Johnson & Johnson
NYSE: JNJ
Student Investment Management (SIM)
Analyst:
Brent W. Soller
Soller_9@fisher.osu.edu
614-235-2815
Recommendation:
Date of Report:
Sector:
Industry:
BUY
November 26, 2010
Health Care
Pharmaceuticals
Share Data
Price
Target Price
Upside Potential
52-Week Price Range
Shares Outstanding (dil.)
Market Cap
Dividend Yield (annual)
Beta
Financial Data
Revenues
Operating Margin
Earnings Per Share
Working Capital
$62.30
$82.00
32%
$56.86-$66.20
2.75B
$171.1B
3.41%
0.49
2009
2010E
$61.90B $62.97B
25.45% 26.27%
$4.40
$4.71
$17.82B $18.71B
2010 Q3 Data
Cash & Equivalents
Revenue
YTD Revenue
Net Earnings
YTD Net Earnings
Earnings Per Share
YTD Earnings Per Share
Sources: Johnson & Johnson Financial Statements and
Thompson Reuters Baseline
12-Month Share Price Performance
$14.34B
$15.00B
$45.94B
$3.42B
$11.40B
$1.23
$4.08
Johnson & Johnson is one of the world’s largest diversified health
care companies with over 250 individual operating companies and
over 115,000 employees located in 59 countries. The firm produces
pharmaceuticals, medical devices and diagnostics, and consumer
health care products.
Investment Thesis
Johnson & Johnson and the broader Health Care Sector remain historically undervalued on fears the recently passed federal health
care legislation will slow earnings growth. Johnson & Johnson provides an attractive investment for the following reasons:

Johnson & Johnson has a strong pharmaceuticals pipeline, a
dedication to R&D and acquisitions, and is flush with cash,
giving the firm vital flexibility.

The Health Care Sector will continue to benefit from increased
spending due to trends in demographics and obesity.

The health care legislation should be a net positive for Johnson
& Johnson by increasing the size of the market.
Risks

If clinical trials do not lead to FDA approval, the pharmaceuticals pipeline will not be as valuable as expected; as patent protection for pharmaceuticals expires, the firm will face increased
competition from generics.

Currency risk is a potential concern for a global company.

Austerity spending cuts in Europe could decrease spending on
health care in those markets.

The impact of some provisions within the health care legislation are unknown, these could have negative impacts.
Contents Company Overview ........................................................................................................................ 3 Business Segments ...................................................................................................................... 3 Management................................................................................................................................ 4 Recent Developments .................................................................................................................. 5 Investment Thesis ........................................................................................................................... 6 Competitive Advantage and Strategy .......................................................................................... 6 Fundamental Drivers .................................................................................................................. 6 Sector/Industry Trends ................................................................................................................ 7 Financial Analysis ...................................................................................................................... 9 Valuation Analysis ...................................................................................................................... 9 Current Valuations.................................................................................................................... 11 Risks.............................................................................................................................................. 12 Summary ....................................................................................................................................... 13 Appendix A – Johnson & Johnson Pharmaceuticals Pipeline ...................................................... 14 Appendix B – Selected Financial Data ......................................................................................... 15 Appendix C – Discounted Cash Flow Model ............................................................................... 16 Appendix D – Sources .................................................................................................................. 17 Johnson & Johnson
Analyst: Brent W. Soller
Page 2
Company Overviewi
Johnson & Johnson, founded in 1886 to produce sterile surgical dressings, is one now one of the
world’s largest diversified health care companies with over 250 individual operating companies
and over 115,000 employees located in 59 countries. The firm became publicly traded in 1944
and derives its revenue from thousands of products developed and sold in its three business lines:
pharmaceuticals, medical devices and diagnostics, and consumer health care products. The firm
is truly global with 50% of its sales derived from international markets.
