qualified as a business combination.
During the fiscal year 2022, certain businesses were acquired for $17.7 billion, net of cash acquired. The fiscal year 2022
acquisitions primarily included Abiomed, Inc. (Abiomed). The remaining acquisitions were not material.
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 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, $8.75
per 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.
During the fiscal fourth quarter of 2023, the Company finalized the purchase price allocation. In fiscal 2023, there were
purchase price allocation adjustments netting to approximately $0.2 billion with an offsetting increase to goodwill. The fair
value of the acquisition was allocated to assets acquired of $20.1 billion (net of $0.3 billion cash acquired), primarily to goodwill
for $11.1 billion, amortizable intangible assets for $6.6 billion, IPR&D for $1.1 billion, marketable securities of $0.6 billion and
liabilities assumed of $3.0 billion, which includes the fair value of the contingent consideration mentioned above for $0.7 billion
and deferred taxes of $2.0 billion. The goodwill is primarily attributable to the commercial acceleration and expansion of the
portfolio and is not expected to be deductible for tax purposes. The contingent consideration was recorded in Other Liabilities
and adjusted to fair value through the fiscal year end 2024 on the Consolidated Balance Sheet.
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 the fiscal years 2024, 2023 and 2022, the Company recorded acquisition related costs before tax of approximately
$0.3 billion, $0.2 billion and $0.3 billion, which was primarily recorded in Other (income)/expense.
In accordance with U.S. GAAP standards related to business combinations, and goodwill and other intangible assets,
supplemental pro forma information for fiscal years 2024, 2023 and 2022 is not provided, as the impact of the
aforementioned acquisitions did not have a material effect on the Company’s results of operations.
92
Asset acquisitions
Acquired In-process research and development (IPR&D) in an asset acquisition is immediately expensed as research and
development expense in the Company's consolidated financial statements. Milestone payments incurred prior to regulatory
approval are expensed as research and development expense when the milestone event occurs.
The fiscal year 2024 asset acquisitions expensed as research and development included V-Wave Ltd. and the global rights to
the NM26 bispecific antibody (Yellow Jersey acquisition). The remaining activity was not material.
On October 8, 2024, the Company completed the acquisition of V-Wave Ltd, a privately-held company focused on developing
innovative treatment options for patients with heart failure, for an upfront payment of $0.6 billion, with the potential for
additional regulatory and commercial milestone payments up to approximately $1.1 billion. The Company recorded an IPR&D
charge of approximately $0.5 billion, net of a gain recorded on the Company's existing investment in V-Wave and the results of
operations are included in the MedTech segment as of the acquisition date.
On July 11, 2024, the Company completed the acquisition of Yellow Jersey, a demerged subsidiary of Numab Therapeutics AG,
to secure the global rights to NM26, a novel, investigational first-in-class bispecific antibody targeting two clinically proven
pathways in atopic dermatitis (AD), in an all-cash transaction for approximately $1.25 billion. The Company recorded an IPR&D
charge of approximately $1.25 billion, and the results of operations are included in the Innovative Medicine segment as of the
acquisition date.
The fiscal year 2023 asset acquisitions expensed as research and development included Laminar Inc. The remaining activity
was not material.
During the fiscal year 2023, the Company completed the acquisition of Laminar Inc., a privately-held medical device company
focused on eliminating the left atrial appendage (LAA) in patients with non-valvular atrial fibrillation (AFib), for an upfront
payment of $0.4 billion. The Company recorded an IPR&D charge of approximately $0.4 billion and the results of operations
are included in the MedTech segment as of the acquisition date.
There were no significant asset acquisitions in 2022.
Divestitures
During the fiscal year 2024, the Company completed the divestiture of Acclarent resulting in approximately $0.3 billion in
proceeds and the divestiture of Ponvory outside of the U.S. resulting in approximately $0.2 billion in proceeds. All other
divestitures were not material.
During the fiscal year 2023, the Company executed divestitures resulting in approximately $0.2 billion in proceeds resulting in
gains or losses that were not material. At fiscal year end 2023, the Company held assets, primarily intangibles, on its
Consolidated Balance Sheet of approximately $0.3 billion, primarily related to Acclarent and Ponvory, that were subsequently
divested in fiscal 2024.
During fiscal year 2022, the Company did not make any material divestitures.
19. 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 December 29, 2024, 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
2024 Annual Report
93
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 have been asserted against the Company and its
affiliates arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder.
In talc cases that 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 June 2014, the Mississippi Attorney General filed a complaint against the Company alleging violation of 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). The Company has reached an
agreement to resolve this matter.
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 Company has reached an agreement to resolve this matter.
Forty-two states and the District of Columbia commenced a joint investigation into the Company’s marketing of its talcum
powder products. In January 2024, the Company reached an agreement in principle with the multi-state group of state
Attorneys General, subject to ongoing negotiation of non-monetary terms. In June 2024, the settlements were finalized.
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. 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.
94
In April 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. 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,
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).
Also in April 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 remained in force until late
August 2023, following the Bankruptcy Court’s extension of the initial LTL 2 Preliminary Injunction in June 2023. Under the
LTL 2 Preliminary Injunction, except for those cases filed in the federal court ovarian cancer multi-district litigation, discovery
in all personal injury and wrongful death matters was permitted to proceed.
Furthermore, in April 2023, the Talc Claimants' Committee filed a motion to dismiss the LTL 2 Bankruptcy followed by similar
motions from other claimants. Hearings on the motions to dismiss occurred in June 2023. In July 2023, the court dismissed the
LTL 2 Bankruptcy case and, the same day, the Company stated its intent to appeal the decision and to continue its efforts to
obtain a resolution of the talc claims. In September 2023, the Bankruptcy Court entered an order granting LTL leave to seek a
direct appeal to the Third Circuit Court of Appeals. In October 2023, the Third Circuit granted LTL’s petition for a direct
appeal. In July 2024, the Third Circuit issued a non-precedential opinion affirming the Bankruptcy Court's decision to dismiss
the LTL Bankruptcy case.
In October 2023, the Company stated that it was pursuing the following four parallel and alternative pathways to achieve a
comprehensive and final resolution of the talc claims: (i) the appeal of the LTL 2 dismissal decision; (ii) pursuing a consensual
“prepackaged” bankruptcy case, as “strongly encouraged” by the Bankruptcy Court in its dismissal decision; (iii) aggressively
litigating the talc claims in the tort system; and (iv) pursuing affirmative claims against experts for false and defamatory
narratives regarding the Company’s talc powder products. In December 2023, LTL changed its state of formation to Texas
and its name to LLT Management LLC ("LLT").
Following the dismissal of LTL 2, new lawsuits were filed, cases across the country that had been stayed were reactivated, and
trials have commenced. The majority of the cases are pending in federal court, organized in a multi-district litigation (MDL) in
the United States District Court for the District of New Jersey. In the MDL, case-specific discovery proceeded. The MDL
proceedings have been stayed by order of the bankruptcy court in the Red River Bankruptcy case discussed below. In March
2024, the court granted the Company's motion for a renewed Daubert hearing prior to the trial. The briefing on the renewed
Daubert issues was completed in August 2024.
In May 2024, the Company commenced a three-month solicitation period of its proposed consensual “prepackaged” Chapter 11
bankruptcy plan (the “Proposed Plan”) for the comprehensive and final resolution of all current and future claims related to
cosmetic talc in the United States, excluding claims related to mesothelioma or State consumer protection claims, in exchange
for the payment by the Company of present value of approximately $6.475 billion payable over 25 years (nominal value of
approximately $8.0 billion, discounted at a rate of 4.4%). The claims encompassed by the Proposed Plan constitute 99.75% of
pending lawsuits against the Company relating to its talc powder products.
In August 2024, LLT engaged in a restructuring that resulted in the creation of three new Texas limited liability companies: (a)
Red River Talc, LLC ("Red River"); (b) Pecos River Talc LLC ("Pecos River"); and (3) New Holdco (Texas) LLC. As a result of this
restructuring, all claims related to ovarian and other gynecological cancers were separated and allocated to Red River, and
mesothelioma, governmental unit and certain other claims were allocated to Pecos River.
In September 2024, while reiterating the Company's continued confidence in the safety of its talc products, Red River filed a
voluntary petition with the United States Bankruptcy Court for the Southern District of Texas, seeking relief under Chapter 11
of the Bankruptcy Code (the Red River Bankruptcy Case), in furtherance of the Company's consensual "prepackaged"
Proposed Plan. Red River also filed a motion for a temporary restraining order, seeking to extend the automatic stay to
additional non-debtor entities. Prior to filing, the initial proposed plan was amended to, among other things, increase the
proposed resolution by $1.75 billion.
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Shortly after Red River filed its Chapter 11 petition, the U.S. Trustee's office filed a motion to transfer venue in the New Jersey
Bankruptcy Court, and thereafter, a motion to transfer venue and a motion to dismiss in the Texas Bankruptcy Court. A
coalition of six plaintiff law firms also filed a motion to transfer venue and a motion to dismiss in the Texas Bankruptcy Court.
