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Johnson & Johnson (NYSE:JNJ)

Annual Meeting of Shareholders

April 26, 2012 10:00 am ET

Executives

William C. Weldon - Chairman of the Board and Chairman of Finance Committee

Douglas K. Chia - Secretary and Assistant General Counsel

Alex Gorsky - Chief Executive Officer, Director, Worldwide Chairman of Medical Devices & Diagnostics Group and Chairman of Executive Committee

Unknown Executive -

William C. Weldon

Good morning, ladies and gentlemen. Good morning. I'm Bill Weldon, Chairman and Chief Executive Officer of Johnson & Johnson. And it's my pleasure to welcome you to our Annual Meeting of Shareholders. We're pleased that so many of you could join us this morning for what will be a very special meeting as we report to you on the status of our business and as we transition to an era of new leadership for Johnson & Johnson.

As is our tradition, we are happy to present each of you this morning with a gift package containing some of our recently introduced consumer products. We've also included gift certificates that will enable you to try some additional products from our family of companies. Again, once again, our bags are environmentally friendly, made entirely from recycled plastic bottles. In addition, we have provided a copy of the meeting agenda and rules of order on each of your seats.

We are pleased to be here in downtown New Brunswick, the home of Johnson & Johnson from the very beginning some 126 years ago. But we haven't been at the Hyatt quite that long. We thank the management and staff of the hotel for their hospitality and graciousness as our host again this year.

Given the size of the audience today, for safety purposes, I would ask each of you to take a moment to identify the exit nearest you.

I'd like to acknowledge a few special guests among the many shareholders here his morning. They are members of the Johnson family and the McNeil family. Their presence reminds us of the immense contributions their families have made to the history and heritage of Johnson & Johnson, and it's good to have you all with us today.

I would also like to take a moment to recognize 2 special groups. First, will all the retirees of Johnson & Johnson please stand for a moment here in the ballroom and in the overflow rooms? If you take a moment, just stand up please?

Your loyalty to Johnson & Johnson, your enthusiasm and engagement as retirees remind us of the roles so many generations of employees have played in building this great company. You have our appreciation and gratitude, and thank you for being here. And let's have a round of applause for the Johnsons and McNeils and retirees again.

Now turning to the future. I'd also like to introduce you to a group of employees, who are participants in our international and domestic development programs. These programs have been designed to prepare participants for future senior functional and general management roles. This year, there were over 300 participants worldwide originated from 35 countries. They include, for example, from North America, the United States and Canada; from Asia, Australia, China and Japan; from Europe, Italy, Germany and Belgium; from Africa, Nigeria and South Africa; and from Central and South America, Mexico, Colombia and Argentina. Following completion of their assignments, these talented people will assume new or enhanced roles within their Johnson & Johnson companies, both in the United States and other countries around the world. I'd like to ask our participating employees to stand, and please join me in wishing them well.

Because we have an overflow crowd today, many of our guests are viewing the meeting on video screens in other rooms. We welcome you, as well as the shareholders and others who are viewing the meeting through our Internet webcast. For those of you here in the main ballroom, if, for any reason, you have to leave during the course of the meeting, we ask that you do so through the attended doors at the rear of the room. Following the meeting, at the conclusion of the question-and-answer period, we invite everyone attending today to join us for light refreshments outside in the lobby area or downstairs in the Brunswick Ballroom.

Joining me today to help conduct the business portion of this meeting is Doug Chia, our Corporate Secretary. Now I'd like to call the meeting to order. And Doug, do we have a quorum?

Douglas K. Chia

Thank you, Mr. Chairman. I am pleased to announce that we do have a quorum of shareholders present at this meeting, in person or by proxy, representing more than 2,255,000,000 shares. That is in excess of 82% of the outstanding shares entitled to vote at this meeting. In accordance with the laws of the State of New Jersey, there is available here today, an electronic list of all shareholders of record entitled to vote at this meeting. This list, according -- along with copies of the proxy statement for this meeting, the latest annual report and the minutes of last year's Annual Meeting of Shareholders are located just outside of this room. These materials will remain available after the meeting for shareholders who wish to review them.

Please note that this morning's presentations may contain forward-looking statements as defined by the Federal Securities laws. Our Form 10-K for 2011, which is available outside this room and online, contains a list of factors that could cause the company's actual results to differ materially from the company's expectations. The company does not undertake to update any forward-looking statements as a result of new information or for future events or developments.

In addition, today's presentation may also refer to certain non-GAAP financial measures. Tables reconciling these non-GAAP financial measures to the most comparable GAAP financial measures can be found in our quarterly earnings releases or on the Investor Relations section of our website at jnj.com

Also, during the course of today's presentation, we will discuss a number of products and compounds developed in collaboration with partners, or licensed from other companies. This slide is an acknowledgment of those relationships.

William C. Weldon

Thanks, Doug. And now, will you please report on the items of business?

Douglas K. Chia

The first item of business is the election of directors to serve on the Board of Directors until the next annual meeting. There are 13 nominees for the Board of Directors named in the proxy statement for this meeting. Under our bylaws, the election of each director nominee of today's election requires the affirmative vote of a majority of the votes cast excluding extension -- abstentions. All voting reports are preliminary based on the latest available information at 9:30 this morning. The final results will be published in an upcoming current report on Form 8-K that will be filed with the Securities and Exchange Commission.

In accordance with the instructions of our shareholders, of the more than 2,255,000,000 shares voted for the directors by proxy, not less than 1,362,000,000 shares have been voted in favor of the election of each of the 13 nominees named in the proxy statement.

The inspectors of election have informed me that the number of shares voted by the proxies in favor of each of the nominees named in the proxy statement represents a clear majority of the votes cast. Based on this latest information, under the laws of the State of New Jersey and the company's bylaws, the 13 nominees named in the proxy statement have been elected to the Board of Directors of Johnson & Johnson

William C. Weldon

Thanks, Doug. At Johnson & Johnson, we remain committed to strong corporate governance and to ensuring that our independent directors are unrestricted in their ability to represent you, the shareholders. I want to thank the members of our board for their help and guidance throughout the year. And I would like to introduce the independent directors you have just elected for 2012. I'm going to ask each of them to stand and remain standing as I call their names, so please hold your applause until I have introduced them all.

From my left and your right, Dr. Mary Sue Coleman, President of the University of Michigan and a professor of biological chemistry in the university's medical school; Jim Cullen, retired President and Chief Operating Officer of Bell Atlantic and the independent presiding director of our board; Ian Davis, former Worldwide Managing Director of McKinsey & Company; Dr. Michael Johns, Chancellor of Emory University; Dr. Susan Lindquist, member and former Director of Whitehead Institute for Biomedical Research and a professor of biology at Massachusetts Institute of Technology; Anne Mulcahy, former Chairman and Chief Executive Officer of Xerox Corporation; Leo Mullin, retired Chairman and Chief Executive Officer of Delta Air Lines; Bill Perez, retired President and Chief Executive Officer of the Wm. Wrigley Jr. Company; Chuck Prince, retired Chairman and Chief Executive Officer of Citigroup; Dr. David Satcher, former Surgeon General of the United States and now, Director of Center of Excellence on Health Disparities and Director of the Satcher Health Leadership Institute, each at the Morehouse School of Medicine; and Ron Williams, former Chairman and Chief Executive Officer of Aetna. Please join me in a round of applause for our independent directors.

Personally, I'd like to take this opportunity to thank this extraordinary group of people that make up what I believe is the best board in the world, for their guidance, support and help over the past 10 years. So please thank them again.

We have 3 additional board proposals and 3 shareholder proposals to cover this morning, each of which is described in the proxy statement for this meeting. Doug, will you please continue?

Douglas K. Chia

The next board proposal asked the shareholders to vote in an advisory manner to approve the executive compensation philosophy, policies and procedures described in the Compensation Discussion and Analysis section of the 2012 proxy statement, and the compensation of the named executive officers as disclosed in the 2012 proxy statement.

William C. Weldon

Thanks, Doug. A description of the board's assessment of the performance and compensation of the named executive officers can be found in the proxy statement. As an advisory vote, the results of this vote will not be binding on the board of the company. However, the board understands the importance of receiving shareholder feedback on executive compensation as it did after last year's advisory vote. As noted in our proxy statement, based on key stakeholder feedback gathered over the last year, the company made the most significant executive compensation change design in the last 60 years to draw more visible link between pay and performance. We will report on the voting results from the advisory vote later in the meeting. Doug, please continue.

Douglas K. Chia

The next board proposal asked the shareholders to approve the company's 2012 long-term incentive plan and the material terms of the performance goals under the plan. A description of the plan and a copy of the full plan document appear in our 2012 proxy statement. The affirmative vote of a majority of the shares present and entitled to vote at this meeting is required for approval of this plan. The votes cast relating to this proposal are as follows: For approval, more than 1,373,000,000 shares; against approval, fewer than 413 million shares; or more than 76% of the votes cast in favor of the proposal. The inspectors of election have informed me that the favorable votes represent the majority of the votes cast. Based on the latest information, under the laws of the State of New Jersey and the rules of the New York Stock Exchange, this proposal has been adopted and the plan has been approved.

William C. Weldon

Our board believes that creating equity-based awards to our employees is crucial in promoting long-term financial growth and stability, thereby enhancing shareholder value. We annually grant long-term incentives to over 18,000 employees. By approving this plan today, you enable us to continue to attract, retain and motivate business leaders, and align their interests with the long-term interest of you, our shareholders. Doug, please proceed with the final board proposal.

Douglas K. Chia

The final board proposal asked the shareholders to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for Johnson & Johnson for fiscal 2012. The affirmative vote of a majority of the shares present and entitled to vote at this meeting is required to approve this proposal. The votes cast relating to this proposal are as follows: For the proposal, more than 2,161,000,000 shares; against the proposal, fewer than 85 million shares; or more than 96% in favor of the proposal. The inspectors of election have informed me that the favorable votes represent a majority of the votes cast. Based on the latest information under the laws of the State of New Jersey, this proposal has been adopted.

William C. Weldon

The next 3 items of the business will be the proposals submitted by 3 of the company's shareholders. Each proposal will be introduced by the shareholder proponent or a representative. Following the presentation of the shareholder proposals, the polls will remain open for 5 minutes if you wish to vote or to change your proxy vote. Doug, please proceed with the first shareholder proposal.