Business Segments The Pharmaceuticals Segment includes therapeutic products for areas including anti-infective,
antipsychotic, cardiovascular, contraceptive, dermatology, gastrointestinal, hematology,
immunology, neurology, oncology, pain management, urology, and virology care. Products are
sold to retailers, wholesalers, and health care professionals for prescription use. Some more
prominent names in Johnson & Johnson’s
Exhibit 1
Segment
2009 Sales
arsenal include Remicade (for immune
Pharmaceuticals
36%
mediated inflammatory diseases) Procrit (for
Medical Devices and Diagnostics
38%
stimulating red blood cell production),
Consumer Health Care
26%
Levaquin (an anti-infective), Risperdal Consta
(for schizophrenia), Concerta (for attention deficit hyperactivity disorder), Aciphex/Pariet (a
proton pump inhibitor), Duragesic (for chronic pain), Velcade (for multiple myeloma), Prezista
(for HIV/AIDS), and Invega (an antipsychotic).
The Medical Devices and Diagnostics Segment includes a broad range of products used by
healthcare professionals in hospitals, laboratories, and clinics. These products are sold directly
and through distributors to wholesalers, hospitals, and retailers. The most prominent products
include Cordis circulatory disease management products; DePuy orthopaedic joint
reconstruction, spinal care, and sports medicine products; Ethicon surgical care, aesthetics,
women’s health, and minimally invasive surgical products; LifeScan blood glucose monitoring
and insulin delivery products; Ortho-Clinical Diagnostics professional diagnostic products; and
Vistakon disposable contact lenses.
The Consumer Segment includes the most recognizable names amongst Johnson & Johnson’s
broad array of products. These include baby care, skin care, oral care, wound care, women’s
health care, nutritional, and over-the-counter pharmaceutical products. Some of the many
prominent products include Johnson’s Baby products; skin care names Aveeno, Neutrogena,
RoC, and Lubriderm; oral care product Listerine; would care products Band-Aid and Purell; nocalorie sweetener Splenda; the entire line of Tylenol acetaminophen products; the entire line
Sudafed and Zyrtec cold, flu, and allergy products; pain manager Motrin IB; and stomach acid
controller Pepcid AC.
Johnson & Johnson
Analyst: Brent W. Soller
Page 3
Management
Mr. William C. Weldon is Chairman of the Board and Chief Executive Officer of Johnson &
Johnson. Mr. Weldon assumed this role in April of 2002 after serving as Worldwide Chairman
for the Pharmaceuticals Group and a Vice Chairman of the Board of Directors, positions he had
held since 1998. Mr. Weldon joined Johnson & Johnson in 1971 and has held positions in
numerous subsidiaries including McNeil Pharmaceutical in the U.S., the ICOM Regional
Development Center in Southeast Asia, Ortho-Cilag Pharmaceutical in the U.K, Janssen
Pharmaceutica in the U.S., and in the Ethicon Endo-Surgery in the U.S. Mr. Weldon is also
serves as a member of the Board of Directors of JPMorgan Chase & Co., the Chairman of the
CEO Roundtable on Cancer, the Vice Chair of The Business Council, as a member of The
Sullivan Commission on Diversity in the Health Professions Workforce, as Chairman of the
Liberty Science Center Advisory Council, and as a member of the Board of Trustees for
Quinnipiac University, his alma mater.
Other senior management includes:
Exhibit 2
Name
Dominic J. Caruso
Russell C. Deyo
Colleen A. Goggins
Alex Gorsky
Sherilyn S. McCoy
Age Position
52
60
55
49
51
Member, Executive Committee; Vice President, Finance; Chief Financial Officer
Member, Executive Committee; Vice President, Human Resources and General Counsel
Member, Executive Committee; Worldwide Chairman, Consumer
Member, Executive Committee; Worldwide Chairman, Medical Devices and Diagnostics
Member, Executive Committee; Worldwide Chairman, Pharmaceuticals
Most of the senior managers have been with the company for more than two decades and have
provided the experienced, steady leadership which has allowed this venerated company to
maintain its steady growth and market leadership. This team is considered an asset for the firm’s
future prospects.