In September 2024, the Texas Bankruptcy Court entered a temporary order enjoining the commencement or prosecution of all
claims against Red River and certain non-debtor entities, including the Company, until October 11, 2024. The temporary order
was extended in October 2024 and again in December 2024. The commencement and prosecution of all claims against Red
River and certain non-debtor entities are currently enjoined until March 15, 2025. Also in September 2024, the New Jersey
Bankruptcy Court denied the U.S. Trustee's motion to transfer venue without prejudice. In October 2024, the Texas
Bankruptcy Court denied the motion to transfer venue from Texas to New Jersey Bankruptcy Court. A consolidated hearing to
address, among other things, the motions to dismiss and plan confirmation is currently scheduled to begin on
February 18, 2025.
Mesothelioma and State consumer protection claims are being addressed outside the Proposed Plan. The Company separately
has resolved 95% of the mesothelioma lawsuits filed to date and has resolved the State claims.
To account for these settlements and the contemplated comprehensive resolution through the Proposed Plan, the Company
recorded a cumulative incremental charge of approximately $5.0 billion, through the fourth fiscal quarter 2024. As of
December 29, 2024, the total present value of the reserve is approximately $11.6 billion (or nominal value of approximately
$13.5 billion), net of payments made in fiscal 2024. Approximately ten percent of the reserve is recorded as a current liability.
The recorded amount remains the Company's best estimate of probable loss.
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 for relief 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 its
bankruptcy, Imerys proposed a Chapter 11 plan (the Imerys Plan) that contemplated all talc-related claims against it being
channeled to a trust along with its alleged indemnification rights against the Company. Following confirmation and
consummation of the plan, the trust would pay talc claims pursuant to proposed trust distribution procedures (the TDP) and
then seek indemnification from the Company.
In February 2021, Cyprus Mines Corporation (Cyprus), which had owned certain Imerys talc mines, 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 affiliated
parties. Cyprus also asserts it has claims for indemnity against the Company arising out of talc personal injury claims. Under the
Cyprus Plan, Cyprus would also contribute its alleged indemnification rights to the trust.
In September 2023, Imerys and Cyprus filed amended plans of reorganization. The amended plans contemplate a similar
construct as the prior Imerys and Cyprus Plans, including all talc claims against Imerys and Cyprus (and certain other protected
parties) being channeled to a trust along with Imerys’s and Cyprus’s alleged indemnification rights against the Company. The
Company opposed both plans on the basis that the plans inflated Imerys’s and Cyprus’s liability for talc claims and had the
potential effect of imposing those inflated liabilities on the Company through the Company’s alleged
indemnification obligations.
In July 2024, the Company, Imerys, and Cyprus and certain of their affiliates (including their parent entities), and the tort
claimants' committees and future claimants' representatives appointed in their respective Chapter 11 cases entered into a
global settlement agreement (the Imerys Settlement Agreement) to resolve their ongoing disputes, including disputes raised in
the Imerys and Cyprus bankruptcies. In August 2024, Imerys and Cyprus filed amended Chapter 11 plans and disclosure
statements incorporating the terms of the settlement with the Company. In October 2024, the Imerys Bankruptcy Court
entered an order approving the Imerys Settlement Agreement (the Settlement Order). The effectiveness of certain provisions
of the settlement, including mutual releases, are subject to certain conditions, including the Imerys and Cyprus Plans being
accepted by a sufficient number and amount of voting creditors to be confirmed under the Bankruptcy Code. Certain insurers
have appealed the Settlement Order and sought a stay of the order pending appeal, which the Court denied on January 13,
2025. The briefing of the appeal in the District Court is scheduled to be completed in April 2025. On January 5, 2025, Imerys
and Cyprus each filed a certification of voting results, indicating that their respective plan had been accepted by each voting
class of creditors. A joint confirmation hearing for the plans is scheduled for April 2025.
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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. The case was stayed in May 2022 pursuant to the LTL
Bankruptcy Case and was reopened in May 2023. In December 2023, the Court granted Plaintiff’s motion for class
certification. In January 2024, Defendants filed a petition with the Third Circuit under Federal Rule of Civil Procedure 23(f) for
permission to appeal the Court’s order granting class certification, and in February 2024, the Third Circuit granted Defendants'
petition. In February 2024, fact discovery closed, the Court ordered the parties to mediate, and stayed the case pending
mediation. In May 2024, the parties participated in an unsuccessful mediation. In June 2024, at the parties' request, the Court
lifted the stay for certain limited discovery, but otherwise kept the stay in place pending a decision from the Third Circuit on
the 23(f) petition. Briefing on the 23(f) petition was completed in September 2024. In January 2025, the Third Circuit listed
the appeal for oral argument in March 2025.
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. 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.
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 July 2021, the Company announced finalization of an agreement to settle the state and subdivision claims for up to
$5.0 billion. Approximately 70% of the all-in settlement was paid by the end of fiscal fourth quarter 2024. A few government
entities opted out of the settlement. In September 2024, the Company reached an agreement to resolve the hospital cases.
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. In total, there are approximately 35 remaining opioid cases against the Company and JPI in various
state courts, 390 remaining cases in the Ohio multi-district litigation (MDL), and 4 additional cases in other federal courts.
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. That action was certified as an opt in class action on behalf of other provincial/territorial
and the federal governments in Canada in January 2025. 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. The proposed class action in Quebec on behalf of residents diagnosed with
opioid use disorder was authorized to proceed against Janssen Inc. and other industry members in April 2024; and leave to
appeal was denied in October 2024.
Starting in November 2019, a series of shareholder derivative complaints were filed 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. As of September 2024, all the complaints had been dismissed, and all
appeals exhausted.
Product liability
The 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
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, Contingencies. 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.
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The table below contains the most significant of these cases and provides the approximate number of plaintiffs in the United
States with direct claims in pending lawsuits regarding injuries allegedly due to the relevant product or product category as of
December 29, 2024:
Product or product category
Number of plaintiffs
Body powders containing talc, primarily JOHNSON’S Baby Powder
62,830
DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System
60
PINNACLE Acetabular Cup System
910
Pelvic meshes
5,990
ETHICON PHYSIOMESH Flexible Composite Mesh
130
RISPERDAL
7
ELMIRON
2,170
The number of pending lawsuits is expected to fluctuate as certain lawsuits are settled or dismissed and additional lawsuits are
filed. There may be additional claims that have not yet been 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 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, Ireland, 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. 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. 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 the 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.
Most 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 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 state courts and in countries outside of the United States. 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 the 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
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various countries outside of the United States, including claims and cases in the United Kingdom, the Netherlands, and Ireland,
and class actions in Israel, Australia, Canada and South Africa. The vast majority of these actions are now resolved. 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 Physiomesh Flexible Composite Mesh (Physiomesh), claims for
personal injury have been made against Ethicon, Inc. (Ethicon) and the 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., and lawsuits pending in two 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. Other than a small
number of cases still pending in the MDL, all Physiomesh matters in the United States have been resolved or are undergoing
formal review for purposes of settlement.
Claims have also been filed against Ethicon and the 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.
Ethicon and the 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, as well as a
number of unfiled claims. All litigation activities in the two New Jersey MCLs are stayed pending effectuation 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 Physiomesh Flexible
Composite Mesh, PROCEED Mesh and PROCEED Ventral Patch, and PROLENE Polypropylene Hernia System products.
Innovative Medicine
RISPERDAL
Claims for personal injury have been made against Janssen Pharmaceuticals, Inc. and the 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. The Company continues
to defend RISPERDAL product liability lawsuits, and continues to evaluate potential costs related to those claims. 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.
ELMIRON
Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen
Pharmaceuticals, Inc. and 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
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Jersey (MDL). In addition, cases have been filed in various state 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. The Company continues to
defend ELMIRON product liability lawsuits and continues to evaluate potential costs related to those claims. All U.S. based
ELMIRON matters have been resolved or are undergoing formal review for purposes of settlement. The Company has
established accruals for defense and indemnity costs associated with ELMIRON related product liability litigation.
Intellectual property
Certain subsidiaries of the 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 scope and/or validity of patents that relate to various products and allegations that certain of the Company’s products
infringe the intellectual property rights 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.
Innovative Medicine - litigation against filers of abbreviated new drug applications (ANDAs)
The Company’s subsidiaries have brought lawsuits against generic companies that have filed ANDAs with the U.S. FDA (or
similar lawsuits outside of the United States) seeking to market generic versions of products sold by various subsidiaries of the
Company prior to expiration of the applicable patents covering those products. These lawsuits typically include allegations of
non-infringement and/or invalidity of patents listed in FDA’s publication “Approved Drug Products with Therapeutic
Equivalence Evaluations” (commonly known as the Orange Book). In each of these lawsuits, the Company’s subsidiaries are
seeking an order enjoining the defendant from marketing a generic version of a product before the expiration of the relevant
patents (Orange Book Listed Patents). In the event the Company’s subsidiaries are not successful in an action, or any
automatic statutory stay expires before the court rulings are obtained, the generic companies involved would have the ability,
upon regulatory approval, to introduce generic versions of their products to the market, resulting in the potential for
substantial 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.
The 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 conjunction with ANDAs and lawsuits to challenge the
applicable patents.