Douglas K. Chia

Thank you, Mr. Chairman. The first shareholder proposal requests that the Board of Directors adopt the policy that the board's Chairman be an independent director according to the definition set forth in the New York Stock Exchange listing standards. The proposal appears on Page 76 of the proxy statement and was submitted by the AFSCME Employees Pension Plan of Washington, D.C., a beneficial owner of 19,868 shares of Johnson & Johnson common stock. Ms. Cathy Rowan [ph] will introduce the proposal on behalf of AFSCME Employees Pension Plan.

William C. Weldon

Ms. Rowan, you may proceed.

Unknown Shareholder

Good morning, Mr. Weldon. As a courtesy to the AFSCME Employees Pension Plan, I move this shareholder proposal. Thank you.

William C. Weldon

Ms. Rowan, thank you for your comment or your proposal. The board believes that each of the possible leadership structures for our board has its particular pros and cons, which must be considered in the context of the specific circumstances, culture and challenges facing a company. And that such consideration falls squarely on the shoulder's of the company's board and necessitates a diversity of views and experiences. The combined Chairman CEO role is a leadership model that has served our shareholders well for many generations through numerous economic cycles and through a succession of effective leaders.

Now in the context of the transition to a new CEO, the independent directors believe it will be in the best interest of the company to have me remain as Chairman and work closely with our new CEO, Alex Gorsky, to ensure a seamless transition of leadership. Because I will not be an independent chairman, our board will continue to have an independent presiding director for effective board governance. For these reasons, the board believes this proposal is not in the best interest of the company or its shareholders. It is therefore recommended that shareholders vote against this proposal. Doug, would you do the second shareholder proposal please?

Douglas K. Chia

The second shareholder proposal resolves that the corporation shall make no political contributions without the approval of the holders of at least 75% of its outstanding shares. The proposal appears on Page 78 of the proxy statement and was submitted by Mr. James Mackie of Haverford, Pennsylvania, a beneficial owner of 3,950 shares of Johnson & Johnson common stock. Mr. Mackie will introduce his proposal.

William C. Weldon

We welcome Mr. Mackie to our shareholders meeting this morning. The floor is yours.

James Mackie

Thank you, Mr. Chairman, Mr. Chia, directors and officers. Thank you for the opportunity to present my proxy proposal to my fellow stockholders. While I recognize that others have similar concerns in presenting the proposal concerning political contributions, I'm representing myself, not anyone else, any organization or any group. I am an individual concerned about the potential abuse of power resulting from the recent Citizens United decision handed down by the United States Supreme Court. Corporations and unions seeking to influence legislation or regulatory matters by infusing large amounts of money to support particular candidates or positions can result in the buying of power that may be counter to the best interest of the public.

In the current political environment, we have seen candidates spend enormous sums of money to win primaries. Some candidates have received large contributions from individual and corporate sources, including the super PACs. Many times, a voter has no idea who is really paying the candidate's campaign expense until after the election.

I choose to present the proposal to J&J stockholders since over the years, I've held J&J management in high esteem and recognize their corporate responsibility to the public by the actions taken in regard to their products. J&J products are subject to approvals by governmental agencies, and the ability to direct large sums of money to support candidates who can legislate and support -- and appoint regulators could directly benefit or hurt J&J in the -- to the detriment of the public. If J&J could do this, so could others. The effect of this is that others could suppress the development and marketing of products by J&J. It is my opinion that stockholders of J&J have the opportunity to be a leader in corporate governance with the passage of a resolution. Other managements would be motivated to apply similar guidelines to their organizations, and the result would be to assure the public that candidates for office are not bought and sold by corporations and unions.

The use of corporate or union funds to promote certain candidates would be using stockholder or union members' funds in a manner that may be unacceptable to the stockholders or the union members. The unfettered ability of a corporation or union to contribute to political campaigns can only lead to a degradation of the quality of our elected officials. This would lower the quality of governance and regulation, that could hinder the development of products and restrict the opportunity of entrepreneurs and small businesses to enter the marketplace. We, the public, would be held hostage to the big-time contributors. I ask my fellow stockholders to consider the potential unintended consequences brought about by the ability of financially strong organizations to dominate our quality of life in the coming years. Thank you very much.

William C. Weldon

Thank you for your comments, Mr. Mackie. Johnson & Johnson was an early mover on the disclosure of corporate political contributions. This was the result of constructive engagement with a number of our investors. Johnson & Johnson's disclosures regarding political contributions can be found in the Corporate Governance section of our website at jnj.com.

The board believes that adopting this proposal could restrict the ability of the company to make political contributions in support of those whose policy positions reflect the legitimate business interest of the company and its shareholders. The legal and regulatory environment for health care companies, such as Johnson & Johnson, has undergone considerable changes in recent years. The board believes these changes could continue into the future with a potentially significant impact on the company's business results. Thus, the company has a business interest in expressing its voice through the political process. By requiring an affirmative vote of 75% of the outstanding shares of the company for any political spending, regardless of the amount or purpose, this proposal would effectively take away a potentially important tool for the company.

The policies and procedures that govern the company's political contributions, including the board's oversight role, are also described on our website. The board believes these policies and procedures appropriately balance the concerns raised by this proposal with the legitimate need for the company to protect its business interests. It is therefore recommended that shareholders vote against this proposal. Doug, will you please proceed with the final proposal?

Douglas K. Chia

The third shareholder proposal requests that to maintain and promote the highest ethical and evidence-based training standards, the board adopt available nonanimal methods whenever possible and incorporate them consistently throughout all the corporation's operations. The proposal appears on Page 80 of the proxy statement and was submitted by Ms. Jill Maynard of Peekskill, New York, a beneficial owner of 1,000 shares of Johnson & Johnson common stock. Dr. Alka Chandna of the People for the Ethical Treatment of Animals will introduce the proposal on behalf of Ms. Maynard.

William C. Weldon

We welcome Dr. Chandna back to our shareholders meeting this morning. Could you please proceed?

Alka Chandna

Certainly, thank you. Good morning, Mr. Chairman, Mr. Chia, members of the board, respected retirees and fellow shareholders. Thank you for this opportunity to speak before you. My name is Dr. Alka Chandna, and I'm here on behalf of People for the Ethical Treatment of Animals and our more than 3 million members and supporters. Let me say at the outset that our proposal is not about doing away with all animal testing, as much as we would love that. I am also not here to ask our company to do anything that would violate government regulations or endanger consumer safety. Rather, PETA's resolution is focused very narrowly on our company's use of animals to train personnel in the use of medical equipment. PETA has learned of at least 2 Johnson & Johnson companies, Ethicon Institute for Surgical Education in India and Ethicon Endo-Surgery in the U.S., that currently use animals in lethal demonstrations to train personnel in the use of laparoscopic surgical equipment even as the company uses nonanimal simulators for this very purpose at other facilities. According to the federal reports, last year, in the U.S. alone, J&J's Ethicon and Ethicon Endo-Surgery facilities experimented on 1,517 animals, including 16 dogs, 94 rabbits, 32 sheep and 1,375 pigs. All but 35 of these animals were used in painful experiments.

The use of animals in medical training -- sorry, the use of animals in medical device training goes against the prevailing medical scientific and corporate consensus, which holds that animal use should be eliminated in favor of nonanimal methods whenever and wherever possible, and against our company's principles as stated in its commitment to ethical animal care and use. It defies logic that our company would choose to use cruel, invasive and demonstrably inferior training methods in one J&J facility and use superior alternatives in another. I ask that you consider that the use of animals in laparoscopic training is illegal in Great Britain and the Netherlands. It's not endorsed by the American College of Surgeons and has been eliminated at all top American medical colleges. Modern medical training employs virtual-reality simulation, synthetic models and human cadavers. These training tools replicate human anatomy and allow trainees to repeat procedures until vital skills have been mastered. We submit to you that our company's commendable commitment to patient safety and well-being would be best served by using nonanimal training methods consistently throughout the corporation and its subsidiaries. I thank you very much for your time and attention.

William C. Weldon

Thank you for your comments, Dr. Chandna. The company and its businesses take seriously its responsibility for the humane treatment of the animals used in research, development and training. In doing so, the company has well-developed policies that guide the ethical practice of all of its businesses in the care and use of animals. Included in these policies is a principle that alternatives to animals should be used whenever possible. And while our businesses are to follow this principle, above all, they must adhere to the primary principle of Our Credo, that patient safety and well-being must be first and foremost in everything we do. Thus, at times it becomes necessary for our businesses to use animals for teaching or demonstration purposes. This is especially true for certain products sold by our Medical Devices businesses, for which proper training of the health professionals who use them is critical to the safety of patients. And the currently available nonanimal methods for training do not meet the necessarily high standards to ensure safe and proper use of these products.

The company's current policy on the ethical care and use of animals for teaching and demonstration purposes states that alternative methods shall be employed whenever possible. This policy applies to our businesses worldwide, including company-sponsored teaching and demonstration sessions held at non-Johnson & Johnson facilities. For these reasons, the board believes it is unnecessary and inappropriate to implement this proposal. It is therefore recommended that shareholders vote against this proposal. The polls will now remain open for 5 more minutes. There's no need for anyone who has already voted his or her proxy to do anything. However, if you wish to turn in your proxy now or change your proxy vote, please raise your hand and our representatives will escort you to the lobby where there are personnel to assist you. We will report on the final voting results later in the meeting.

Because we've devoted time here to the topics discussed in the advisory vote and shareholder proposals, we ask that you raise other topics during our Q&A session this morning.

We now have 2 shareholders, who each contacted us in advance of the meeting and requested time to make a statement here today. The first shareholder is Mr. John Fratti of Hummelstown, Pennsylvania. Mr. Fratti, welcome back to our meeting. Please proceed with your statement

John Fratti

Thank you for having me back here this year, dear Chairman Weldon, Mr. Doug Chia, board directors and shareholders. My name is John Fratti. I made a very difficult trip from Hummelstown, Pennsylvania yesterday to be here today. I was a clean-cut athletic person who worked in the pharmaceutical industry. I worked hard, earned my Masters degree. I lost my health and my job over 6 years ago from LEVAQUIN. I have documented nerve, tendon and central nervous system damage. I am simply here to raise awareness so that other people do not suffer my fate. LEVAQUIN is a drug that is not meant for simple infections. It's a drug of last resort. LEVAQUIN certainly has helped people with life-threatening infections. I didn't have a life-threatening infection. I have suffered in pain every single day for over 6 years, unnecessarily. While I have gained some mobility, I have to take several strong prescription pain medications every day to try and make my symptoms more tolerable. I have a bag of pain pills that I have to take with me wherever I go.