Compensation for Mr. Weldon has the following approximate weighting: 10% base salary, 15%
annual bonus, 39% Options/Restricted Shares, 36% Certificates of Long Performance. The other
executive officers have a very similar mix with a slightly higher weight given to base salary and
the annual bonus. The levels of compensation are based upon the performance metrics of Sales
Growth, Net Income Growth and Margin, Free Cash Flow, Earnings per Share, and Shareholder
Return. This structure provides the proper incentives for management to remain focused on longterm growth.ii
Johnson & Johnson
Analyst: Brent W. Soller
Page 4
Recent Developments
Johnson & Johnson has experienced four noteworthy events in recent monthsiii:
•
•
•
•
On October 6, 2010, Johnson & Johnson announced that it would acquire Crucell, a
Dutch vaccine producer. The move is expected to augment the firm’s internal research
and development efforts.
On October 18, 2010, The McNeil Consumer Products division announced product
control problems which the FDA is investigating. These problems led to the October 18,
2010 announcement that it is recalling a small proportion of the Tylenol products from
this division.
On October 19, 2010, third quarter earnings were announced at $1.23 per share. This beat
the consensus quarterly estimate, which was $1.15 per share.
On November 15, 2010 a Phase III clinical trial on Xarelto, a drug Johnson & Johnson is
co-developing with Bayer AG, showed positive results in reducing the severity of strokes.
These events did not appear to have any lasting impact on Johnson & Johnson’s stock price,
which has underperformed the market, along with the rest of the Health Care Sector, as shown in
Exhibit 3. It appears that the market is still wary of the impact health care legislation signed into
law on March 23, 2010, and is dramatically discounting the sector because of this uncertainty.iv
Johnson & Johnson
Analyst: Brent W. Soller
Page 5
Investment Thesis
The BUY recommendation for Johnson & Johnson is based upon the firm’s competitive
advantages, including its strong brand names, pharmaceuticals pipeline, and financial results and
the broad macroeconomic trends which are driving the health care market. Each of these topics
will be discussed below.
Competitive Advantage and Strategyv
Johnson & Johnson has been well served throughout recent history by its diversified product
offering and its dedication to research and development. In 2009 alone, Johnson & Johnson spent
over $7 billion in research and development and 25% of its 2009 revenue was generated by
products it introduced in the previous five years. Recently, the firm has also leaned upon
acquisitions to bolster its development portfolio, as shown in Exhibit 4. This positions the firm
favorably in the three fastest-growing
Exhibit 4
Major Acquisition
Year Firm Strength
segments of the industry: vaccines, bioConor Medsystems
2007
Coronary Stents surgical products, and aesthetics.
Omrix Biopharmaceuticals
Mentor Corp
Cougar Biotechnology
Crucell
2008
2009
2009
2010
Immunotherapy
Aesthetics
Anti-Cancer
Vaccines R&D
Johnson & Johnson also has the luxury of
numerous name-brand products in its
Consumer Segment (as described above).
This advantage was considerably strengthened with its 2006 purchase of Pfizer’s consumer
health care business which added notable products, including Nicorrette, Visine, Neosporin,
Benadryl, and Zantac. With strong brand loyalty and name recognition, it would take competitors
years and large capital commitments to match this division.
Additionally, Johnson & Johnson’s Pharmaceuticals Segment has a robust pipeline with 26 FDA
Phase III trials currently underway. This should be a strength going forward, offsetting patent
expirations with sales of new pharmaceuticals. More detail of the pipeline is included in
Appendix A.
Finally, as developing markets, such as China, India, and Brazil, increase health care spending to
cover more citizens, it provides significant growth opportunities. Johnson & Johnson is already
strongly involved in these markets and stands to gain from their growth.
Fundamental Drivers
Johnson & Johnson benefits from its diversification, participating in one-third of the overall
global health care market. Therefore, as health care goes, so too does Johnson & Johnson.