XARELTO
Beginning in March 2021, Janssen Pharmaceuticals, Inc.; Bayer Pharma AG; Bayer AG; and Bayer Intellectual Property GmbH
filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking
approval to market generic versions of XARELTO before expiration of certain Orange Book Listed Patents. The following
entities are named defendants: Dr. Reddy’s Laboratories, Inc.; Dr. Reddy’s Laboratories, Ltd.; Lupin Limited; Lupin
Pharmaceuticals, Inc.; Taro Pharmaceutical Industries Ltd.; Taro Pharmaceuticals U.S.A., Inc.; Teva Pharmaceuticals USA, Inc.;
Mylan Pharmaceuticals Inc.; Mylan Inc.; Mankind Pharma Limited; Apotex Inc.; Apotex Corp.; Auson Pharmaceuticals Inc.;
Shanghai Auson Pharmaceuticals Co. Ltd.; Cipla Ltd.; Cipla USA Inc.; InvaGen Pharmaceuticals, Inc.; Prinston Pharmaceuticals,
Inc.; Ascent Pharmaceuticals, Inc.; and Hetero Labs Limited. In October 2024, the Company entered into a confidential
settlement agreement with Auson Pharmaceuticals Inc. and Shanghai Auson Pharmaceuticals Co., Ltd. and the case was
dismissed. In November 2024, the Company entered into confidential settlement agreements with Ascent Pharmaceuticals Inc.
that resulted in dismissal of litigation against Ascent Pharmaceuticals, Inc. and Hetero Labs Limited. In January 2025, the
Company entered into a confidential settlement agreement with Prinston Pharmaceutical, Inc. (as to U.S. Patent No.
9,539,218). The following U.S. patents are included in one or more cases: 9,539,218 and 10,828,310.
U.S. Patent No. 10,828,310 was also under consideration by the USPTO in an IPR proceeding. In July 2023, the USPTO issued
a final written decision finding the claims of the patent invalid. In September 2023, Bayer Pharma AG filed an appeal to the U.S.
Court of Appeals for the Federal Circuit.
INVEGA SUSTENNA
100
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.;
Accord Healthcare, Inc.; Qilu Pharmaceutical Co. Ltd.; and Qilu Pharma Inc. The following U.S. patent is included in one or more
cases: 9,439,906. In October 2020, the district court issued a decision in the case against Teva Pharmaceuticals USA, Inc.,
finding that United States Patent No. 9,439,906 is not invalid. Teva previously stipulated to infringement. Teva appealed the
decision, and, in April 2024, the United States Court of Appeals for the Federal Circuit vacated and remanded the case to the
district court for further proceedings. In November 2024, the district court issued its decision on remand, finding that United
States Patent No. 9,439,906 is not invalid. Teva appealed to the Court of Appeals for the Federal Circuit, and oral argument is
scheduled for April 2025. In February 2024, the district court issued a decision in the case against Tolmar Inc. finding that
United States Patent No. 9,439,906 is not invalid. Tolmar previously stipulated to infringement. Tolmar has appealed
the decision.
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 generic manufacturers who have filed ANDSs seeking approval
to market generic versions of INVEGA SUSTENNA before expiration of the listed patent. The following entities are named
defendants: Pharmascience Inc. and Apotex Inc. The following Canadian patent is included in one or more cases: 2,655,335. In
June 2024, the Supreme Court dismissed the Apotex case. In September 2024, the Supreme Court granted Pharmascience's
motion to appeal the Federal Court's decision that the 2,655,335 Patent is not invalid.
INVEGA TRINZA
Beginning in September 2020, Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica NV, and Janssen 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. In May 2023, the District Court issued
a decision finding that Mylan’s proposed generic product infringes the asserted patent and that the patent is not invalid. Mylan
has appealed the decision. Oral argument before the Court of Appeals for the Federal Circuit was held in February 2025.
SYMTUZA
Beginning in November 2021, Janssen Products, L.P., Janssen Sciences Ireland Unlimited Company, Gilead Sciences, Inc. and
Gilead Sciences Ireland UC filed patent infringement lawsuits in United States district courts against generic manufacturers
who have filed ANDAs seeking approval to market generic versions of SYMTUZA before expiration of certain Orange Book
Listed Patents. The following entities are named defendants: Lupin Limited; Lupin Pharmaceuticals, Inc.; MSN Laboratories
Private Ltd.; MSN Life Sciences Private Ltd.; MSN Pharmaceuticals Inc.; Apotex Inc.; and Apotex Corp. The following U.S.
patents are included in one or more cases: 10,039,718 and 10,786,518. A trial is scheduled to begin in February 2025.
ERLEADA
Beginning in May 2022, Aragon Pharmaceuticals, Inc., Janssen Biotech, Inc. (collectively, Janssen), Sloan Kettering Institute for
Cancer Research (SKI) and The Regents of the University of California filed patent infringement lawsuits in United States
district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of ERLEADA
before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Zydus Worldwide
DMCC; Zydus Pharmaceuticals (USA), Inc.; Zydus Lifesciences Limited; Hetero Labs Limited Unit V; and Hetero USA, Inc. The
following U.S. patents are included in one or more cases: 9,481,663; 9,884,054; 10,052,314 (which reissued as RE49,353);
10,702,508; 10,849,888; 8,445,507; 8,802,689; 9,388,159; 9,987,261; RE49,353; and 11,963,952. In October 2024, Janssen,
The Regents of the University of California, SKI, Hetero Labs Limited Unit V, and Hetero USA, Inc. entered into a confidential
settlement, and the case was dismissed. In November 2024, Janssen, The Regents of the University of California, Zydus
Worldwide DMCC, Zydus Pharmaceuticals (USA), Inc., and Zydus Lifesciences Limited entered into confidential settlements,
and the cases were dismissed.
SPRAVATO
Beginning in May 2023, Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica NV filed patent infringement lawsuits in
United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions
of SPRAVATO before expiration of certain Orange Book Listed Patents. The following entities are named defendants: Sandoz
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Inc.; Hikma Pharmaceuticals Inc. USA; Hikma Pharmaceuticals PLC; and Alkem Laboratories Ltd. The following U.S. patents are
included in one or more cases: 10,869,844; 11,173,134; 11,311,500; and 11,446,260.
INVOKANA
Beginning in January 2024, Janssen Inc. and Mitsubishi Tanabe Pharma Corporation initiated Statements of Claim under
Section 6 of the Patented Medicines (Notice of Compliance) Regulations against generic manufacturers who filed ANDSs
seeking approval to market generic versions of INVOKANA before expiration of the listed patents. The following entities are
named defendants: Jamp Pharma Corporation and Apotex Inc. The following Canadian patents are included in one or more
cases: 2,534,024 and 2,671,357. Trial in the Jamp action is scheduled for September 2025, and trial in the Apotex action is
scheduled for December 2025.
MedTech
In March 2016, Abiomed, Inc. (Abiomed) filed a declaratory judgment action against Maquet Cardiovascular LLC (Maquet) in
U.S. District Court for the District of Massachusetts seeking a declaration that the Impella does not infringe certain Maquet
patents, currently U.S. Patent Nos. 7,022,100 (’100); 8,888,728; 9,327,068; 9,545,468; 9,561,314; and 9,597,437. Maquet
counterclaimed for infringement of each of those patents. After claim construction, Maquet alleged infringement of only the
’100 patent. In September 2021, the court granted Abiomed’s motion for summary judgment of non-infringement of the ’100
patent, and in September 2023, the district court entered final judgment in favor of Abiomed on all patents-in-suit.
Maquet appealed.
Government proceedings
Like other companies in the pharmaceutical and medical technologies industries, the 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.
MedTech
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 (DOJ) and the United States Securities and Exchange
Commission. The Company has been informed DOJ has closed its investigation.
In July 2023, the DOJ issued Civil Investigative Demands to the Company, Johnson & Johnson Surgical Vision, Inc., and
Johnson & Johnson Vision Care, Inc. (collectively, J&J Vision) in connection with a civil investigation under the False Claims Act
relating to free or discounted intraocular lenses and equipment used in eye surgery, such as phacoemulsification and laser
systems. J&J Vision has begun producing documents and information responsive to the Civil Investigative Demands. J&J Vision
is in ongoing discussions with the DOJ regarding its inquiry.
Innovative Medicine
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 trial commenced in May 2024. On June 13, 2024, a jury found no
liability regarding the anti-kickback violations but found liability for a portion of the off-label promotion claims. The Company is
pursuing post-trial briefing challenging the verdict on the off-label claims.
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
102
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.
General litigation
The Company 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 Company’s agreement to implement remediation activities at designated hazardous
waste sites or to reimburse the government or third parties for the costs they have incurred in performing remediation as
such sites.
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 June 2023, defendants filed a petition for a writ of certiorari to the United States Supreme Court. In June
2024, the Supreme Court vacated the D.C. Circuit's decision and remanded the case to the D.C. Circuit. Oral argument was
held in November 2024.
In February 2024, a putative class action was filed against the Company, the Pension & Benefits Committee of Johnson &
Johnson (Committee), and certain named officers and employees, in United States District Court for the District of New
Jersey. In May 2024, the plaintiff filed an amended complaint against the Company and the Committee. The complaint alleges
that defendants breached fiduciary duties under the Employee Retirement Income Security Act (ERISA) by allegedly
mismanaging the Company’s prescription-drug benefits program. The complaint seeks damages and other relief. In January
2025, the Court granted in part and denied in part defendants’ motion to dismiss.