MRIs and a biopsy show multiple tears and other significant injuries. 5 separate physicians have written letters documenting that my injuries are the result of LEVAQUIN. My primary care physician also read a letter stating that I did not have my current symptoms prior to LEVAQUIN. Over 20,000 individual safety reports have been submitted to the FDA by both physicians and patients. Both of my senators, my congressmen and 6 of my state representatives wrote letters to the FDA concerning LEVAQUIN. Many of them urge significantly stronger safety warnings. Several of the LEVAQUIN clinical trials that were submitted to the FDA were considered significantly flawed in both protocol design and protocol implementation. This is listed on the FDA website.

I believe that most doctors are not fully informed of the frequency and severity of LEVAQUIN adverse events. I think it is very important that sales representatives do not downplay or omit important drug safety information. In 2009, I spoke here, and Mr. Weldon, you personally came down and sat with me, and I appreciate that gesture. We talked about my LEVAQUIN injuries, I gave you medical documentation on LEVAQUIN, and that was 3 years ago. My family doesn't understand the reason to come down here and talk with me in light of the Credo with the fact that nothing has changed. I hope it wasn't just a photo opportunity in front of the media and the investors. I know you do care. I know you worked your way very hard from the top -- or from the bottom of Johnson & Johnson to the top, and that's commendable. I do know that I have lost over $300,000 in lost wages, another $30,000 in out-of-pocket medical and insurance costs. And while that may not be a lot to some people here, it's certainly a lot to me and my family. And I know your company can do better than to submit clinical trials that do have flaws. If you care to come and sit down with me here again after this meeting, I can share this information.

Your company set the gold standard in the 1980s. It's a great company. And I believe that it's paramount that the Credo is adopted into the company's actions. And I hope for all the shareholders here in attendance that you would have the same level of courage to get up here and tell your story if this happened to you, your spouse or your son or daughter. These adverse reactions are not rare.

The Credo states that we believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality.

Finally, Johnson & Johnson states that we care for the world one patient at a time. And I think that's great that you have a culture of caring. Today, I'm back here, Mr. Weldon, and again, I appreciate the opportunity to invite me back. I am that one patient. I have suffered for over 6 years, physically, emotionally and financially with my parents. It's been a very long, hard road. I thank you, Mr. Weldon, for your time, your consideration and your leadership here today. Thank you very much.

William C. Weldon

Mr. Fratti, thank you for your comments. And I will come and sit with you and talk to you after, and hopefully, we'll be able to have a good conversation. LEVAQUIN is part of an important class of prescription medications that have been used for more than 20 years to treat infections, including those that may be serious or life-threatening. When used according to the product labeling, LEVAQUIN has been proven to be a safe, effective antibiotic medication, and therefore, we continue to make it available to patients who need it. We take reports about negative experiences related to our company's products very seriously. At Janssen Pharmaceuticals, the company that makes LEVAQUIN, a team of safety physicians and safety scientists gather information related to any adverse events reported to the Janssen medical information center. Elaborate processes are in place to review this information both on a periodic basis and in response to any specific requests by health authority. The data are regularly reviewed by physicians and multiple safety professionals, and any new safety issues are identified and added to product labeling.

Mr. Fratti, because your statement concerns matters that are currently the subject of civil litigation, including a suit you brought against the company, it would be inappropriate for me to comment any further or address your personal situation. I'm sure you appreciate that today. But I do very much appreciate your comments, and thank you for coming.

Our next shareholder to speak is Sister Barbara Aires from the Sisters of Charity of Saint Elizabeth of Convent Station, New Jersey. Welcome back to our meeting this morning, Sister Barbara. The floor is yours.

Barbara Aires

Good morning, Mr. Chair, board, retirees, shareholders. 10 years ago to the day, I believe, I rose to encourage you since it was your first meeting in which you were Chair and CEO. You had acknowledged that you were a bit anxious about the task. Now that it's 10 years and there is transition, the celebration in effect of an anniversary, albeit you might think of it somewhat sadly, is both a gift and a challenge. I have led a group of members of the Interfaith Center on Corporate Responsibility in dialogues with you for those 10 years on a variety of topics that are critical to everyone in this room, to people in our country and around the world. We have discussed with you, as gift to you and your company, concerns about access to medicines, the price of medicines and prescription drugs, access to the global community, particularly those suffering from HIV and other pandemics. We were thrilled at times that you sat at the table with us, very unusual for Chair and CEO to be there. You argued with us, defended your position. But at other times, you really were trying to hear, on behalf of your company, the concerns we were raising. We've raised questions about medical devices, quality, the efficacy of those devices. We've encouraged you to be part of the medicine patent pool on treatment of AIDS. We've argued with you that you need a very specific strategic plan to move your second and third tier medicines into that field so that more people get treated. I see all the signs around of the things you're doing. I've worked with many of your colleagues in the company as have my members. You have been a gift to your company, but the challenges are still there. There is much that needs to be done, particularly with some of the things that have not been met at the pace we need to. So your successor, Mr. Gorsky, will continue to see our challenge.

But in terms of the personal interaction you've had with us, we cannot be silent and say we did not admire it. We were proud that you were there. Disappointed in some of the things that have happened the last 2 or 3 years, but we did not fail to keep engaging you and to urge you to change, to move forward to do things. We're very concerned still about the participation in ALEC, another one of those research lobbying groups that has written such crazy legislation that leads our society to argue among themselves. You have -- tremendous possibility to influence good change. We urge you to do this, we thank you for your leadership and we will continue to challenge. You have been both a gift and challenge to us. Thank you.

William C. Weldon

Sister Barbara, thank you for those kind words. I've also enjoyed the discussions we've had on many important topics during my time as CEO, and I hope you will continue to visit with us. And I might add, we had discussions before I was CEO, so we've been -- we've known each other for an even longer time. And I will tell everybody, if you want to make crab cakes, you talk to Sister Barbara. She has the best recipe in the world. And I'm sure you're going to have many more opportunities to meet with Alex Gorsky, who I'm sure you will find also as receptive and also as challenging. And I think as I've always said, I wish we could do everything you want, but you know we can't. And -- but I continue to try and do the best we can to meet you in the ways that we can help people.

And that concludes the business portion of the meeting, which I hereby adjourn. Thanks very much, Doug.

Now let's continue with a review of the company's performance in the first quarter this year. Our first quarter financial results were announced last week. We're off to a good start in 2012, and we're encouraged by the early success of our recently launched pharmaceutical products and the recent stabilization in surgical procedures. We continue to see significant opportunities in health care, and we're well positioned for the future.

First quarter sales were $16.1 billion, and that was down 0.2% on a reported basis and up 1% on an operational basis. We anticipated weaker sales for the quarter due to generic competition for LEVAQUIN and CONCERTA, and our decision to exit the drug-eluting stent business. Our underlying operational growth was 4%. Excluding special items, net earnings on an adjusted basis were $3.8 billion and earnings per share were $1.37, both up 1.5% versus the first quarter of 2011.

We continue to bring meaningful innovations to our patients and customers through the strong performance of our recently launched products. The dedication of the people at Johnson & Johnson gives me great confidence in the prospects of our business to deliver sustainable growth well into the future. In recognition of the continued support that you, our shareholders, have given us, our strong financial position and our confidence in Johnson & Johnson's ability to deliver outstanding results now and in the future, the Board of Directors has voted to increase the quarterly dividend for the 50th consecutive year, payable on June 12 to shareholders of record May 29, by 7%, from $0.57 per share to $0.61 per share.

Now let's turn to the business performance for 2011, and some perspectives on where the business is today and how well we are positioned for the future. I'm pleased to report that Johnson & Johnson returned to delivering operational sales growth in 2011 and grew adjusted earnings for the 28th consecutive year. Worldwide sales of $65 billion were up 5.6%. Excluding the impact of currency, sales increased 2.8%, reflecting the strength of new product launches in our Pharmaceuticals business segment, steady performance across our MD&D franchise, science-based innovations in our Consumer business and strong double-digit operational sales growth in emerging markets. Approximately 70% of sales were from products with #1 or #2 global market share positions. And about 25% were from products introduced over the past 5 years, demonstrating the importance we place on innovation.

With our continued focus on financial discipline, our adjusted earnings were $13.9 billion and adjusted earnings per share were $5, representing increases of 4.4% and 5%, respectively. We maintained our strong commitment to research and development last year with an investment of $7.5 billion that helped advance robust pipelines across all 3 of our business segments. We generated significant free cash flow, approximately $11.4 billion, maintained our AAA credit rating and increased the dividend to our shareholders. Solid and consistent returns to shareholders have been a hallmark of Johnson & Johnson.

During 2011, we generated a one-year total return to shareholders of nearly 10%, exceeding the Standard & Poor's 500 and Dow Jones Industrial Average. Over longer timeframes, our company continues to compare favorably to most of the indices. Johnson & Johnson has remained a solid investment choice for decades.

Our performance in 2011 reflects the dedication and hard work of Johnson & Johnson employees around the world. And not just last year, but over the past few years as we faced a number of challenges. Externally, we faced an extended global economic decline and a tightening of consumer spending and health care budgets. Internally, we anticipated generic competition for 4 of our major drugs, RISPERDAL, TOPAMAX, CONCERTA and LEVAQUIN, which together totaled $9 billion in peak-year sales. We faced unanticipated issues too, including significant recalls of McNeil Consumer Healthcare and with the DePuy ASR Hip system.

In managing through this period, we relied heavily on the resolve of our people, as well as the principles embodied in Our Credo. We stayed the course with our time-tested business model, our broad base in health care, our commitment to managing business for the long-term, our decentralized management philosophy and focusing on people and values. Throughout all of this, we stayed true to Our Credo.