Thankfully for the company, several fundamental drivers are expected to lead to five percent
annual growth in the overall health care market, with Johnson & Johnson positioning to focus in
the high-growth segments and countries. Domestically, the health care market will benefit from:
Johnson & Johnson
Analyst: Brent W. Soller
Page 6
•
•
•
Demographics – increasing life-expectancy (now at over 78 years) is leading to greater
spending on pharmaceuticals, diagnostic devices, and consumer products. Additionally, a
greater proportion of the population is older, causing healthcare spending to increase
faster than general economic growth. Currently, 16% of U.S. GDP is spent on health care
and 30% of that spending is for senior care. Both of those proportions are expected to
increase.vi
Obesity – Unfortunately, Americans are overweight with almost 35% of adults classified
as obese and with that proportion increasing at a rate of 0.5% per year. Obesity leads to
numerous health problems, including diabetes and heart disease, dramatically increasing
health care spending.vii
Health Care Reform – Although there are both positives and negatives to the recently
passed health care legislation, several components of the bill should benefit the markets
in which Johnson & Johnson participates. Perhaps as many as 32 million more Americans
will have health insurance, increasing overall demand for all segments of the firm’s
business.viii Additionally, there were no provisions in the new law granting the
government the power to negotiate (i.e., push down) prices for services. With the results
of the recent mid-term congressional elections, it is also now anticipated that the most
potentially-damaging provisions in the bill will be modified before they take effect.ix
Sector/Industry Trends
The Health Care Sector appears to be unambiguously undervalued when compared to historical
norms. With the worst year-to-date performance of
Exhibit 5
any sector in the S&P 500 (see Exhibit 5 to the right),
PRICE RETURNSx
QTD
YTD
Health Care has underperformed the broader index by
S&P 500
4.2%
6.7%
over nine hundred basis points. Oddly, the underlying
BY SECTOR
fundamentals remain positive with improving
Cons Disc
8.8%
21.9%
earnings, book values, and cash flow numbers. This
Industrials
3.8%
15.6%
Materials
7.1%
8.4%
has led to valuations near, or at, their 10-year lows
Energy
10.7%
8.0%
when measured on absolute or relative bases. Exhibit
Cons
Staples
2.2%
7.4%
6 on the next page shows that the Health Care Sector
Info Tech
6.6%
5.8%
is currently trading at a discount on an absolute basis
Telecom Svc
-0.7%
5.3%
and relative to the S&P 500, when compared to
Financials
0.6%
0.3%
history. The Sector suffered leading up to the passage
Utilities
-2.3%
-1.4%
of the health care reform legislation in the U.S. For
Health Care
0.0%
-2.4%
the reasons stated in the previous section, the drop in
prices appears to have been disproportionately severe.
Johnson & Johnson
Analyst: Brent W. Soller
Page 7
Exhibit 6xi
Absolute Basis
P/Trailing E
P/Forward E
P/B
P/S
P/CF
Relative to S&P 500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
10-Year Health Care Sector Valuations
High
Low
Median
Current
35.5
9.9
18.9
12.1
31.6
10.0
17.7
11.6
10.1
2.2
4.1
3.2
4.7
1.0
1.9
1.2
27.7
7.6
14.0
10.4
High
Low
Median
Current
1.5
0.7
1.1
0.8
1.4
0.7
1.1
0.9
2.5
1.2
1.4
1.5
2.4
1.0
1.3
1.0
1.9
0.9
1.3
1.1
Historically, Health Care Sector returns have shown only weak relationships with
macroeconomic measures, with the exception of a positive relationship with employment
(correlation: r = 0.69). This is for two reasons – health insurance is largely tied to employment
and, in times of economic decline, people tend to delay discretionary and cosmetic surgeries.
Although it is reasonable to assume that this relationship may weaken in the future if the recent
health care reform successfully insures more of the unemployed, the Health Care Sector should
be buoyed as employment strengthens. Exhibit 7 shows the correlation between employment and
the Health Care Sector over the past five years.xii
Exhibit 7 xii
Johnson & Johnson
Analyst: Brent W. Soller
Page 8
Health Care Sector and Employment Correlation
Financial Analysisxiii
Due to the careful management of its product lines and operations, Johnson & Johnson has a
healthy balance sheet and income statement with a strong cash position and growing earnings.