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 occurred in January 2024. In September 2024, the court found
liability with respect to certain claims and no liability with respect to other claims. The Company has appealed the decision.
In October 2019, Innovative Health, LLC filed a complaint against Biosense Webster, Inc (BWI) in the United States District
Court for the Central 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. Trial is scheduled for April 2025.
Innovative Medicine
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. In January 2025, the FTC Bureau of Consumer Protection informed Janssen that it was closing its investigation.
2024 Annual Report
103
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
September 2024, the district court granted plaintiff's motion for class certification. Trial is scheduled for March 2026.
In December 2023, a putative class action lawsuit was filed against the Company and Janssen Biotech Inc. (collectively
Janssen) in the United States District Court for the Eastern District of Virginia. The complaint alleges that Janssen violated
federal and state antitrust laws and other state laws by delaying biosimilar competition with STELARA through Janssen's
enforcement of patent rights covering STELARA. The complaint seeks damages and other relief. In February 2024, plaintiffs
filed an amended complaint, which Janssen moved to dismiss in March 2024. In August 2024, the court granted in part and
denied in part Janssen's motion to dismiss.
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 on behalf of the United States, certain states, and the
District of Columbia. The complaint 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 sales and reimbursement programs. At this time,
the federal and state governments have declined to intervene. In December 2021, the United States District Court for the
District of New Jersey denied Janssen's motion to dismiss.
20. Restructuring
In fiscal 2023, the Company commenced restructuring actions within its Innovative Medicine and MedTech segments. The
amounts and details of the current year programs are included below.
In fiscal 2023, the Company completed a prioritization of its research and development (R&D) investment within its Innovative
Medicine segment to focus on the most promising medicines with the greatest benefit to patients. This resulted in the exit of
certain programs within certain therapeutic areas. The R&D program exits are primarily in infectious diseases and vaccines
including the discontinuation of its respiratory syncytial virus (RSV) adult vaccine program, hepatitis and HIV development.
Pre-͏tax Restructuring expenses of $0.1 billion in the fiscal year 2024, included the termination of partnered and non-partnered
development program costs, asset impairments and asset divestments. Pre-͏tax Restructuring expenses of $0.5 billion in the
fiscal year 2023, included the termination of partnered and non-partnered development program costs and asset impairments.
Total project costs of approximately $0.6 billion have been recorded since the restructuring was announced. The program was
completed in the fiscal fourth quarter of 2024.
In fiscal 2023, the Company initiated a restructuring program of its Orthopaedics franchise within the MedTech segment to
streamline operations by exiting certain markets, product lines and distribution network arrangements. The pre-tax
restructuring expense of $0.2 billion in the fiscal year 2024 primarily included costs related to market and product exits. The
pre-tax restructuring expense of $0.3 billion in the fiscal year 2023 primarily included inventory and instrument charges related
to market and product exits. Total project costs of approximately $0.5 billion have been recorded since the restructuring was
announced. The estimated costs of the total program are between $0.7 billion - $0.8 billion and is expected to be completed
by the end of fiscal year 2025.
The following table summarizes the restructuring expenses for the fiscal years 2024 and 2023:
(Pre-tax Dollars in Millions)
2024
2023
Innovative Medicine Segment(1)
$102
479
MedTech Segment(2)
167
319
Total Programs
$269
$798
(1)
The fiscal year of 2024 included $102 million in Restructuring on the Consolidated Statement of Earnings. The fiscal year of 2023 included
$449 million in Restructuring and $30 million in Cost of products sold on the Consolidated Statement of Earnings.
(2)
The fiscal year of 2024 included $132 million in Restructuring and $35 million in Cost of products sold on the Consolidated Statement of
Earnings. The fiscal year of 2023 Included $40 million in Restructuring and $279 million in Cost of products sold on the Consolidated
Statement of Earnings.
Restructuring reserves as of December 29, 2024 and December 31, 2023 were insignificant.
104
21. Kenvue separation and discontinued operations
The results of the Consumer Health business (previously reported as a separate business segment) have been reflected as
discontinued operations in the Company’s consolidated statements of earnings as Net earnings from discontinued operations,
net of taxes through August 23, 2023, the date of the exchange offer. Prior periods have been recast to reflect
this presentation.
On May 15, 2024, the Company issued $3.6 billion aggregate principal amount of commercial paper and received $3.6 billion of
net cash proceeds to be used for general corporate purposes. On May 17, 2024, the Company completed a Debt-for-Equity
Exchange of its remaining 182,329,550 shares of Kenvue Common Stock for the outstanding Commercial Paper. Upon
completion of the Debt-for-Equity Exchange, the Commercial Paper was satisfied and discharged and the Company no longer
owns any shares of Kenvue Common Stock. This exchange resulted in a loss of approximately $0.4 billion recorded in Other
(income) expense.
On May 8, 2023, Kenvue, completed an initial public offering (the IPO) resulting in the issuance of 198,734,444 shares of its
common stock, par value $0.01 per share (the “Kenvue Common Stock”), at an initial public offering of $22.00 per share for
net proceeds of $4.2 billion. The excess of the net proceeds from the IPO over the net book value of the Johnson & Johnson
divested interest was $2.5 billion and was recorded to additional paid-in capital. As of the closing of the IPO, Johnson &
Johnson owned approximately 89.6% of the total outstanding shares of Kenvue Common Stock and at July 2, 2023, the non-
controlling interest of $1.3 billion associated with Kenvue was reflected in equity attributable to non-controlling interests in the
consolidated balance sheet in the fiscal second quarter of 2023.
On August 23, 2023, Johnson & Johnson completed the disposition of an additional 80.1% ownership of Kenvue Common
Stock through an exchange offer, which resulted in Johnson & Johnson acquiring 190,955,436 shares of the Company’s
common stock in exchange for 1,533,830,450 shares of Kenvue Common Stock. The $31.4 billion of Johnson & Johnson
common stock received in the exchange offer is recorded in Treasury stock. Following the exchange offer, the Company
owned 9.5% of the total outstanding shares of Kenvue Common Stock that was recorded in other assets within continuing
operations at the fair market value of $4.3 billion as of August 23, 2023. Subsequent changes are reflected in other income/
expense and amounted to $0.4 billion expense through December 31, 2023.
Johnson & Johnson divested net assets of $11.6 billion as of August 23, 2023, and the accumulated other comprehensive loss
attributable to the Consumer Health business at that date was $4.3 billion. Additionally, at the date of the exchange offer,
Johnson & Johnson decreased the non-controlling interest by $1.2 billion to record the deconsolidation of Kenvue. This
resulted in a non-cash gain on the exchange offer of $21.0 billion that was recorded in Net earnings from discontinued
operations, net of taxes in the consolidated statements of earnings for the fiscal third quarter of 2023. This one-time gain
includes a gain of $2.8 billion on the Kenvue Common Stock retained by Johnson & Johnson. The gain on the exchange offer
qualifies as a tax-free transaction for U.S. federal income tax purposes.
Also in connection with the separation, Johnson & Johnson and Kenvue entered into a separation agreement and also entered
into various other agreements that provide for certain transactions to effect the transfer of the assets and liabilities of the
Consumer Health business to Kenvue and to govern various interim and ongoing relationships between Kenvue and Johnson &
Johnson following the completion of the Kenvue IPO, including transition services agreements (TSAs), transition manufacturing
agreements (TMAs), trademark agreements, intellectual property agreements, an employee matters agreement, and a tax
matters agreement. Under the TSAs, Johnson & Johnson will provide Kenvue various services and, similarly, Kenvue will provide
Johnson & Johnson various services. The provision of services under the TSAs generally will terminate within 24 months
following the Kenvue IPO. Additionally, Johnson & Johnson and Kenvue entered into TMAs pursuant to which Johnson &
Johnson will manufacture and supply to Kenvue certain products and, similarly, Kenvue will manufacture and supply to Johnson
& Johnson certain products. The terms of the TMAs range in initial duration from 3 months to 5 years.
Amounts related to the TSAs and TMAs included in the consolidated statements of earnings were immaterial for both fiscal
years 2024 and 2023. Additionally, the amounts due to and from Kenvue for the above agreements was not material as of
December 31, 2023.
The results of the Consumer Health business (previously reported as a separate business segment), as well as the associated
gain, have been reflected as discontinued operations in the Company’s consolidated statements of earnings as Net earnings
from discontinued operations, net of taxes. As a result of the separation of Kenvue, Johnson & Johnson incurred separation
costs of $145 million in the fiscal year 2024, which was included in Net Earnings and incurred separation costs of $986 million
and $1,089 million in the fiscal years 2023 and 2022, respectively, which were included in Net earnings from discontinued
operations, net of taxes. These costs were primarily related to external advisory, legal, accounting, contractor and other
2024 Annual Report
105
incremental costs directly related to separation activities. In the fiscal 2022, as part of the planned separation of the
Company’s Consumer Health business, the Company recognized approximately $0.5 billion in net incremental tax costs.