Collectively, we steered the ship with a steady hand, making tough, disciplined decisions to manage our cost structure, making both efficient and strategic use of our capital as we look to build a strong foundation and a bright future for Johnson & Johnson. We acted to preserve our core values, taking responsibility for our mistakes and instituting measures to ensure that our products live up to the high quality standards that our customers expect and deserve. We are working hard to strengthen and grow our reputation with all our key stakeholders. It is encouraging to see that through our actions, we are regaining our standing with both our employees and the public. We also kept investing in research and development, nearly $37 billion over the past 5 years. That commitment has resulted in approvals of major new pharmaceutical products globally, and exciting innovations in Medical Device and Consumer business platforms, such as contact lenses, Electrophysiology, advanced energy, biosurgicals, oral care and skin care. We replenished and advanced our pipelines, which today are among the best in the industry, with new technologies like the Fibrin Pad to control surgical bleeding and compounds like Canagliflozin for diabetes and Bapineuzumab for Alzheimer's Disease. With a focus on financial discipline, we have continued to use our capital for important long-term investments in strategic alliances and acquisitions, like the Pfizer Consumer Healthcare business; DOKTOR MOM and RINZA in Russia; and the Beijing Dabao Cosmetics Company in the Consumer business; Crucell and Elan Corporation in our Pharmaceuticals business; and the pending acquisition of Synthes in our MD&D business.

2011 was a positive turning point for us. Despite continuing headwinds for our industry, our disciplined approach to managing our investments for growth began to bear fruit. Today, Johnson & Johnson is delivering meaningful innovation to patients and customers, and making a difference in their lives in a very personal way. I can't say enough about the people of this company and how proud I am of the way they responded to this period of global and industry change and to our own challenges.

As a result, in 2011, we strengthened our platforms for leadership and profitable growth through new product launches, strong pipelines and investments in key growth areas.

With $24.4 billion in sales in 2011, our Pharmaceuticals business, the eighth largest in the world and also the sixth largest biotechnology business, built on the success of recently launched products to strengthen our leadership position in core therapeutic areas, including immunology, infectious disease, neuroscience and oncology. In fact, Johnson & Johnson last year was the U.S. leader in new molecular entity approvals with 3: ZYTIGA in oncology, XARELTO in cardiovascular disease and EDURANT in HIV. Strong operational growth of 6.2%, which excludes the impact of currency, was driven with -- by products like STELARA, a biologic for moderate to severe plaque arthritis -- psoriasis; SIMPONI, another biologic with the treatment of adults for moderate to severe rheumatoid arthritis, psoriatic arthritis and ankylosing spondylitis; ZYTIGA, an oral once-a-day medication for use in combination with prednisone in treating men with metastatic chemo refractory castration-resistant prostate cancer; INCIVO for hepatitis C, for which we received European approval in 2011; and INVEGA SUSTENNA, our once monthly long-acting injectable atypical antipsychotic for acute and maintenance treatment of schizophrenia in adults. We completed the acquisition of Crucell, building a key leadership position in vaccines. And we entered into new collaborations with companies like Pharmacyclics to jointly develop and market an anticancer compound building on our strength in oncology.

With $25.8 billion in sales in 2011, our Medical Devices & Diagnostics business unit is the largest in the world. Operational sales growth for this segment was just under 2% last year as European austerity measures, pricing pressures and a slowdown in elective surgeries all contributed to more tempered growth rates. Despite these challenges, the majority of our product categories maintained or grew market share even as overall market growth slowed. We showed strong double-digit growth in emerging markets and increased our investments there by opening innovation centers in India and China. We're also introducing innovative products in these markets, such as one-day ACUVUE MOIST for astigmatism to ONETOUCH SelectSimple blood glucose monitor, and the DePuy Knee III, all high-quality products at affordable prices for emerging markets.

We have sustained the #1 or #2 leadership positions in 80% of our key MD&D business platforms while growing or maintaining share in the majority of them. At the same time, breakthrough products like SEDASYS System, the first computer-assisted personalized sedation system, and the Fibrin Pad for surgical bleeding are progressing through reviews by the U.S. Food and Drug Administration. In fact, 75% of our development portfolio in Medical Devices & Diagnostics advanced to the next stage in 2011.

We also made important strategic portfolio decisions such as exiting the drug-eluting stent business and shifting investments to promising, higher-growth, higher-need areas like Electrophysiology. Our decision to acquire Synthes to strengthen our leadership position in orthopedics and our acquisition of SterilMed for its experience in reprocessing surgical instruments are examples of how we continuously look across our business for the best long-term growth opportunities. We continue to anticipate the Synthes acquisition will close this quarter.

With $14.9 billion in sales in 2011, our Consumer business segment is the sixth largest Consumer Health Care company in the world. The remediation and supply issues associated with our U.S. over-the-counter products business contributed to operational sales decline of just under 1%. That decline was partially offset by solid growth in our skincare and oral care franchises, with strong performances from Neutrogena and LISTERINE mouthwash brands, as well as strong growth in emerging markets. Our Consumer group also continued its expansion into emerging markets with the acquisition of the DOKTOR MOM and RINZA lines of over-the-counter cough and cold brands in Russia. And we saw a continuing innovation with the introduction of Neutrogena Naturals, JOHNSON'S baby naturals, NICORETTE Quick Mist and LISTERINE ZERO.

Meanwhile, McNeil Consumer Healthcare continues to make good progress against our commitments to return high-quality products to consumers. Shipments have resumed for a number of adult and children's TYLENOL products. We anticipate key selected products to continue to be reintroduced this year and next, thanks to the efforts of hundreds of our supply chain associates at a number of manufacturing facilities around the world. Construction of a world-class production facility for over-the-counter liquid medicines continues at our McNeil site in Fort Washington, Pennsylvania. We anticipate the new facility to be ready for certification review by the FDA late next year.

Our proven ability to build on a stable of iconic consumer brands and to deliver scienced-based innovations, together with the restoration of supply for some of our over-the-counter products, has us feeling very confident about the direction of our Consumer business.

Overall, our business model, our ongoing investments and the quality of our people have us well positioned to increase our market leadership in one of the most important and rewarding industries in the world. As I pass the baton as CEO for this great company, I am confident that Johnson & Johnson will continue shaping and leading the future of health care, and advancing the health and well-being of people around the world.

I would now like to report on the voting on the advisory vote and the 3 shareholder proposals that were presented at the beginning of the meeting. The preliminary voting results on the advisory vote on executive compensation, just under 57% of the votes were cast in favor and 43% were cast against. On the independent board chairman proposal, just about 43% of the votes were cast in favor of the proposal and 57% were cast against. On the political contributions proposal, 4.7% of the votes were cast in favor of the proposal and just over 95% were cast against. On the nonanimal methods of training proposal, just under 4.5% of the votes were cast for the proposal and just over 95% were cast against. And these preliminary votes will be posted on our corporate blog later today, and the final voting results will be disclosed in an upcoming SEC filing.

It has been a profound honor and privilege to have served as your CEO these past 10 years. And before passing the reins over to your new CEO, I'd like to thank 4 groups. First, I would like to thank you, the shareholders of this great company. I've appreciated your support and it has truly been an honor to represent you in addressing the needs of the people all over the world. Second, the board. Without your support, we couldn't have accomplished all the things that we've done together. Third, the people of Johnson & Johnson. They are the people that make up this great company. It is your hard work and dedication that brings everything to life for these -- for those with health care needs, and more broadly, for those less fortunate than we are. It has truly been an honor to work with you. And finally, my family, who, without their support, none of this could've been possible. So I'd like to thank you all very much.

Thank you. Now the time has come to pass the mantle to someone who I have known and worked closely with for over 20 years, a person who has the qualities and capabilities to protect and grow the legacy of this extraordinary company, Johnson & Johnson. In 1988, Alex Gorsky began his career with Johnson & Johnson as a sales representative for Janssen Pharmaceutica. 13 years later, he became President of Janssen U.S. From Janssen U.S., he went on to assume broader responsibilities for Johnson & Johnson's Pharmaceutical businesses in Europe, the Middle East and Africa. He left Johnson & Johnson in 2004 for 4 years, and since returning in 2008, Alex has spent his time leading the Medical Devices & Diagnostics segment of our business. In 2010, he became Vice Chairman of our Executive Committee, and today, he becomes the seventh CEO of our company. Ladies and gentlemen, it is my great pleasure to present your new Chief Executive Officer, Alex Gorsky.

Alex Gorsky

Thank you, thank you, thank you. Thank you very much, Bill, and thank you very much, everyone, and good morning. What an honor and a privilege, and indeed, a very humbling moment this is for me. Johnson & Johnson is an extraordinary company with a proud heritage of over 125 years and a future that promises more opportunities than ever before. Now I commit to bringing my heart and my soul to this role as CEO to keep us all proud of what Johnson & Johnson is and what we stand for on behalf of customers, patients, employees and communities and you, our shareholders.

Now for Bill, it was 10 years as Chairman and CEO. But what we're really talking about here is someone who has given his own heart and soul to Johnson & Johnson for more than 40 years, right out of college. Now Bill originally wanted to be a doctor, wanted to help people, wanted to help patients. Well, he chose not to go to medical school. But Bill, you sure found a way to help a lot of patients. As a pharmaceutical sales representative just starting his career, Bill sold HALDOL, our first-generation antipsychotic. And he saw firsthand what a difference he could make for patients and for families. And from that point forward, as Bill rose to positions of increasing responsibility, he always talked about patients being the first priority and ours too. Now Bill worked across several different companies and segments within J&J. If you know him, he is never shy about taking on a competitive challenge. And Bill, his wife, Barbara, and his whole family, they acquired global experience way before global is cool. They worked and they lived in Korea, the Philippines, the U.K. And under Bill's leadership as Chairman and CEO, Johnson & Johnson managed through some of the most turbulent times in the health care industry, and frankly, at the world at large. When Bill took over in 2002, J&J sales were less than half of its $65 billion they are today. Adjusted earnings have grown 2.5x what they were 10 years ago, from $5.7 billion a year to nearly $14 billion. And over the past decade, the company generated a total of roughly $100 billion in free cash flow. We've continued year after year to increase the dividend to shareholders. It's more than tripled during Bill's tenure as CEO. We maintained a AAA credit rating for the entire past decade and saw total shareholder return outperform virtually all the major stock indices. But Bill would say time and time again, during this period, it's what we do for patients that matters most. And while the financial results that I just mentioned are impressive, even more impressive are the strategic contributions that Bill has made to the portfolio of Johnson & Johnson companies. Incredible brands, platforms and businesses have thrived under Bill's leadership: Janssen, Ethicon Endo-Surgery, Centocor, our Pharmaceutical biologics business and the acquired Pfizer Consumer Health business, to name just a few. In fact, while under Bill's leadership, we acquired over 60 new companies. Many of these brands have had a significant impact on patient care over the years in areas like cardiovascular disease, hepatitis C and HIV-AIDS. And for every single year of Bill's tenure as CEO, Johnson & Johnson earned a place in Fortune's Top 20 Most Admired Companies list, a real honor. Now nowhere has Bill's personal commitment been clearer than in his leadership role with the CEO Roundtable on Cancer. When former President George H. W. Bush asked CEOs to do something quote, "bold and adventuresome" to address cancer, Bill heeded the call. For years, he led the CEO Roundtable, which drove best practices in preventing and treating cancer to millions of member company employees around the world. Bill, for more than 4 decades, you made a big difference in the lives of more people than you can ever imagine. We thank you. We salute you. And now, I'd like look to turn on a brief video for a few other people to say thank you as well.