Appendix B contains selected financial data and forecasts firm growth into the future. The
forecasts show that as operating margins and sales growth slowly return to more normalized
trends, consensus earnings per share values are easily attainable. Even through the difficulty of
the past few years, Accounts Receivable, Accounts Payable, and Inventories have remained
steady. Further, after $18 billion in acquisitions in 2006 drained reserves the company has
significantly strengthened its cash position – this provides Johnson & Johnson with the flexibility
to increase acquisitions or spending on product development. All the while, the firm has
continued to spend on research and development to prepare for the future.
Although Johnson & Johnson is classified as a member of the pharmaceuticals industry, it would
appear that, as pharmaceuticals only make up 36% of its revenue, this is too narrow a definition.
Therefore, while it is difficult to find competition which exactly matches Johnson & Johnson’s
unique make-up, when compared against other global diversified health care companies Johnson
& Johnson is appears attractive. As shown in Exhibit 8, Johnson & Johnson is well positioned
compared to its peers using financial and valuation ratios.
Exhibit 8xiv
Johnson & Johnson
Novartis AG
Merck & Co.
Roche Holdings
Pfizer, Inc.
Competitor Comparison
Current
Ratio
1.8
1.7
1.8
1.7
1.7
LongTerm Debt
to Assets
8.7
9.1
14.3
48.5
20.3
Price/
Return On Trailing Price/ Price/ PEG
Equity
Earnings Sales Book Ratio
26.4
12.8
2.8
8.9
2.1
15.6
12.6
2.8
3.3
2.7
33.0
13.4
3.9
17.7
2.3
30.0
14.3
2.5
8.1
1.6
11.7
21.7
2.6
1.5
6.7
Valuation Analysisxv
The target price of $82 per share, which provides 31.6% upside, was determined using both
valuation multiples and discounted cash flow analysis.
Exhibit 9
Relative to S&P 500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
Johnson & Johnson
Analyst: Brent W. Soller
Page 9
10-Year Johnson & Johnson Stock Valuations
High
Low
Median
Current
1.6
0.7
1.1
0.9
1.4
0.8
1.1
1.0
3.0
1.4
1.9
1.5
4.2
2.1
2.6
2.3
2.4
1.0
1.5
1.2
Johnson & Johnson shares are unambiguously undervalued relative to the broader market when
compared to the last 10 years. Exhibit 9, on the previous page, highlights that those ratios are
currently near or at their 10-year lows.
Exhibit 10
Absolute
Valuation
P/Forward E
P/S
P/B
P/EBITDA
P/CF
High
29.3
6.1
8.8
20.4
27.0
10-Year Johnson & Johnson Stock Valuations
Target
Target
Value Per
Low
Median Current Multiple
Share
11.1
17.1
13.3
16.0
4.7
2.2
3.8
2.8
3.5
22.9
3.0
5.7
3.3
5.2
19.3
6.9
12.4
8.8
12.2
6.0
9.0
16.2
11.0
15.0
5.2
Target
Price
$ 75.36
$ 80.14
$ 100.37
$ 73.37
$ 78.49
To further the analysis of valuation ratios, I compared Johnson & Johnson’s absolute valuations
to the previous 10 years. As shown in Exhibit 10 above, even conservatively assuming that the
multiples will not entirely revert to the median, the price target implied by this analysis is
between $75.36 and $100.37 per share.
A more in-depth analysis was then completed using the discounted cash flow model presented in
Appendix C. This model uses the estimates previously described in the financial analysis and
shown in Appendix B and then projects them until 2020. Two overarching assumptions went into
the model: a discount rate of 9.5% and a terminal growth rate of 4.0%. I am comfortable with
those assumptions for the following reasons. I believe the discount rate of 9.5% is conservative
(assuming an S&P 500 discount rate of 10%) given the stability of Johnson & Johnson’s
earnings in their recent history – especially given the economic turmoil which occurred. I also
believe the terminal growth rate of 4.0% is reasonable given the fact that Johnson & Johnson is a
mature company in a mature market, and has been able to grow sales at a 5.5% compounded rate
over the last five years. With these assumptions, the model estimates a value of $86.55 per share.
To further test the reasonableness of my assumptions, I then performed a sensitivity analysis
changing the discount and terminal growth rate assumptions. The results of this analysis, in terms
of target price and implied upside potential, are shown below in Exhibits 11 and 12, respectively.