Details of Net Earnings from Discontinued Operations, net of taxes are as follows:
(Dollars in Millions)
2023(1)
2022
Sales to customers
$10,036
14,953
Cost of products sold
4,369
6,494
Gross profit
5,667
8,459
Selling, marketing and administrative expenses
3,085
4,519
Research and development expense
258
468
Interest Income
(117)
—
Interest expense, net of portion capitalized
199
—
Other (income) expense, net
1,092
1,060
(Gain) on separation of Kenvue
(20,984)
—
Restructuring
—
46
Earnings from Discontinued Operations Before Provision for Taxes on Income
22,134
2,366
Provision for taxes on income
307
795
Net earnings from Discontinued Operations
$21,827
1,571
(1)
The Company ceased consolidating the results of the Consumer Health business on August 23, 2023, the date of the exchange offer, but
continued to reflect any separation costs incurred as part of discontinued operations through the end of the fiscal fourth quarter.
The following table presents depreciation, amortization and capital expenditures of the discontinued operations related
to Kenvue:
(Dollars in Millions)
2023(1)
2022
Depreciation and Amortization
$383
641
Capital expenditures
$162
303
106
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Johnson & Johnson
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Johnson & Johnson and its subsidiaries (the “Company”) as
of December 29, 2024 and December 31, 2023, and the related consolidated statements of earnings, of comprehensive
income, of equity and of cash flows for each of the three fiscal years in the period ended December 29, 2024, including the
related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal
control over financial reporting as of December 29, 2024, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 29, 2024 and December 31, 2023, and the results of its operations and its cash flows
for each of the three fiscal years in the period ended December 29, 2024 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s report on internal control over financial reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in
all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
As described in Management’s report on internal control over financial reporting, management has excluded Shockwave
Medical, Inc., (“Shockwave”) from its assessment of internal control over financial reporting as of December 29, 2024 because
it was acquired by the Company in a purchase business combination during 2024. We have also excluded Shockwave from our
audit of internal control over financial reporting. Shockwave is a wholly-owned subsidiary whose total assets and total sales
excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1% of
each of the related consolidated financial statement amounts as of and for the fiscal year ended December 29, 2024.
2024 Annual Report
107
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
U.S. Innovative Medicine Rebate Reserves – Managed Care, Medicare and Medicaid
As described in Note 1 to the consolidated financial statements, the Company recognizes revenue from product sales when
obligations under the terms of a contract with the customer are satisfied. Rebates and discounts provided to customers are
accounted for as variable consideration and recorded as a reduction in sales. The liability for such rebates and discounts is
recognized within Accrued rebates, returns, and promotions on the consolidated balance sheet. A significant portion of the
liability related to rebates is from the sale of pharmaceutical products within the U.S., primarily the Managed Care, Medicare
and Medicaid programs, which amounted to $12.3 billion as of December 29, 2024. For significant rebate programs, which
include the U.S. Managed Care, Medicare and Medicaid rebate programs, rebates and discounts estimated by management are
based on contractual terms, historical experience, patient outcomes, trend analysis, and projected market conditions in the
various markets served.
The principal considerations for our determination that performing procedures relating to U.S. Innovative Medicine rebate
reserves - Managed Care, Medicare and Medicaid is a critical audit matter are (i) the significant judgment by management due
to the significant measurement uncertainty when developing the estimate of these reserves and (ii) a high degree of auditor
judgment, subjectivity, and effort in performing procedures and evaluating the assumptions related to contractual terms,
historical experience, patient outcomes, trend analysis, and projected market conditions in the U.S. pharmaceutical market.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s estimate of the U.S. Innovative Medicine rebate reserves - Managed Care, Medicare and Medicaid, including
controls over the assumptions used to estimate these rebates. These procedures also included, among others (i) developing an
independent estimate of the rebates by utilizing third party information on price and market conditions in the U.S.
pharmaceutical market, the terms of the specific rebate programs, and the historical experience and trend analysis of actual
rebate claims paid; (ii) testing, on a sample basis, rebate claims processed by the Company, including evaluating those claims
for consistency with the contractual and mandated terms of the Company’s rebate arrangements; and (iii) comparing the
independent estimates to management’s estimates to evaluate the reasonableness of management’s estimates.
108
Litigation Contingencies – Talc
As described in Notes 1 and 19 to the consolidated financial statements, the Company records accruals for loss contingencies
associated with legal matters, including talc, when it is probable that a liability will be incurred and the amount of the loss can
be reasonably estimated. To the extent adverse awards, judgments, or verdicts have been rendered against the Company,
management does not record an accrual until a loss is determined to be probable and can be reasonably estimated. For these
matters, management 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. Management continues to believe that the
Company has strong legal grounds to contest the talc verdicts it has appealed. Notwithstanding management’s confidence in
the safety of the Company’s talc products, in certain circumstances the Company has settled cases. In May 2024, the
Company proposed a consensual “prepackaged” Chapter 11 bankruptcy plan (the “Proposed Plan”) for the final resolution of all
current and future claims related to cosmetic talc in the United States, excluding claims related to mesothelioma or State
consumer protection claims. In September 2024, the Company’s subsidiary Red River Talc, LLC filed a voluntary petition,
seeking relief under Chapter 11 of the Bankruptcy Code, in furtherance of the Company’s consensual “prepackaged” Proposed
Plan. As of December 29, 2024, the total present value of the reserve to resolve the talc claims is approximately $11.6 billion,
of which approximately ten percent is recorded as a current liability. The recorded amount remains the Company's best
estimate of probable loss. The Company is unable to estimate the possible loss or range of loss beyond the amounts accrued.
The principal considerations for our determination that performing procedures relating to the litigation contingencies - talc is a
critical audit matter are (i) the significant judgment by management when assessing the likelihood of a loss being incurred for
the remaining unresolved talc claims, when determining whether a reasonable estimate of the loss or range of loss for the
remaining unresolved talc claims can be made, and when determining the timing of settlement payments for the remaining
unresolved talc claims, and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and
evaluating audit evidence related to management’s assessment of the loss contingencies associated with the talc litigation.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s assessment of the litigation contingencies – talc, including controls over determining whether a loss is probable
and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures. These procedures also
included, among others (i) gaining an understanding of the Company’s process around the accounting and reporting for the talc
litigation; (ii) obtaining and evaluating certain executed settlement agreements related to the talc litigation; (iii) discussing the
status of significant known actual and potential litigation and settlements activity with the Company’s in-house legal counsel,
as well as external counsel when deemed necessary; (iv) obtaining and evaluating the letters of audit inquiry with internal and
external legal counsel related to the talc litigation; (v) evaluating the reasonableness of management’s assessment regarding
whether an unfavorable outcome is reasonably possible or probable and reasonably estimable; and (vi) evaluating the
sufficiency of the Company’s litigation contingencies disclosures.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
February 13, 2025
We have served as the Company’s auditor since at least 1920. We have not been able to determine the specific year we began
serving as auditor of the Company.
2024 Annual Report
109
Management’s report on internal control over financial reporting
Under Section 404 of the Sarbanes-Oxley Act of 2002, management is required to assess the effectiveness of the Company’s
internal control over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the
Company’s internal control over financial reporting is effective.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
The Company’s internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the
Company’s financial reporting and the preparation of external financial statements in accordance with generally accepted
accounting principles.
Internal controls over financial reporting, no matter how well designed, have inherent limitations. Therefore, internal control
over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and may not prevent or detect all misstatements. Moreover, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
The Company’s management has assessed the effectiveness of the Company’s internal control over financial reporting as of
December 29, 2024. In making this assessment, the Company used the criteria established by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework (2013).” These criteria are in
the areas of control environment, risk assessment, control activities, information and communication, and monitoring. The
Company’s assessment included extensive documenting, evaluating and testing the design and operating effectiveness of its
internal controls over financial reporting.
The Company acquired Shockwave Medical, Inc. (Shockwave), in a business combination in May 2024. Shockwave’s total
assets, excluding intangible assets and goodwill, and total sales represented less than 1% of each of the related consolidated
financial statement amounts as of and for the fiscal year ended December 29, 2024. As the acquisition occurred in the fiscal
year 2024, the scope of the Company's assessment of the design and effectiveness of internal control over financial reporting
for the fiscal year 2024 excluded the above mentioned acquisition. This exclusion is in accordance with the SEC's general
guidance that an assessment of a recently acquired business may be omitted from the scope in the year of acquisition.
Based on the Company’s processes and assessment, as described above, management has concluded that, as of December 29,
2024, the Company’s internal control over financial reporting was effective.
The effectiveness of the Company’s internal control over financial reporting as of December 29, 2024 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which
appears herein.
/s/ J. Duato
/s/ J. J. Wolk
Joaquin Duato
Joseph J. Wolk
Chairman, Board of Directors
Executive Vice President, Chief Financial Officer
Chief Executive Officer
110
Shareholder return performance graphs
Set forth below are line graphs comparing the cumulative total shareholder return on the Company’s Common Stock for
periods of five years and ten years ending December 31, 2024, against the cumulative total return of the Standard & Poor’s
500 Stock Index, the Standard & Poor’s Pharmaceutical Index and the Standard & Poor’s Healthcare Equipment Index. The
graphs and tables assume that $100 was invested on December 31, 2019 and December 31, 2014 in each of the Company’s
Common Stock, the Standard & Poor’s 500 Stock Index, the Standard & Poor’s Pharmaceutical Index and the Standard &
Poor’s Healthcare Equipment Index and that all dividends were reinvested.