[Presentation]

Thank you again, Bill, and well deserved. There haven't been very many CEOs for Johnson & Johnson over its 126-year history. All of them have been appointed from within the company, and by and large, have had long tenures. That's a real testament to our culture, our management philosophy, our long-term mindset and a leadership and development program, and succession planning process, which is taken very seriously at all levels of our organization. Now I've given a lot of thought to this select group of extraordinary leaders who have come before me. Their vision, integrity, their values have been built into the company and made us an enduring institution that we've become. Our Founder, Robert Wood Johnson; his brother, James Wood Johnson; and of course, his son, known as General Robert Wood Johnson, our first CEO and the author of Our Credo; former CEOs Phil Hoffman, Richard Sellars, Jim Burke, Ralph Larsen, and of course, Bill Weldon.

Now while each had their different management styles, there's no question about their heartfelt commitment to the principles of Our Credo.

[Presentation]

Now as we listen to these great leaders, you can truly sense the consistency, strength and power of Our Credo in the words of these leaders across so many decades. Now the Credo's also been the frame shaping my own thinking about my role as CEO for this great company. Now naturally, many people have been asking me about my priorities and my plans for Johnson & Johnson. And while it's still very early, I'd like to share at least some initial thoughts, observations and insights into how I'm thinking about our company and our future.

First and foremost, I am resolute in my determination to keep Our Credo as the foundation for Johnson & Johnson. It will remain at the core of what drives our actions. It reflects our values, our beliefs, our aspirations. It defines our core responsibilities to our stakeholders. It enables us to really make a lasting, a profound difference in this world. As science is going to evolve, world economies and marketplaces are going to continually change, but I believe that by following our moral compass, it's going to help us navigate successfully whatever the future has to offer.

Now one thing does seem quite clear about our future, though there's a lot of uncertainty everywhere, and that's that how people around the world achieve good health in a sustainable manner is likely to be the most significant challenge facing our generation.

Now for many people, Johnson & Johnson evokes memories of the scent of embracing your baby. And in this dynamic environment, we want to continue to be the healthcare partner supporting people at every stage in their lives. We've got a strong foundation, built on a clear enterprise strategy, and it's kept us focused on promising therapeutic and consumer categories, spaces where patient needs and customer demand are the highest. And we've navigated our way effectively through a series of challenges to position ourselves well for the future and for continuing change that we should expect. But today, to meet the new challenges, to stay ahead of the transformations taking place in health care, we've got to adapt faster than ever before, be more agile than ever before. It's going to take new ways of thinking, more cost-efficient ways of delivering healthcare and an expanded global presence and mindset. We've got to work smarter and harder, wherever we are delivering new therapies. It's going to take meaningful innovations for patients and customers, from drugs to treat HIV and TB to mobile health programs for new mothers and products and services of consistently high quality, and it will take staying true to our core values.

All of our stakeholders are counting on us. Those who use our products, health care providers, our own employees and their families, you, our stockholders and society in general. And this is where Johnson & Johnson is truly unique. And it's not only because of our innovations, but because of a deep commitment to the core management principles and values that we've had in place for so many years. They remain vital and relevant and continue to serve us well. We will remain dedicated to being broadly based in human health care. This principle gives us access to a wide breadth of markets and makes us more agile in adapting to change and investing our capital, our talent and technology to grasp new opportunities.

Now some business models today extol a command-and-control approach in a diverse, fast-changing global economy, but we're committed to being decentralized in those areas that are closest to serving our patients and our customers. Now not everything about Johnson & Johnson is decentralized and nor should it be, but like our broad base of products, decentralization increases our agility by offering local windows into so many diverse markets around the world. Our decentralized philosophy also supports our commitment to developing strong leaders at every level of the company.

Now we will also remain true to our philosophy of managing for the long term. And this doesn't mean that we're not going to have short-term pressures and obligations, but we want to manage with a long-term perspective for long-term sustainable gains. And this is, in our view, best for the interests of patients, customers, employees and our shareholders.

So going forward, we intend to build on the strongest elements of Johnson & Johnson's legacy, but we also intend to be bold in our thinking and our actions as we move this great company forward. Bold, but thoughtful and disciplined.

We must think about everything we do in global terms if we expect to touch more patients, expand access to health care and grow our business. While we're a U.S.-based company, our mindset must always remain global. Global opportunities can lead us to new products, new markets, new technologies and new business models. While many businesses rush to enter markets like Asia, it's important to remember that we've been operating in China for 1/4 of a century. Our fastest-growing markets are the emerging markets, markets where incomes, while lower, are growing rapidly. Markets where unmet health care needs abound. Now we're doing well in many emerging markets today, while in others we still have much, much more work to do. And in this regard, our ability to deliver meaningful innovations for patients, customers, health care systems and other caregivers will be critical to how we fare around the world. We must be able to identify, generate and acquire new treatment and prevention approaches that extend access to health care in an economical and a sustainable manner. Now we're already doing this in some markets, such as India and China, with the introduction of lower-cost versions of products like our blood glucose monitors. Equally accurate and effective, but with fewer features than you might find in more developed markets. But we've got to do much more of this and in developed, as well as emerging markets.

We also need to foster even more innovation. Now whether this comes from our own research facilities or from strategic alliances and partnerships with others. Now Bill referenced earlier our great track record of turning these relationships into products that are addressing serious, unmet medical needs. Going forward, it will be as important for us to be innovative in how we do things as it is in what we do. In today's environment, we need to ensure that we stay agile, maintain a high sense of urgency and move quickly to grasp opportunity and to address challenges.

Now for me personally, a key area of innovation must be focused on how we connect with our customers and with each other. By driving connectivity, we can have a transformational impact on the way our businesses compete and the way we function.

Now let me give you just one example of something we launched just this week, in fact, that demonstrates how we can be innovative in connecting with patients. For PREZISTA, our treatment for HIV/AIDS, we transform the experience of reviewing patient information through the use of digital storytelling and animation. Let's take a quick look.

[Presentation]

Package inserts didn't exist like that when I was a representative. Hand in hand with creating innovative products and services is the expectation that everything we do must be of high quality. Our supply chains and systems have been strengthened, and our leaders across the enterprise have a high sense of urgency, in fact, a personal responsibility and accountability for the quality of our products. Of course, there's much more that we need to accomplish, but there is no question, the high quality and high standards are paramount in everything we do. And I believe that all of our associates, every single person who works for Johnson & Johnson, plays a role in ensuring and delivering on our commitment to quality. That's as clear in our leadership priorities, as it is in Our Credo.

Now also this morning, because a lot of people have been asking me about this, I thought I'd share just a few personal thoughts about my leadership and management. Now by nature, I refer to myself as a realistic optimist. I don't believe you can exercise sound judgment and make consistently good decisions if you don't face into [ph] reality. Now case in point was our decision to exit the drug-eluting stent business last year. Clearly, this was a difficult choice, but it was one that had to be made as we assess the market and our future prospects for that business.

Now far from abandoning treatments for cardiovascular disease, we are redirecting our energy and investment in another more promising part of that business, for instance, Electrophysiology, where progress is more dramatic, where our ability to serve patients is more clear and where our financial investments are more promising. Now that's the realist in me. The optimist in me reminds me that what we're doing to advance human health care and well-being is so important that we must persevere, even when obstacles and challenges appear to be insurmountable. Now in the business world, success can sometimes seem a long way away.

Consider SEDASYS, our novel computer-assisted personalized sedation system. Now at first, U.S. regulators denied our application for approval. Our teams persevered, working with regulatory authorities to address their concerns. Ultimately, this collaboration and following several rounds of discussion, our application is now back on the review track. Our bold action was appropriate because we consider SEDASYS an important breakthrough for certain gastrointestinal endoscopy procedures, like colonoscopies. So it's always important to stay focused on that ultimate goal.

Realists and optimists, it's a careful balance, but it's what I expect from myself and from our leaders. So stay tuned. I don't have all the answers. I've only been on the job now officially for about 20 minutes, but I plan on doing a lot of listening and learning over the next several months. But please know, you've got my absolute commitment to do everything I can to inspire all of us at Johnson & Johnson to be the very best we can be, to truly make a difference in the lives of people around the world and to deliver sustainable growth for you, our shareholders.

Thank you. So as I was preparing for this meeting and my new role, I was thinking about General Robert Wood Johnson, the author of Our Credo. Now can you imagine, if you just think about it for a moment, how fascinating it would be to have a chance to sit down and talk with him today? Ask him about his thinking, his views on business, his foresight and thank him for leaving us such a profound, yet very simple document that decades later remain so relevant, so intrinsic to who we are and why Johnson & Johnson has such a long track record of success. Think about it. How can you succeed in business over the long term unless your very first responsibility is to the people who use your products? How can you succeed in business, unless you can attract, retain, talented and deeply committed employees, employees who see their role in the workplace in the world is impacting health and well-being for so many people around the world? How can you succeed in business, unless you're a good corporate citizen, you're giving back to the community, you're doing right by society? And finally, how can shareholders make a fair return or, for that matter, any return on their investment, unless a company is doing all of these things very well?