Growth Rate
Exhibit 11
3.50%
3.75%
4.00%
4.25%
4.50%
Johnson & Johnson
Analyst: Brent W. Soller
Page 10
DCF Sensitivity Analysis - Target Price
Discount Rate
9.00%
9.25%
9.50%
9.75% 10.00%
$89.42
$85.55
$82.01
$78.75
$75.74
$92.07
$87.93
$84.14
$80.67
$77.48
$95.00
$90.53
$82.76
$79.36
$86.55
$98.23
$93.39
$89.02
$85.04
$81.41
$101.81
$96.56
$91.82
$87.54
$83.64
Growth Rate
Exhibit 12
3.50%
3.75%
4.00%
4.25%
4.50%
DCF Sensitivity Analysis - Upside Potential
Discount Rate
9.00%
9.25%
9.50%
9.75% 10.00%
44%
37%
32%
26%
22%
48%
41%
35%
29%
24%
52%
45%
33%
27%
39%
58%
50%
43%
37%
31%
63%
55%
47%
41%
34%
To determine a final target price, I first utilized the valuation multiples. Because the Price/Book
Ratio is an outlier, I dropped it from the calculation. The other multiples were weighted equally
which provides a simple average of $76.84. I then weighted each valuation technique equally,
resulting in what I feel is a reasonable and conservative target price:
$86.55
50%
$75.36
$80.14
$73.37
4
$78.49
50%
$81.70
$82 /
Current Valuations
Presently, Johnson & Johnson equity is trading at $62.30 per share. With the given underlying
fundamental data, this implies a far different set of assumptions than I have utilized. To gain a
better understanding about whether or not the current price is reasonable I further tested the
discounted cash flow model. While the permutations are infinite, I tested certain assumptions
while keeping the others constant.
•
•
•
Assuming the 9.5% discount rate is correct, Johnson & Johnson would have to
experience literally no sales growth through the year 2020, to justify today’s price.
Assuming sales do decline to a terminal rate of 4.0%, the discount rate would have to be
raised to nearly 12.0%, far above the market discount rate of approximately 10.0% to
justify today’s price.
Assuming the 9.5% discount and 4.0% terminal growth rates are correct, operating
margins would have to collapse to 18.2%, far below the 25.4% margins Johnson &
Johnson has averaged over the past 5 years, to justify today’s price.
While there are many combinations of assumptions which could force the discounted cash flow
model to justify today’s price, all of them seem to be unreasonable given the firm’s
fundamentals. It appears there is simply a market dislocation where the price has not yet caught
up with the firm’s intrinsic value.
Johnson & Johnson
Analyst: Brent W. Soller
Page 11
Risks
As with any investment thesis there are risks involved. Johnson & Johnson is reliant upon
approval from the U.S. Food and Drug Administration for approval of its pharmaceuticals
products. There is always risk that clinical trials will not lead to approval of drugs in the
pipeline. Also, as patent protections for some pharmaceuticals expire, there is a risk that
competition from generic alternatives will hurt the firm’s profits.
Johnson & Johnson is a global company, which creates the risk that currency movements will
erode profits. Additionally, with government deficits’ rising there have been increased pressures
to cut costs through austerity measures – especially in European markets. As government
expenditures provide the vast majority of health care spending in those markets, some of these
cuts have already resulted in decreased health care spending. Further austerity cuts would pose a
threat to future earnings.
Finally, while it is expected that the federal health care legislation will be, at worst, a neutral
impact on earnings, many of the law’s implications are not yet understood. There is a risk that
the law’s impacts will be worse than expected.
Johnson & Johnson
Analyst: Brent W. Soller
Page 12
Summary
Johnson & Johnson has a track record of competent management and steady growth in a health
care market with a positive outlook. This leads to a BUY recommendation with a target price of
$82, which implies an upside of 31.6% from the closing price of $62.30 on Friday, November
26, 2010. The investment thesis is driven by a number of catalysts:
•
•
•
•
•
•
•
•
Demographics – Health care spending will continue to increase as the American
population ages.