5 Year Shareholder Return Performance J&J vs. Indices
Johnson & Johnson
S&P 500 Index
S&P Pharmaceutical Index
S&P Healthcare Equipment Index
5-year CAGR
J&J
2.6%
S&P 500
14.5%
S&P Pharm
9.8%
S&P H/C Equip
6.6%
2019
2020
2021
2022
2023
2024
100
120
140
160
180
200
2019
2020
2021
2022
2023
2024
Johnson & Johnson
$100.00
$110.85
$123.54
$130.91
$119.65
$113.91
S&P 500 Index
$100.00
$118.39
$152.36
$124.75
$157.52
$196.90
S&P Pharmaceutical Index
$100.00
$107.53
$135.34
$146.78
$147.27
$159.35
S&P Healthcare Equipment Index
$100.00
$117.63
$140.40
$113.92
$124.22
$137.81
2024 Annual Report
111
10 Year Shareholder Return Performance J&J vs. Indices
Johnson & Johnson
S&P 500 Index
S&P Pharmaceutical Index
S&P Healthcare Equipment Index
10-year CAGR
J&J
6.2%
S&P 500
13.1%
S&P Pharm
8.8%
S&P H/C Equip
11.8%
2014
2015
2016
2017
2018
2019
2020
2021
2022 2023 2024
100
150
200
250
300
350
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Johnson & Johnson
$100.00
$101.16
$116.66
$145.13
$137.67
$159.99
$177.35
$197.66
$209.45
$191.43
$182.25
S&P 500 Index
$100.00
$101.37
$113.48
$138.25
$132.18
$173.81
$205.78
$264.82
$216.83
$273.79
$342.24
S&P Pharmaceutical Index
$100.00
$105.79
$104.13
$117.22
$126.71
$145.83
$156.80
$197.36
$214.04
$214.75
$232.38
S&P Healthcare
Equipment Index
$100.00
$105.97
$112.85
$147.71
$171.70
$222.04
$261.19
$311.74
$252.95
$275.82
$306.00
112
Item 9. Changes in and disagreements with accountants on
accounting and financial disclosure
Not applicable.
Item 9A. 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
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 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, Chairman
and Chief Executive Officer, 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.
Reports on internal control over financial reporting. The information called for by this item is incorporated herein by reference
to Management’s report on internal control over financial reporting, and the attestation regarding internal controls over
financial reporting included in the report of independent registered public accounting firm included in Item 8 of this Report.
Changes in internal control over financial reporting. During the fiscal quarter ended December 29, 2024, there were no changes
in the Company’s internal control over financial reporting identified in connection with the evaluation required under
Rules 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting. The Company continues to monitor and assess the effectiveness of the
design and operation of its disclosure controls and procedures.
The Company is implementing a multi-year, enterprise-wide initiative to integrate, simplify and standardize processes and
systems for the human resources, information technology, procurement, supply chain and finance functions. These are
enhancements to support the growth of the Company’s financial shared service capabilities and standardize financial systems.
This initiative is not in response to any identified deficiency or weakness in the Company’s internal control over financial
reporting. In response to this initiative, the Company has and will continue to align and streamline the design and operation of
its financial control environment.
Item 9B. Other information
Securities trading plans of Directors and Executive Officers. During the fiscal fourth quarter of 2024, none of our directors or
officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption or termination of a “Rule 10b5-1 trading
arrangement” or “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.
Item 9C. Disclosure regarding foreign jurisdictions that
prevent inspections
Not applicable.
2024 Annual Report
113
Part III
Item 10. Directors, executive officers and
corporate governance
The information called for by this item is incorporated herein by reference to the discussion of the Audit Committee under the
caption Item 1. Election of Directors - Board committees; and the material under the captions Item 1. Election of Directors and,
if applicable, Delinquent Section 16(a) reporting in the Proxy Statement; and the material under the caption “Executive Officers
of the Registrant” in Part I of this Report.
The Company’s Code of Business Conduct, which covers all employees (including the Chief Executive Officer, Chief Financial
Officer and Controller), meets the requirements of the SEC rules promulgated under Section 406 of the Sarbanes-Oxley Act
of 2002. The Code of Business Conduct is available on the Company’s website at www.jnj.com/code-of-business-conduct, and
copies are available to shareholders without charge upon written request to the Secretary at the Company’s principal
executive offices. Any substantive amendment to the Code of Business Conduct or any waiver of the Code granted to the
Chief Executive Officer, the Chief Financial Officer or the Controller will be posted on the Company’s website at www.jnj.com/
code-of-business-conduct within five business days (and retained on the website for at least one year).
In addition, the Company has adopted a Code of Business Conduct & Ethics for Members of the Board of Directors and
Executive Officers. The Code of Business Conduct & Ethics for Members of the Board of Directors and Executive Officers is
available on the Company’s website at www.investor.jnj.com/governance/corporate-governance-overview/code-of-business-
conduct--ethics, and copies are available to shareholders without charge upon written request to the Secretary at the
Company’s principal executive offices. Any substantive amendment to the Code or any waiver of the Code granted to any
member of the Board of Directors or any executive officer will be posted on the Company’s website at www.investor.jnj.com/
governance/corporate-governance-overview/code-of-business-conduct--ethics within five business days (and retained on the
website for at least one year).
In addition to the prohibition on insider trading for all employees covered in our Code of Business Conduct, the Company has
adopted an insider trading policy governing the purchase, sale and other dispositions of its securities by directors, officers and
certain other insiders that is reasonably designed to promote compliance with insider trading laws, rules and regulations and
any applicable listing standards. A copy of this policy is filed with this Annual Report on Form 10-K as Exhibit 19.
Item 11. Executive compensation
The information called for by this item is incorporated herein by reference to the material under the captions Item 1. Election of
Directors – Director compensation, and Item 2. Compensation Committee report, Compensation discussion and analysis and
Executive compensation tables in the Proxy Statement.
The material incorporated herein by reference to the material under the caption Compensation Committee report in the Proxy
Statement shall be deemed furnished, and not filed, in this Report and shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as a result of this
furnishing, except to the extent that the Company specifically incorporates it by reference.
Item 12. Security ownership of certain beneficial owners and
management and related stockholder matters
The information called for by this item is incorporated herein by reference to the material under the caption Stock ownership in
the Proxy Statement; and Note 16 Common stock, stock option plans and stock compensation agreements of the Notes to
Consolidated Financial Statements in Item 8 of this Report.
114
Equity compensation plan information
The following table provides certain information as of December 29, 2024 concerning the shares of the Company’s Common
Stock that may be issued under existing equity compensation plans.
Plan Category
Number of
Securities to
be Issued Upon
Exercise of
Outstanding
Options and Rights
Weighted Average
Exercise Price of
Outstanding
Options
and Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans(2)(3)
Equity Compensation Plans Approved by Security Holders(1)
127,682,644
$127.63
111,042,139
Equity Compensation Plans Not Approved by Security Holders
—
—
—
Total
127,682,644
$127.63
111,042,139
(1)
Included in this category are the following equity compensation plans which have been approved by the Company’s shareholders: 2012
Long-Term Incentive Plan and 2022 Long-Term Incentive Plan.
(2)
This column excludes shares reflected under the column “Number of Securities to be Issued Upon Exercise of Outstanding Options
and Rights.”
(3)
The 2012 Long-Term Incentive Plan expired April 26, 2022. All options and restricted shares granted subsequent to that date were under
the 2022 Long-Term Incentive Plan.
Item 13. Certain relationships and related transactions, and
director independence
The information called for by this item is incorporated herein by reference to the material under the captions Item 1. Election of
Directors - Related person transactions & Director independence in the Proxy Statement.
Item 14. Principal accountant fees and services
The information called for by this item is incorporated herein by reference to the material under the caption Item 3.
Ratification of appointment of independent registered public accounting firm in the Proxy Statement.
2024 Annual Report
115
Part IV
Item 15. Exhibits and financial statement schedules
The following documents are filed as part of this report:
1.
Financial Statements
Consolidated balance sheets at end of fiscal years 2024 and 2023
Consolidated statements of earnings for fiscal years 2024, 2023 and 2022
Consolidated statements of comprehensive income for Fiscal Years 2024, 2023 and 2022
Consolidated statements of equity for fiscal years 2024, 2023 and 2022
Consolidated statements of cash flows for fiscal years 2024, 2023 and 2022
Notes to Consolidated Financial Statements
Report of independent registered public accounting firm
All schedules are omitted because they are not applicable or the required information is included in the financial statements
or notes.
2. Exhibits required to be filed by item 60l of regulation S-K
The information called for by this item is incorporated herein by reference to the Exhibit Index in this Report.
Item 16. Form 10-K summary
Registrants may voluntarily include a summary of information required by Form 10-K under this Item 16. The Company has
elected not to include such summary information.
116
Signatures
Pursuant to the requirements of Section 13 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.