So now I'd like to tell you a few stories, all set in the context of Our Credo. To share with you how we see it, how we feel it in action everyday within Johnson & Johnson. So let's start first with patients and customers. Our first responsibility, and the one that we can never, ever, ever lose sight of, is to doctors, nurses and patients, for mothers and fathers and all others who use our products and services. As you heard earlier, we have a thriving Pharmaceuticals business, with several recently launched products and these are really meaningful innovations that are making a big difference for patients, along with a pipeline of very promising compounds. We are addressing important unmet medical needs with new or improved medicines that save or extend lives.

Let's take prostate cancer. Now globally, prostate cancer is the second most frequently diagnosed cancer in men and the fifth most common cancer overall. More than 28,000 men in the United States die annually from prostate cancer. Early last year, ZYTIGA was approved in the U.S. for men who failed chemotherapy. Well, it's now approved in 43 countries. The U.S. approval was based, in part, on a clinical study that showed that men with chemotherapy refractory prostate cancer lived, on average, 4.6 months longer. More than 20,000 men worldwide have used it to help treat their cancer. One of them is John Palmer.

[Presentation]

Isn't that wonderful? Now we recently received more good news about ZYTIGA. We were able to unblind the clinical trial testing ZYTIGA because the study's independent monitoring board saw clear benefits of ZYTIGA for use by prostate cancer patients who had not yet been treated with chemotherapy. Now this is very exciting, and we plan on filing an application this year in the U.S. and Europe for the use of ZYTIGA in that patient population.

Now there's another group of customers who have a very special meaning for all of us at Johnson & Johnson: moms. No company quite cares for moms the way that we do. And we care through a wide range of our products for baby and we care through BabyCenter, the #1 pregnancy and parenting web and mobile destination worldwide, providing support for mom at every stage of her child's development.

Now in the United States, 7 out of 10 babies born -- just last year, were BabyCenter babies. And worldwide, 26 million moms in 22 markets rely on BabyCenter to provide trusted advice and support from experts around the world. Inspired by Our Credo, we want to be there for all moms, not just those with Internet access. And while 1 in 5 moms worldwide are online, well over 50%, even in emerging markets like India and China, have access to a mobile phone. So whether on the web or by phone, we provide culturally relevant messages by empowering our BabyCenter content experts around the world to think local.

[Presentation]

A lot of things may change, but moms are moms for the rest of their lives. And you can only imagine the terror that a mom might feel when she hears that her child, now not a baby but a 20-year-old young woman, has had a terrible accident and is waiting for an ambulance to arrive. Late last year, Sarah Oliver was climbing a tree in her neighborhood, something she had done countless times before. But this time, something went terribly wrong.

[Presentation]

You know what, a great story. Imagine after an injury like that to be up and walking just one day after surgery. As you can imagine, our employees at DePuy Spine are very proud. Outcomes like that are what they live for. And going forward, the acquisition of Synthes will make us an even stronger player in the spine market.

Now let me offer another story that demonstrates our commitment to patients. Recently, surgeons at the University of California San Diego Medical Center successfully performed a life-saving kidney transplant, transferring a kidney from a husband to his wife. Now by its nature, this surgery was very risky for both the donor and the recipient. And for this operation, surgeons used the new Powered ECHELON FLEX Endopath Endocutters from Ethicon Endo-Surgery, and they're designed to ensure safety and reliability in critical moments of surgery. Now in this setting, the right surgical device can make all the difference in the world. Timing is absolutely critical in transplants because the kidney must be out of the body and on ice within just 2 minutes. And in this particular procedure, 2 Endocutters need to be fired almost simultaneously and with total stability, or else things could go very wrong for one or both of the patients in a hurry. Now with the entire team of 6 surgeons in the room, it was a very tense moment. Let's hear from a few of the people involved.

[Presentation]

What a heartwarming story. As you probably know, right after our responsibility to patients and our customers, Our Credo points us to a responsibility to our own employees. At Johnson & Johnson, we've long recognized that employees are clearly our greatest asset, and that by investing in them, we invest in the success of our business. Now we invest in a lot of ways, education, training, development programs and we invest in their health through one of the most comprehensive company wellness programs in the industry. In fact, this commitment dates back some 30 years with a multidimensional program. And as a result, in the United States, Johnson & Johnson employees today are healthier than the overall population. Our rate of heart disease is 41% below national standards. In high blood pressure, it's 75% below. As a group, our employees are more active and smoke less. Statistically, we've seen steady improvement across other high risk factors, such as cholesterol and obesity. And for every $1 we invest in the health of our employees, we see a return of close to $4 in reduced health care costs, lower absenteeism and improved productivity. Our health care spending average is below industry benchmarks. So with this as a backdrop, Johnson & Johnson founded its own Wellness & Prevention business within our consumer segment. Along with our customers, our employees are some of the prime beneficiaries of these programs.

[Presentation]

Thank you. Now Mr. Delucia really personifies the value of investing in our employees, and he's with us here today. You want to stand up? Let's give him a big round of applause.

Now the extent to which Johnson & Johnson employees give of themselves to support patients and communities also never ceases to amaze me. Operation Smile is a children's charity that uses medical volunteers to help provide free surgeries to children around the world born with severe cleft palate conditions. Now unfortunately and all too often, parents of these children cannot afford to pay for the much-needed repair surgeries. For more than 2 decades, Ethicon, Inc. in the United States and in Europe has supported Operation Smile through donations of sutures and other products in support of surgical missions in Africa, Central and South America and Asia. Last year, Ethicon sutures were used exclusively in Operation Smile's 65 international surgical missions. Now Ethicon also sends ambassadors from the company to developing countries to volunteer and experience this great program firsthand. Let's hear from a few.

[Presentation]

I just love that story. That's why we do what we do. Let's turn to another example. The mission of Crucell, our vaccines company, is to bring meaningful innovation to health in all parts of our world. And since 2009, Crucell's been offering employees an opportunity to visit under-resourced communities where Crucell supports critical development projects. Under this unique program, teams of Crucell employees have traveled to South Africa and Bangladesh to see for themselves firsthand what health care and vaccination really mean to communities battling with poverty and infectious diseases. Employees tell us this is a life-changing experience. They each do their bit to help in direct and practical ways.

[Presentation]

By now I hope you get a sense that the world of health care can be emotionally draining, but it can also be very emotionally rewarding. And when it's the latter, there's really nothing quite like it. Some things just really tug at your heart. Now in a program pioneered by our consumer group, we help teach newborn resuscitation to health care workers in China, India, Vietnam, Uganda, Malawi and South Africa. In these parts of the world, the neonatal mortality rate due to birth asphyxia is staggering and heartbreaking. But I'd like to share with you a letter from a physician in India, Dr. Sankara Rao. After providing the details of a difficult delivery, Dr. Rao writes:

"The baby has no cry, no breathing or movements. Is the baby alive or not? Tense faces all around. Patient attendants and mother thought that baby has gone. Pin drop silence. Staff nurse, Mrs. Suah [ph], that recently trained in neonatal resuscitation, started resuscitation. Spontaneous breathing started after 30 seconds. Resuscitation continued another 3 minutes. Baby turned pink, cry started normally with active body movements. My happiest moment in government service when we were able to prevent one infant death."

Dr. Sankara Rao.

Now I'm happy to tell you that in China alone, the neonatal resuscitation program has saved more than 90,000 newborn lives due to training of more than 120,000 health care workers. Now think about that. 90,000 lives, that's almost 100x the number of people in this room and the main ballroom with us today. And projections show that over 175,000 more babies will be spared from premature and preventable deaths over the next 5 years. Johnson & Johnson has a long history of focusing on and saving and improving the lives of women and children, building the skills of people who serve community health needs and preventing disease. The neonatal resuscitation program is just one part of a comprehensive 5-year effort to improve the health and lives of up to 120 million women and children each year in developing countries. Since announcing our commitment, we have expanded health information for new and expectant mothers over mobile phones. We've helped train birth attendants to make pregnancy and childbirth safer, quadrupled donations of treatments for intestinal worms in children. We've taken further steps to eliminate pediatric AIDS and further research and development of new medicines for HIV and tuberculosis. Our leadership in this area is recognized recently by the UN Secretary General, who awarded Johnson & Johnson the United Nations Humanitarian of the Year Award for 2011.

And finally, Our Credo describes our responsibility to you, our shareholders. Making sound profits, experimenting with new ideas, pursuing innovative research, launching new products, these are specific responsibilities, and we discussed a number of these areas with you today. I encourage you to take a closer look at our annual report to learn even more.

You'll read about encouraging progress in cancer research, our breakthrough treatments in hepatitis C and immunology and our innovative treatment for stroke. You'll read about our significantly increased R&D commitment in 2011, up over 10% from 2010. You'll hear about our approaches to innovating with some of the most iconic consumer brands.

Unknown Attendee

[indiscernible]

Alex Gorsky

Excuse me -- we're going to continue just another minute and then we're going to take questions, please? If I could ask you to wait just a couple of more minutes, we'll go ahead and -- we'll do questions within just a couple of minutes, please. Okay? I'll make sure you get a chance.

Now you're going to hear about our approaches to innovating with some of the most iconic consumer brands, to entering emerging markets, to how we're assuring world-class, high-quality manufacturing across our companies. Our Credo also says that by operating according to its principles, our shareholders should realize a fair return. And in fact, over the past 10 years, we returned 3/4 of our total $100 billion in free cash flow to shareholders through dividends and share repurchases. And you know our track record over the long term. If you'd invested $1000 in J&J stock when we went public in 1944, with the dividends reinvested, you'd have over $25 million today.

Now from my perspective, there's no bigger challenge for society today than addressing the health care needs of citizens. And there's no better company anywhere to address these needs at every level than Johnson & Johnson. When our talented employees apply their knowledge of health and new technology to solving medical problems, the results can be truly life-changing. In fact, the way we bring longer, healthier, happier lives to people and live up to Our Credo responsibilities is a function of the dedication and skills of all 117,000 of our employees around the world. Please join me in extending our thanks for the important work they do each and every day.

