00:00It was a beaten race quarter for J&J, and in particular, there's a lot of excitement around
00:04Icotide. That is your new psoriasis pill, just launched. I saw on the call that you said that
00:11already about 1,500 patients are on the pill. I'd like to talk about sort of the ambition here.
00:16From 1,500, where do you think we could reasonably get to in the next few quarters,
00:21and how big do you think this will be for J&J? Yeah, so Katie, Danny, it's great to be
00:26here with
00:27you, especially on a solid quarter for Johnson & Johnson to start the year. We think Icotide is
00:33one of those key brands that is newly launched, but supports our current portfolio, which delivered
00:38today's results, and will lead us to double-digit growth by the end of the decade. That's saying
00:42something on a $100 billion business. With Icotide specifically, Jennifer did share some of the results
00:48early on. And just to keep this in mind, this drug was approved only about 10 days ago. There's already
00:531,500 patients that are on the drug, about 1,000 unique prescribers, so the receptivity and the
01:00demand is already showing to be there. In terms of an overall number, I couldn't give you that today.
01:05We do think it'll be one of Johnson & Johnson's largest drugs ever. It provides a great opportunity,
01:10an option for prescribers and patients to have an oral option with biological efficacy, biological
01:17safety. Right now, if you have psoriasis or inflammatory bowel disease, you have to use an injectable,
01:23biologic for most effective relief. We know that about 60 to 70 percent of patients will avoid a
01:32biologic, whether it's the stigma of my disease isn't that serious and wanting to fess up to that,
01:36or just an aversion to needles. We think this really comes in the treatment paradigm almost first line
01:42right after some creams and solutions that are usually ineffective. So this is a real winner for
01:46you. When you look at the portfolio as a whole, you and the industry is dealing with this big patent
01:51cliff. And I wonder if there are any more holes that you want to fill as you get closer to
01:55those dates
01:56of expertise. You know, that's what I love about our portfolio. Our patent cliff is in the rearview
02:01mirror. So we encountered Stellara, a loss of exclusivity here in the U.S., first quarter of 2025. It was
02:08an
02:08$11 billion drug. We're one of the only companies to ever actually grow through a patent cliff of that size.
02:13We lost about 45 percent of that business last year. And the portfolio continues to grow. These products
02:19that we have in-house will have some patent cliffs, but they're not anywhere near the size. And that's
02:23what really, I think, gives me comfort in my role as CFO is we don't have to do deals out
02:28of
02:28desperation to make up for patent cliffs. We started thinking about the loss of Stellara the middle of
02:33last decade and made sure we had the pipeline and the product portfolio to compensate. Just to that point, you
02:37did
02:37last year's biggest biopharma deal. Does that mean deals of those size are also in the rearview window for you?
02:42No, I think we're going to be much more strategic. So people often ask, hey, what do you think about
02:47the M&A market? Is it hot? Is it cold? To Johnson & Johnson, it really doesn't matter. Is there
02:52a
02:52strategic fit? And by that, I mean, is there a scientific expertise or an insight that we have?
02:58Is there a commercial capability that we can maybe provide better access for patients? And that's 80 percent
03:03of the discussion with our board. The other 20 percent is making sure we compensate shareholders for the
03:07risk that we're bearing on their behalf. And we'll have different return quarters, if you will, based on where
03:13that asset is in its life cycle. If it's a marketed product, maybe in the med tech space, you can
03:18get closer to the cost of
03:19capital because it's really just commercial risk. If it's a phase one, phase two asset, you're going to look for
03:23a higher return.
03:24Just to put a bow tie on the discussion on deals, to Danny's point, I mean, you're known for being
03:28inquisitive over at Johnson & Johnson. And you think about the divesture you have coming up, orthopedics
03:34going to be spun off from devices over the next year. After that point, once we get through that
03:40transaction, I mean, should we be on the lookout for deals from J&J?
03:44Yeah, we're always inquisitive. I mean, as you said, I think over the last three and a half years, we've
03:51deployed
03:51about $60 billion in capital. About $45 billion went to three deals. We had another 25 deals that ate up
03:58the other
03:59$15 billion. So we like those smaller deals. That's really part of our integral part of our playbook. But when
04:05a strategic
04:06asset makes sense, and in last year's case, it was intercellular and the addition of cap light, which fits nicely
04:12into our
04:13historical legacy and success of neuroscience.
04:16So J&J, not afraid of deals, also not afraid of spinoffs. As I mentioned, you know, spinning off orthopedics
04:22from
04:22devices. Do you anticipate further spinoffs when it comes to the devices unit specifically?
04:29Part of our responsibility as an executive team and as a board is really to ensure that we're managing our
04:35portfolio with rigor. How we view that is if we don't have a right to be number one or number
04:40two in a
04:41marketplace with significant innovation on the horizon, then we probably could do better with
04:46our efforts, better with our resources, and we can create value elsewhere. I love the portfolio where
04:50it's at right now. If you think how clean it is with respect to on pharmaceuticals, oncology,
04:56immunology, neuroscience. In medtech, it's surgery, it's vision, and it's cardiovascular. We're now the
05:03leading growing company in terms of cardiovascular, where we weren't much of a player other than our
05:09electrophysiology space, which was clearly a winner three years ago.
05:12I do want to talk a little bit about expenses as well, especially when it comes to marketing,
05:17because you said that you're setting up a separate sales force for IcoTide, which again was only
05:23approved about 10 days ago. You think about some of your efforts when it comes to Trimfea's strength
05:28as well. A lot of that points back to marketing spend. I know you said in an interview with some
05:32of our colleagues over at Bloomberg News that you plan to front load a lot of these expenses.
05:37Just talk us through how you expect it to develop as the year progresses.
05:41Yeah, this is another part I like to our story. We came out, we actually set expectations a little
05:46bit higher than the street was expecting in January, and here we are today raising already. It's not
05:51common that this early in the year we tend to raise guidance. Maybe it's a 50-50 bet. We did
05:57raise
05:59guidance today because we feel really good about our business. The investment is front and loaded to go
06:03with the timing of the launches of these new products, with some of the R&D clinical trials
06:08that will develop over time. We expect improving margins as we go throughout the year, and we've
06:15reaffirmed our commitment to at least 50 basis points improvement throughout 2026. As sales
06:21trajectory goes higher, we think that margin profile improves in the outer years. We'll be having an
06:26investor day in December to take analysts through a bunch of these details, how we plan to get to
06:31double-digit growth, how the profit will come along for the ride, so to speak, in that case. And we
06:37think we're very,
06:38very well positioned. We also did have the opportunity to increase our dividend today for the 64th consecutive year.
06:43So one of the big stresses for this industry has been any additional tariffs. And I knew the team have
06:49been confident that
06:50given your deal that you have with the administration, that you won't be subject to the section 232 farm and
06:56tears. Has that been
06:57confirmed yet? Yeah, that's right, Danny. Based on all the discussions, which are very productive with the
07:01administration, it appears that our MFN deal structure in place would avoid those 232 tariffs. Right now, we've got about
07:10$500 million built into this year's projections. We'll see how it plays out in the courts with whether the authority
07:16was there.
07:17It has to be replaced with a 10 percent tariff. So there may be some upside in our P&L
07:21as we look forward throughout the balance of this year.
07:23Should some of those tariff decisions be reversed?
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