Date: February 13, 2025
JOHNSON & JOHNSON
(Registrant)
By
/s/ J. Duato
J. Duato, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ J. Duato
Chairman of the Board
February 13, 2025
J. Duato
Chief Executive Officer
(Principal Executive Officer)
/s/ J. J. Wolk
Chief Financial Officer
February 13, 2025
J. J. Wolk
(Principal Financial Officer)
/s/ R. J. Decker Jr.
Controller and Chief Accounting Officer
February 13, 2025
R. J. Decker Jr.
(Principal Accounting Officer)
/s/ D. Adamczyk
Director
February 13, 2025
D. Adamczyk
/s/ M. C. Beckerle
Director
February 13, 2025
M. C. Beckerle
/s/ J. A. Doudna
Director
February 13, 2025
J. A. Doudna
2024 Annual Report
117
Signature
Title
Date
/s/ M. A. Hewson
Director
February 13, 2025
M. A. Hewson
/s/ P. A. Johnson
Director
February 13, 2025
P. A. Johnson
/s/ H. Joly
Director
February 13, 2025
H. Joly
/s/ M. B. McClellan
Director
February 13, 2025
M. B. McClellan
/s/ A. M. Mulcahy
Director
February 13, 2025
A. M. Mulcahy
/s/ M. A. Weinberger
Director
February 13, 2025
M. A. Weinberger
/s/ N. Y. West
Director
February 13, 2025
N. Y. West
/s/ E. A. Woods
Director
February 13, 2025
E. A. Woods
118
Exhibit index
2(i)
Agreement and Plan of Merger, dated as of October 31, 2022, by and among Johnson & Johnson, Athos
Merger Sub, Inc. and ABIOMED, Inc. – Incorporated herein by reference to Exhibit 2.1 of the Registrant’s Form
8-K Current Report filed November 1, 2022.†
3(i)
Restated Certificate of Incorporation effective February 19, 2016 — Incorporated herein by reference to
Exhibit 3(i) of the Registrant’s Form 10-K Annual Report for the fiscal year ended January 3, 2016.
3(ii)
Certificate of Amendment to the Certificate of Incorporation of Johnson & Johnson effective April 30, 2020
— Incorporated herein by reference to Exhibit 3.1 of the Registrant's Form 8-K Current Report filed
April 29, 2020.
3(iii)
Amended and Restated By-Laws of the Company, as amended effective April 25, 2024 — Incorporated herein
by reference to Exhibit 3.1 of the Registrant’s Form 8-K Current Report filed April 29, 2024.
4(a)
Upon the request of the Securities and Exchange Commission, the Registrant will furnish a copy of all
instruments defining the rights of holders of long-term debt of the Registrant.
4(b)°
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 — Filed
with this document.
4(c)**
Indenture, dated as of September 15, 1987 – Incorporated herein by reference to Exhibit 4(a) to the
Registrant’s Form S-3 Registration Statement filed on October 11, 1994
4(d)**
First Supplemental Indenture, dated as of September 1, 1990 – Incorporated herein by reference to Exhibit
4(b) to the Registrant’s Form S-3 Registration Statement filed on October 11, 1994
4(e)
Second Supplemental Indenture, dated as of November 9, 2017 – Incorporated herein by reference to Exhibit
4.1 to the Registrant’s Form 8-K Current Report filed on November 13, 2017
10(a)
2012 Long-Term Incentive Plan — Incorporated herein by reference to Appendix A of the Registrant’s Proxy
Statement filed on March 15, 2012.*
10(b)
Form of Stock Option Certificate under the 2012 Long-Term Incentive Plan — Incorporated herein by
reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended April 1, 2012.*
10(c)
Global NonQualified Stock Option Award Agreement under the 2012 Long-Term Incentive Plan —
Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for the
quarter ended April 1, 2018.*
10(d)
Global Restricted Share Unit Award Agreement under the 2012 Long-Term Incentive Plan — Incorporated
herein by reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended
April 1, 2018.*
10(e)
Global Performance Share Unit Award Agreement under the 2012 Long-Term Incentive Plan — Incorporated
herein by reference to Exhibit 10.3 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended
April 1, 2018.*
10(f)
Global Restricted Share Unit Award Agreement granted to John Reed on May 1, 2023 under the 2022 Long-
Term Incentive Plan — Incorporated herein by reference to Exhibit 10(h) of the Registrant’s Form 10-K Annual
Report for the fiscal year ended December 31, 2023*
10(g)
Domestic Deferred Compensation (Certificate of Extra Compensation) Plan — Incorporated herein by
reference to Exhibit 10(g) of the Registrant’s Form 10-K Annual Report for the year ended
December 28, 2003.*
10(h)
Amendments to the Certificate of Extra Compensation Plan effective as of January 1, 2009 — Incorporated
herein by reference to Exhibit 10(j) of the Registrant’s Form 10-K Annual Report for the year ended December
28, 2008.*
10(i)
Amended and Restated Deferred Fee Plan for Directors (Amended as of January 17, 2012) — Incorporated
herein by reference to Exhibit 10(k) of the Registrant's Form 10-K Annual Report for the fiscal year ended
January 1, 2012.*
Reg. S-K
Exhibit Table
Item No.
Description
of Exhibit
2024 Annual Report
119
10(j)
The Johnson & Johnson Executive Income Deferral Plan Amended and Restated Effective January 1, 2010 —
Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for the
quarter ended September 30, 2012.*
10(k)
The Johnson & Johnson Excess Savings Plan (amended and restated as of January 1, 2022) — Incorporated
herein by reference to Exhibit 10(l) of the Registrant’s Form 10-K Annual Report for the fiscal year ended
January 1, 2023.*
10(l)
Excess Benefit Plan of Johnson & Johnson and Affiliated Companies (amended and restated as of January 1,
2020) — incorporated by reference to Exhibit 10(m) of the Registrant’s Form 10-K Annual Report for the
fiscal year ended January 3, 2021.
10(m)**
Executive Life Plan Agreement — Incorporated herein by reference to Exhibit 10(i) of the Registrant’s Form
10-K Annual Report for the fiscal year ended January 3, 1993.*
10(n)
Executive Life Plan Agreement Closure Letter — Incorporated herein by reference to Exhibit 10.1 of the
Registrant’s Form 10-Q Quarterly Report for the quarter ended March 29, 2015.*
10(o)
2022 Long-Term Incentive Plan — Incorporated by reference to Appendix A of the Registrant’s Proxy
Statement filed on March 16, 2022.*
10(p)
Severance Pay Plan of Johnson & Johnson and U.S. Affiliated Companies, Amended and Restated as of
October 1, 2014 — Incorporated herein by reference to Exhibit 10.1 of the Registrant's Form 10-Q Quarterly
Report for the quarter ended September 28, 2014.*
10(q)
First Amendment to the Severance Pay Plan of Johnson & Johnson and U.S. Affiliated Companies (as
amended and restated effective October 1, 2014) — Incorporated herein by reference to Exhibit 10.1 of the
Registrant's Form 10-Q Quarterly Report for the quarter ended June 28, 2015.*
10(r)
Second Amendment to the Severance Pay Plan of Johnson & Johnson and U.S. Affiliated Companies (as
amended and restated effective October 1, 2014) — Incorporated herein by reference to Exhibit 10(x) of the
Registrant's Form 10-K Annual Report for the fiscal year ended January 3, 2016.*
10(s)
Contingent Value Rights Agreement, dated as of December 22, 2022, by and between Johnson & Johnson
and American Stock Transfer & Trust Company, LLC – Incorporated herein by reference to Exhibit 10.1 of the
Registrant’s Form 8-K Current Report filed December 22, 2022.†
10(t)
Intellectual Property Agreement, dated as of May 3, 2023, by and between Johnson & Johnson and
Kenvue Inc. — Incorporated herein by reference to Exhibit 10.4 of the Registrant's Form 8-K Current Report
filed May 8, 2023.
10(u)
Trademark Phase-Out License Agreement, dated as of April 3, 2023, by and between Johnson & Johnson and
Johnson & Johnson Consumer Inc. — Incorporated herein by reference to Exhibit 10.5 of the Registrant's
Form 8-K Current Report filed May 8, 2023.
10(v)
Johnson & Johnson Deferred Compensation Plan — Incorporated herein by reference to Exhibit 10.1 of the
Registrant's Form 8-K Current Report filed November 27, 2023.*
10(w)
Global Performance Share Unit Award Agreement under the Johnson & Johnson 2022 Long-Term Incentive
Plan — Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly Report for
the quarter year ended April 2, 2023.*
10(x)
Global Restricted Share Unit Award Agreement under the Johnson & Johnson 2022 Long-Term Incentive Plan
— Incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the
quarter year ended April 2, 2023.*
10(y)
Global Nonqualified Stock Option Award Agreement under the Johnson & Johnson 2022 Long-Term Incentive
Plan — Incorporated herein by reference to Exhibit 10.3 of the Registrant’s Form 10-Q Quarterly Report for
the quarter year ended April 2, 2023.*
10(z)
Amendment One to the Johnson & Johnson Excess Savings Plan (amended and restated effective as of
January 1, 2022) — Incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form 10-Q Quarterly
Report for the quarter ended October 1, 2023.*
Reg. S-K
Exhibit Table
Item No.