Now I've taken you through a wide-ranging tour of just some of the areas where Johnson & Johnson makes a big difference in the world, from prostate cancer to spinal surgery. Let's wrap up now by going back to what, I believe, is the heart and soul of this great company. We're a company that takes seriously the idea of caring for one another, in the unbreakable human bond that holds us all together and makes the work we do everyday so worthwhile. There's no bond of caring and responsibility quite so powerful as the bond between a mother and a baby. And over the years, that bond has come to symbolize the highest hopes and aspirations of all of us here at Johnson & Johnson. Johnson's Baby is an integral part of our enterprise, and for so many people around the world, it embodies the very best of who we are. Now let's take a look at one of Johnson's Baby's latest ads for the busy, and sometimes, underappreciated 21st century mom.

[Presentation]

So let's give all of our moms in the audience a big round of applause. So with Our Credo directing us and our employees providing the skill, the knowledge, the passion, the challenges of global health and well-being become opportunities for Johnson & Johnson. We aspire to bring longer, healthier, happier lives to billions of people around the world, caring one person at a time. I'm proud, humbled and extremely energized to have your confidence, your trust and your support in leading this great organization into the future. You have committed your valued investments to our company. We very much appreciate your continued support for Johnson & Johnson, as well as our customers, products, communities and people. Your continued commitment means so much to us. Thank you very much.

Now, ladies and gentlemen, I do realize that we're running a little bit late, but I want to make sure we give an opportunity to ask questions on the presentations that you just heard or any other aspects of our business. Now to consideration for other shareholders who may wish to be heard, it's going to be necessary for me to reserve the right to limit each shareholder to one question. Each shareholder will be limited to 2 minutes when asking his or her questions. Also, because we wish to cover a range of topics, please refrain from asking questions about topics that have already been addressed. Light refreshments are going to be available at the conclusion of the question-and-answer session outside in the lobby area and downstairs in the Brunswick Ballroom. And would anyone having a question, please go to the nearest microphone, identify yourself to the representative and then we will call on you for your question in rotation.

Question-and-Answer Session

Alex Gorsky

So the first question is from Mr. Charles Weiner [ph] in Overflow Room #1. Mr. Weiner?

Unknown Shareholder

Mr. Weldon, Board of Directors of J&J, corporate officers, managers, stockholders, investors and guests, this very brief presentation, due to the lack of time, each of the items presented for your perusal are vital due to the extremely important federal election to take place this November 2012. We urge you to consider them. Your financial future could be at stake, $2 trillion to $3 trillion are ready to be invested with millions of jobs to be created depending upon the political outcome. In my opinion, one, we need a change in our tax system. There are about 70,000 pages in documents in our tax code. We need to change to a flat tax, which would take about 5 minutes to file. Still better would be a fair tax.

Alex Gorsky

Excuse me, Mr. Weiner, do you have a question, please?

Unknown Shareholder

Two, a change in our health care system is needed. Three, the alternative minimum tax must be abolished, for taxpayers who are receiving social security and are taxed up to 85% of their social security should not have to pay anything for their social security. The original bill was passed by the Democrats and signed by former President Clinton.

Alex Gorsky

Mr. Weiner, may I please ask you for your question? We're going to be running out of time here shortly. I want to make sure that your question gets addressed.

Unknown Shareholder

[indiscernible] excellent work of our distinguished CEO, Mr. William Weldon, who devoted the best years of his life in directing our great company, J&J, and wish him the best. We also wish...

Alex Gorsky

Okay. Thank you, Mr. Weiner. We're going to have to move on to the next question because we don't have the full question. I'd now like to go to question from Overflow Room #1, Mr. Tom Williamson?

Tom Williamson

We're coming up on the 30th anniversary of the TYLENOL poisoning. Under the Credo, Mr. Burke knew immediately how to react. Back -- going back to 2007, the office of corporate compliance appeared to have been gutted by Mr. Weldon. That was the people that watchdogged the Credo. You were -- operating Janssen. We've got Respiral that's blowing up. We've -- federal subpoena is coming out. You switched over to medical devices. We've got the Dupré Osteo (sic) [DePuy Orthopaedics] thing, where they're being advertised for groups. Mr. Charlie Prince is my personal bugaboo, he continues on the Board of Directors. This is a man that is the exact antithesis of...

Alex Gorsky

Excuse me, Mr. Williams, do you have a question, please?

Tom Williamson

Yes, my question is will this Board of Directors, at the point that the losses from Dupré (sic) [DePuy] and Resprin [ph] reach $5 billion, will the Board of Directors fire the management -- or for the people that were responsible for that? And secondly, would the Board of Directors commission a study to see if the employees of the J&J view of -- company's view that the Credo has been completely trashed and if it has come up with a plan to restore the Credo?

Alex Gorsky

Okay, thank you, Mr. Williams. In responding to your question, what I would say is, number one, I hope you got a very clear indication today through the review that we went through of Our Credo that we are absolutely committed to Our Credo principles and it guides the conduct of everything that we do. Regarding some of the other issues you've raised, I can't get into some of the specific details because they're under active litigation, but we remain committed to patient safety and helping them around the world. So thank you very much. Next question? We've got number 3 right here, the panel?

Unknown Executive

Mr. Gorsky, Philip Berman [ph] has a couple of questions and comments about our business.

Unknown Shareholder

Philip Berman, portfolio manager and shareholder. Some brief comments and questions. The last year went down as a transitional transforming period in the formidable Johnson & Johnson history as the premier growth company in the world. Now we seem to be at an important inflection point, whereby the stock will hopefully no longer be considered just a safe dividend-producing bond substitute. We look forward to management's follow-through in reorganizing and reenergizing the company, which will lead to the stock following suit dramatically upward. I would also like to praise our long-standing legendary supercharged top legal officer namely Russ Dale [ph] for his loyalty -- 27 loyal years as Johnson & Johnson Chief Legal Officer, and I wish him a very happy retirement. Now some brief questions. In view of your reducing role at the company, Mr. Weldon, to just Chairman of the Board, will you be going on a lot of other boards since you have a lot of time on your hands?

Alex Gorsky

I'll let you address that question to Mr. Weldon later on.

Unknown Shareholder

Okay. As we now have you as our CEO and your medical background is concentrated in the device area and with Janssen pharmaceuticals, should we interpret that to mean that the majority of the future acquisitions will be concentrated in those areas? And if they are, we would hope that they would be fully accretive right away and provide us with high margins.

Alex Gorsky

Thank you for your question, Mr. Berman [ph], and what I would say is we are very committed to maintaining our broad-based portfolio throughout health care. We think that it, number one, provides us a strong business strategy to manage the turbulent times as change is taking place in the industry. And number two, it gives us a unique set of skills and capabilities across our different businesses. So I would see us continuing in consumer as well as devices in our pharmaceutical area.

Unknown Shareholder

And how accretive will the earnings be for the new Synthes merger and any write-off for that for goodwill?

Alex Gorsky

I believe in our last quarterly statement or certainly following the close of the deal, we'll be getting -- giving you more details on that information. Thank you. Two minutes is up. Sorry, Mr. Berman [ph]. Okay, next question. Panel #1?

Unknown Executive

Mr. Gorsky, Mr. Robert Coin [ph], a shareowner, has a question regarding the regulatory and compliance committee.

Unknown Shareholder

Hello, Mr. Chairman. Just on Page 11 of the proxy statement. I am very concerned about this company's issues with quality over the years, and I was wondering who is on this regulatory and compliance committee. It's on Page 11. And have they met at all?

Alex Gorsky

Thank you for your question. And what I would say is we've taken a -- of course, all of us are disappointed in some of the events that have happened over the last few years. We've taken a lot of aggressive steps to address them. And regarding the newest committee, I believe that, that's going to be published very shortly, and we'll be happy to get you that information later after the meeting. I don't have it in front of me right now. Thank you. Okay, the next question is from Overflow Room #4. Ms. Katherine Corten [ph].

Unknown Shareholder

I'm someone who grew up in New Brunswick. My father wire -- he was an electrician and he wired the original headquarters of Johnson & Johnson's when they were changing from windup clocks to electric clocks. I still have one of those windup clocks in my living room. I have been very proud to be a shareholder of Johnson & Johnson, which is a company that has been held in high esteem for many years. My question follows on the tail end of all the other questions that I've kind of listened to. I see you getting bigger and bigger and bigger, and I am -- here's my question: are you going to be implementing more careful procedures to be sure that J&J continues to be the honorable company that it has always been?

Alex Gorsky

Thank you for your question, and we have implemented a number of policies, procedures and changes. As I said earlier, we've recognized that some of these changes were important over the last few years, and we're confident that we've got the right plans in place having addressed them. But again, let me emphasize that throughout our organization, there's a strong commitment on the part of our employees everyday, and we'll continue to make those viable and as up-to-date as we possibly can. Thank you for your question and for your father's long-term service to the great company as well. Next question. Panel #4 in the back?

Unknown Executive

Mr. Gorsky, we have Rachel Brummert. She has a question regarding our sales reps.

Rachel Brummert

Mr. Gorsky, my question is, is it possible for Johnson & Johnson sales reps to not be paid a bonus on prescriptions generated and instead to be paid a base salary as most companies do? And I have a reason why I'm asking. I will keep it brief, I promise.

Alex Gorsky

Excuse me, could you repeat the first part? I want to make sure that I understand it -- the nature of...

Rachel Brummert

Yes, my question is a lot of drug companies are paying a base salary to their sales representative force, and I was wondering if Johnson & Johnson would be doing that instead of paying bonuses for prescriptions that are generated.

Alex Gorsky

No. We have a -- our current policy has a combination, actually, a base salary and a bonus portion along with that. So we continually review it and update it to make sure whether we think it's right for the market, market conditions, as well as to ensure that we're competitive in the field.