Obesity – Health care spending will continue to increase due to complications created
by an increasingly overweight American society.
Health Care Reform – Adding more Americans to the health insurance roles will
enlarge the customer base for Johnson & Johnson.
Pipeline – A strong pipeline of new pharmaceuticals should provide for future
growth.
R&D – Ongoing research and development, maintained even in the recently tough
economic environment, shows management’s dedication to planning for the future.
Acquisitions – Recent acquisitions have strengthened Johnson & Johnson’s position
in the fastest growing segments of the Health Care Sector.
Cash Position – A strong cash position, built up through the worst of the economy,
will provide the firm with the flexibility to continue acquisitions or increase product
development spending.
Undervalued – Based on both the discounted cash flow analysis and valuation
multiples, both the Health Care Sector and Johnson & Johnson are historically
undervalued, not reflecting the underlying fundamentals.
Johnson & Johnson
Analyst: Brent W. Soller
Page 13
Appendix A – Johnson & Johnson Pharmaceuticals Pipelinexvi
Approved in 2009
INVEGA® SUSTENNA™
(Neuroscience)
PRILIGY™ (E.U.)
(Sexual Health)
SIMPONI™
(Immunology)
STELARA™
(Immunology)
Johnson & Johnson
Analyst: Brent W. Soller
Page 14
In Registration
Rivaroxaban
(Cardiovascular &
Metabolism)
TMC 278
(Infectious Disease)
YONDELIS™
(Oncology)
Planned Filings for
2010
Abiraterone Acetate
(Oncology)
Planned Filings for
2011-2013
Fulranumab
(Neuroscience)
Telaprevir (E.U.)
(Infectious Disease)
Bapineuzumab IV
(Neuroscience)
Canagliflozin
(Cardiovascular &
Metabolism)
DACOGEN™ (E.U.)
(Oncology)
Siltuximab (CNTO 328)
(Oncology)
CNTO 136
(Immunology)
TMC 207
(Infectious Disease)
TMC 435
(Infectious Disease)
Appendix B – Selected Financial Data
Johnson & Johnson
Analyst: Brent W. Soller
Page 15
Appendix C – Discounted Cash Flow Model
Johnson & Johnson
Analyst: Brent W. Soller
Page 16
Appendix D – Sources
i
Unless otherwise noted, all Company Overview information was obtained from the Johnson & Johnson 2009 10-K.
Executive Compensation information retrieved from the Johnson & Johnson Notice of Annual Meeting and Proxy
Statement, March 17, 2010.
iii
Johnson & Johnson press releases (www.investor.jnj.com/press-release.cfm)
iv
Data obtained from Morningstar (www.morningstar.com).
v
Johnson & Johnson 2009 10-K.
vi
Department of Health and Human Services (www.hhs.gov).
vii
Centers for Disease Control and Prevention (www.cdc.gov).
viii
Kaiser Health News (http://www.kaiserhealthnews.org/Topics/Reform.aspx).
ix
Advocates Renew Push for Power to Negotiate, The Commonwealth Fund, March 15, 2010
(www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2010/Mar/March-152010/Advocates-Renew-Push-to-Give-Medicare-the-Power-to-Negotiate-Drug-Price.aspx).
x
Return data obtained from Standard and Poor’s (www.standardandpoors.com).
xi
Data obtained from Thompson Reuters Baseline.
xii
Data obtained from Thompson Reuters Baseline.
xiii
Unless otherwise noted, all Financial Analysis information was retrieved from the Johnson & Johnson 2009 10K, and the Johnson & Johnson 2010 10-Q reports.
xiv
Data obtained from Thompson Reuters Baseline.
xv
Unless otherwise noted, all Valuation Analysis information was obtained from Thompson Reuters Baseline.
xvi
Johnson & Johnson 2010 Pharmaceuticals Pipeline, October 19, 2010
(http://files.shareholder.com/downloads/JNJ/1030367410x0x406808/4029adba-51eb-428f-990a71503b753398/Q32010pipeline.pdf).
ii
Johnson & Johnson
Analyst: Brent W. Soller
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