Description
of Exhibit
120
10(aa)
Johnson & Johnson Executive Incentive Plan (Amended as of September 7, 2023) — Incorporated herein by
reference to Exhibit 10.2 of the Registrant’s Form 10-Q Quarterly Report for the quarter ended
October 1, 2023.*
10(ab)°
Johnson & Johnson Executive Officer Cash Severance Policy — Filed with this document.*
19
Johnson & Johnson Stock Trading Policy for Directors, Executive Officers and Insiders (Amended as of April
27, 2023) — Incorporated herein by reference to Exhibit 19 of the Registrant’s Form 10-K Annual Report for
the fiscal year ended December 31, 2023.
21°
Subsidiaries — Filed with this document.
23°
Consent of Independent Registered Public Accounting Firm — Filed with this document.
31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act — Filed with
this document.
31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act — Filed with
this document.
32.1
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act — Furnished with
this document.
32.2
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act — Furnished with
this document.
97
Johnson & Johnson Clawback Policy (effective as of August 8, 2023) — Incorporated herein by reference to
Exhibit 97 of the Registrant’s Form 10-K Annual Report for the fiscal year ended December 31, 2023.
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
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.
Reg. S-K
Exhibit Table
Item No.
Description
of Exhibit
*
Management contract or compensatory plan.
**
Paper filing.
†
Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2)(ii) or 601(b)(10)(iv) of Regulation S-K,
as applicable.
°
Omitted from the printed version of this 2024 Annual Report.
A copy of any of the Exhibits listed above will be provided without charge to any shareholder submitting a written request
specifying the desired exhibit(s) to the Secretary at the principal executive offices of the Company. Pursuant to Item
601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed as exhibits to this Form 10-K certain long-term debt instruments,
under which the total amount of securities authorized does not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. The Company hereby agrees to furnish a copy of any such instrument to the SEC
upon request.
2024 Annual Report
121
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Joaquin Duato, certify that:
1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “report”)
of Johnson & Johnson (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this report;
4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting; and
5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
/s/ Joaquin Duato
Joaquin Duato
Chief Executive Officer
Date: February 13, 2025
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Joseph J. Wolk certify that:
1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “report”)
of Johnson & Johnson (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this report;
4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting; and
5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
/s/ Joseph J. Wolk
Joseph J. Wolk
Chief Financial Officer
Date: February 13, 2025
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
The undersigned, Joaquin Duato, the Chief Executive Officer of Johnson & Johnson, a New Jersey corporation
(the “Company”), pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, hereby certifies that, to the best of my knowledge:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “Report”)
fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Joaquin Duato
Joaquin Duato
Chief Executive Officer
Dated: February 13, 2025
This certification is being furnished to the SEC with this Report on Form 10-K pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the
Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liability of that section.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
The undersigned, Joseph J. Wolk, the Chief Financial Officer of Johnson & Johnson, a New Jersey corporation
(the “Company”), pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, hereby certifies that, to the best of my knowledge:
(1) the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “Report")
fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Joseph J. Wolk
Joseph J. Wolk
Chief Financial Officer
Dated: February 13, 2025
This certification is being furnished to the SEC with this Report on Form 10-K pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the
Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liability of that section.
Board of Directors
JOAQUIN DUATO*
Chairman, Board of Directors
DARIUS ADAMCZYK
Former Executive Chairman and Chief Executive Officer,
Honeywell International
MARY C. BECKERLE
Chief Executive Officer, Huntsman Cancer Institute at the
University of Utah; Distinguished Professor of Biology,
College of Science, University of Utah
JENNIFER A. DOUDNA
Professor of Chemistry; Professor of Biochemistry &
Molecular Biology; Li Ka Shing Chancellor’s Professor in
Biomedical and Health, University of California, Berkeley
MARILLYN A. HEWSON
Former Chair and Chief Executive Officer,
Lockheed Martin Corporation
PAULA A. JOHNSON
President, Wellesley College
HUBERT JOLY
Former Chairman and Chief Executive Officer,
Best Buy Co., Inc.
MARK B. McCLELLAN
Director, Duke-Robert J. Margolis, MD,
Center for Health Policy, Duke University
ANNE M. MULCAHY
Former Chairman and Chief Executive Officer,
Xerox Corporation
MARK A. WEINBERGER
Former Chairman and Chief Executive Officer,
Ernst & Young
NADJA Y. WEST
Former Lieutenant General, U.S. Army
EUGENE A. WOODS
Chief Executive Officer, Advocate Health
Senior Management
JOAQUIN DUATO*
Chief Executive Officer
VANESSA BROADHURST*
Executive Vice President, Global Corporate Affairs
ROBERT J. DECKER JR.
Corporate Controller, Chief Accounting Officer
FRANCIS DOUGHERTY
Treasurer
ELIZABETH FORMINARD*
Executive Vice President, Chief Legal Officer
MARC LARKINS
Corporate Secretary, Worldwide Vice President,
Corporate Governance
KRISTEN MULHOLLAND*
Executive Vice President, Chief Human Resources Officer
JOHN REED*
Executive Vice President, Innovative Medicine, R&D
TIM SCHMID*
Executive Vice President, Worldwide Chairman, MedTech
JAMES SWANSON*
Executive Vice President, Chief Information Officer
JENNIFER TAUBERT*
Executive Vice President, Worldwide Chairman,
Innovative Medicine
KATHRYN E. WENGEL*
Executive Vice President, Chief Technical Operations &
Risk Officer
JOSEPH J. WOLK*
Executive Vice President, Chief Financial Officer
* Member, Executive Committee
Principal office
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
(732) 524-0400
2025 Annual Meeting of Shareholders
Thursday, April 24, 2025
10:00 a.m. (Eastern Standard Time)
Meeting held virtually at
www.virtualshareholdermeeting.com/
JNJ2025.
All shareholders as of the record date of
February 25, 2025 are invited to attend.
A formal Notice of Annual Meeting, Proxy
Statement and proxy have been made
available to shareholders.
2024 Annual Report on Form 10-K and
2025 Proxy Statement
Johnson & Johnson’s Annual Report on
Form 10-K for the fiscal year ended
December 29, 2024 is included in this
Annual Report in its entirety, with the
exception of certain exhibits. The
Form 10-K, complete with all of its
exhibits, is available on our website at
www.investor.jnj.com/financials/sec-filings,
and the SEC’s website at www.sec.gov.
Shareholders may also obtain copies of
the exhibits, our 2024 Annual Report on
Form 10-K and our 2025 Proxy
Statement, without charge, upon written
request to the Office of the Corporate
Secretary at our principal office address,
or by calling (800) 950-5089.
Electronic delivery notification
The 2025 Proxy Statement and our 2024
Annual Report are available on our website
investor.jnj.com/asm. Shareholders who
receive paper copies of our Proxy
Statement and Annual Report by mail can
elect to receive instead an email message
with a link to those documents on the
Internet. Registered shareholders may
enroll in electronic delivery at:
www.computershare-na.com/green.
Beneficial shareholders (who hold shares of
Johnson & Johnson Common Stock through
a bank, broker or other holder of record)
generally can enroll for electronic delivery
at: enroll.icsdelivery.com/jnj.
Stock listing
Johnson & Johnson Common Stock
Listed on New York Stock Exchange
Stock Symbol: JNJ
Shareholder relations contact
Marc Larkins
Corporate Secretary
(732) 524-2455
Investor Relations contact
Jessica Moore
Vice President, Investor Relations
(800) 950-5089
investor-relations@its.jnj.com
Stock transfer agent and registrar
Questions regarding stock holdings,
certificate replacement/transfer,
dividends and address changes should be
directed to our stock transfer agent and
registrar at:
Computershare Trust Company, N.A.
P.O. Box 3006
Providence, RI 02490-3006
Overnight mail:
Computershare Trust Company, N.A.
150 Royal Street, Suite 101
Canton, MA 02021
(800) 328-9033 or (781) 575-2718
Shareholder website:
www.computershare.com/investor
Dividend reinvestment plan
The Plan allows for full or partial dividend
reinvestment and additional cash
investments up to $50,000 per year in
Johnson & Johnson Common Stock
without per share or service charges on
stock purchases. If you are interested in
participating in the Plan and need an
enrollment form and/or more information,
please call the Plan administrator,
Computershare Trust Company, N.A. at
(800) 328-9033 or (781) 575-2718
(outside the U.S.) or access online at
www.computershare.com/investor.
Hearing impaired
Shareholders who have inquiries regarding
stock-related matters can communicate
directly with Computershare Trust
Company, N.A. via a telecommunications
device (TDD). The telephone number for
this service is (800) 952-9245 or (781)
575-2692 (outside the U.S.).
Johnson & Johnson online
Our website: www.jnj.com
www.jnj.com/media-center
www.facebook.com/jnj
www.x.com/JNJNews
www.x.com/JNJCares
www.youtube.com/jnj
www.linkedin.com/company/
johnson-&-johnson
The latest news, conference
announcements, press releases and
Company performance information can be
found at www.investor.jnj.com.
The information on these websites should
not be deemed to be part of this Annual
Report.
©Johnson & Johnson 2025. All rights
reserved.