Rachel Brummert

Okay. I have a reason why I'm asking. I promise I will keep this brief. My name is Rachel Brummert and I'm the New Jersey ambassador for saferpills.org and I'm a lifelong resident of New Jersey. During the 1980s, during the TYLENOL recalls, Johnson & Johnson set the gold standard in corporate responsibility, and it was a defining moment for the company and for the state of New Jersey because we showed the world that we care about patient safety as per your legendary Credo. I have nerve damage and I am on my seventh tendon rupture due to LEVAQUIN. And I know that this has been addressed before, but I've had 6 very painful surgeries. I've had 6 years of painful physical therapy, and this has taken a lot away from my family and from my life. And I had a career that I loved with all my heart and I can't do that anymore, and this is because of a pill. So the reason why I'm asking my question is because it's pretty well documented that most doctors are not aware of the long-term side effects. So I think that a base pay rather than extra generated would help doctors have a fair balance and to have a better representation of the risk versus reward of drugs. And I would be happy to work with you to implement a strategy so that LEVAQUIN's prescribed safely. It's prescribed as -- for life-threatening infections, and mine wasn't. Mine was a cough, and now I'm disabled.

Alex Gorsky

Well, Rachel, thank you very much for your comments, and I certainly understand your concerns and would be happy to speak with you afterwards. We've got a number of reviews in place to make sure that -- obviously, when we are promoting, that our compensation system as well as the training and direction to our representatives was compliant. But again, we -- I appreciate your comments and would be happy to speak with you afterwards. Thank you. Let's go to panel #2 please?

Unknown Executive

Mr. Gorsky, I have Manaje Frava [ph] from the Occupy New Brunswick group, who has a question and comments concerning DEVCO distribution centers, ALEC.

Unknown Shareholder

Sorry for coming earlier. I didn't realize that this section was still going to happen. First, I would like to congratulate you for your new position and also wish well to Mr. Weldon, who's becoming the Chair rather than CEO.

Alex Gorsky

Thank you.

Unknown Shareholder

J&J has made incredible amount of contribution through the years for the world, and you exhibited a lot of it today. But -- and the world is healthier, maybe even live longer because J&J and other companies have been around. But some activities, some of them by design, some of them maybe by neglect has soiled this reputation, and I would like to address them. Some of them are local and the other one is national. As it was said the local one is about DEVCO, the development office that Johnson & Johnson has in New Brunswick and the other one is ALEC, is a national issue, a national concern, and moreover, may be global concern. The DEVCO has -- for 20 years has promised residents of New Brunswick to provide them a community center that people can freely use and develop within that -- use it for development of the population, especially children in this community. But what has happened, they have -- they are introducing basically a health club that ask the public to pay month -- $30 [ph] a month, which many members of New Brunswick, they cannot afford it. And also, they have -- I apologize. Also they have a store that does not accept food stamps, that is fundamentally important for the community. We are asking for Johnson & Johnson to pay close attention to it and a community center that provides a wide ranging activities for the community, who are residents and they can -- proof of residency...

Alex Gorsky

Okay. Excuse me, ma'am, can I ask you to -- I think you said you maybe had one other question? Because we've taken 2 minutes and we still have a number of other...

Unknown Shareholder

I have a question and comment. The other one is J&J, these are very local and is very close to your work. J&J subcontractor that are working -- subcontracting the distribution facilities. And this distribution facility, unlike the workers of J&J that they have good pay and union, these people are paid minimum wage. And if people don't know what minimum wage is, it's $7.25...

Alex Gorsky

Okay. I'm sorry, I'm going to have to move on now. I thank you very much for your points. Look, we've -- thank you, ma'am. Please, for the consideration of others, can we now move to another question? Okay, thank you very much. Let me just address the first comment on Development Co. Thank you. I'll address both those issues. I'm going to ask for your help, please? Okay, thank you. Okay. Excuse me. On the first issue regarding DEVCO, look, we realize that New Brunswick and Johnson & Johnson headquarters -- we've been here for a long period of time. We're deeply involved in the community. We think the specific points that you raised are things that we can certainly look into. Regarding ALEC, since Johnson & Johnson has been involved with ALEC, we've worked really only on matters that are focusing on job creation and innovation. We do not support or condone legislative proposals that could serve even inadvertently to limit the rights or the impact the safety of any individual. And we've been in dialogue with ALEC. We've made our concerns very well known to them. We're pleased with their recent statement, but we're going to continue to monitor our relationship with them very closely. So thank you very much. And next question goes to Overflow Room #1, Ms. Barbara Paplic [ph].

Unknown Shareholder

Mr. Gorsky, I just want to make a positive comment on LEVAQUIN. I had a very, very severe shingle attack -- attacked my head and my face, and LEVAQUIN helped. It helped prevent the spread any further. They were concerned I'd lose my vision and all and I have just everything positive to say, and I thank you.

Alex Gorsky

Well, thank you very much for your comments. Okay, we've got another question. Since I took a few in a row from the room, from Overflow Room #1, Mr. George Heinze [ph]?

Unknown Shareholder

I'm a 40-year retiree of Johnson & Johnson and one of the founding members of Janssen USA. And we also applaud the fact that you've separated the positions of Chair and CEO. I think that's the right way to go and I think that other publicly held companies should go in that same direction. But I must be honest with you and say that many of us over the last 2 or 3 years have begun to cringe when we've heard the name Johnson & Johnson on the 6:00 news, because generally the news that has followed it has been negative with respect to recalls and somewhat less-than-stellar marketing practices. But I would hope from what you have told us today that you will bring to the leadership position that sort of integrity, honesty, ethical decision-making and moral clarity that will lead Johnson & Johnson back to the point where we will all be very glad to hear the name Johnson & Johnson on the 6:00 news. And I hope that when you do reach the end of your tenure as CEO, you will join that pantheon of your predecessors, such as Robert Wood Johnson, who I knew personally, as well as Phil Hoffman, Dick Sellars and Jim Burke, and we wish you well.

Alex Gorsky

Well, Mr. Heinze [ph], thank you very much, first, for your 40 years of commitment and contributions to Johnson & Johnson, and thank you very much your comments. Next question. Let's go to panel #2, again, then we'll take panel #3.

Unknown Executive

Mr. Gorsky, I have Justin Danhof from the National Center of Public Policy Research, who has a question concerning the Affordable Care Act and the future of health care reform.

Justin Danhof

As Cathy said, my name is Justin Danhof, and I represent the National Center for Public policy Research. We're a free-market think tank and a shareholder. I first want to strongly commend the Board of Directors and the company for wisely standing up in the defense of free markets, upon which the success of this company and the prosperity of our nation depends. I'm referring specifically to the company's prudent refusal to allow left-wing interest groups such as Color of Change, Common Cause, the Center for American Progress and others to tell the company which groups it may work with and on which issues. Many other major American corporations have been afraid to stand up for their rights and will now increasingly be the target of boycotts because these interest groups know that they give in easily. So we commend Johnson & Johnson for being strong in the defense of the free markets and hope that you continue to be. My question, however, concerns the future of health care reform. In light of the reasonable possibility that the Affordable Care Act will be struck down by the Supreme Court or a key provision of it, the individual mandate will be, or that a future Congress may repeal all or core parts of the law, health care reform will, once again, be debated by the nation and perhaps this time we can get it right. To do so, we believe a system must build reforms upon the strengths of our free market and not upon the unconstrained and unaffordable growth in our federal government. To that end, we completely agree with the board that the company's positions against drug reimportation, de facto government price controls and de facto rationing boards, such as the Affordable Care Act, Independent Payment Advisory Board are in the best interest of the company and the public, but health care reform is bigger than these issues. I would like to know what other reforms of a free-market nature the company would like to see implemented in any other part of the health care system, whether that be as a replacement to the Affordable Care Act, Medicare, Medicaid or any other part of the system.

Alex Gorsky

Thank you for your time -- or your question, Mr. Danhof. What I would say is that we've been a long-standing supporter of health care reform in the United States, and we've done that based -- predicated on some important principles. The first thing is to increase coverage for the number of uninsured or uninsured people in this country. We think it's vitally important. It's part of our mission, of Our Credo and it's in the best interests of all of Our Credo stakeholders. Second, we want to make sure that we do have a free-market system. We think, one where patients and people can have choice among both public and private options as part of the exchanges that would be created. We think that's good policy. We also think it's really important that we try to remove as many of the disparities in care that currently are sometimes the unintended consequence of our current system are built into that as well. We continue to work with leaders across the spectrum politically, to ensure ultimately that what is being done in the new policy as it's created and actually implemented does what's in the interest of patients. And ultimately, that we believe that we're doing right for our company as well. So thank you very much. I've only got time for about one more question. #3?

Unknown Executive

Mr. Gorsky, Dr. Susan Miller [ph] has a question on the efficacy of PROCRIT.

Unknown Attendee

Okay. I just want to preface my question with the following. PROCRIT has long been given to anemic patients, including those in cancer chemotherapy on the basis of their hemoglobin levels, which while indicating anemia, do not necessarily indicate a need for EPO. Erythropoietin therapy is only indicated where there is a deficiency of EPO itself, of EPO level, and since EPO levels in the blood are normally very low, less than 25 units per liter. Until anemia dictates an increase, generally to levels up to about 1,000 units per liter or a total of 4,000 to 6,000 units in the body in its entirety...

Alex Gorsky

Excuse me, do you have a question?

Unknown Shareholder

Yes, and then in severe anemia, that is with a hematocrit of 10% to 30%, rarely is EPO deficiency observed. Okay, when I was in J&J doing research long ago, okay, the articles that I read expressed concern that EPO would not be effective in chemotherapy patients because EPO levels were generally normal in those patients and EPO is a replacement therapy, okay.

Alex Gorsky

Ma'am, I'm going to ask you to get to your question because we are finishing in a few minutes.

Unknown Attendee

Okay, I just want to make the point that, first of all, as it stands now, EPO is a dangerous therapy for cancer patients and it's never -- its prescription is never warranted, okay, in cancer patients. Is there a way to improve the efficacy of EPO so that it might be...

Alex Gorsky

Okay. Thank you very much. I'm going to have to ask -- understand [ph] the question now. We -- I'd be happy to finish the conversation later on. Look, we believe the PROCRIT is a very important option for patients in need of the type of therapy that you're recommending. It's -- there's a large volume of data on it as well as over 20 years of experience. And we continue to ensure that our research and our promotion of the product is within its appropriate labeling. But thank you very much for your question.

I know that there's still a few people with questions and we'd like to respond to you, so please provide your question and your contact information to our staff at the registration desk just outside the ballroom, and we'll get back in touch with you.

So thank you very much for your heartfelt commitment today. I know it's been a long morning. I wish all of you a safe travel home. Thank you very much, everybody.

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