Johnson & Johnson (JNJ) Presents at Raymond James 42nd Annual Institutional Investors Conference Call Transcript

Johnson & Johnson (NYSE:JNJ) Raymond James 42nd Annual Institutional Investors Conference Call March 2, 2021 9:10 AM ET

Company Participants

Joe Wolk - Chief Financial Officer

Conference Call Participants

Jayson Bedford - Raymond James

Jayson Bedford

Okay, I think we're going to get started now. So good morning, and welcome to the 42nd Annual Raymond James Institutional Investors Conference. My name is Jayson Bedford. I cover the medical device sector at Raymond James. So it's really our pleasure to have J&J with us this morning. A name that's obviously been in the news quite a bit over the last few days for the great work they've done on the vaccine and the important role they'll play in getting us all back to a state of let's call it improved normalization. So with us from J&J, we have the company's CFO, Joe Wolk; company's VP of Investor Relations, Chris DelOrefice, and Senior Director of Investor Relations, Lisa Romanko.

Question-and-Answer Session

Q - Jayson Bedford

So with that Joe, first, obviously, congratulations on the vaccine, the social good that cannot be overstated here, so well done and thank you. I hate to put a critical investment angle to this. But this is the forum we're in. So you stated that you sell the vaccine on a not-for-profit basis in the pandemic. So it certainly helps revenue, but technically, it wouldn't impact earnings. At least that's my interpretation of not for profit, so most investors do value J&J on earnings. So outside of the extremely important social good that J&J is delivering, why should investors in J&J care about the vaccine?

Joe Wolk

Yeah, certainly a pleasure to be here with you and your audience, I hope everybody is safe and well. And what an amazing feat by Dr. Paul Stoffels and his team, our manufacturing team to just be in a position one year after the gene sequence was determined that we can sit here with a very viable option and an important tool in the kit of tools to combat the pandemic and hopefully get us back to some sense of normalcy. Your questions spot on in terms of the audience that we're speaking with today, in terms of not for profit and why should investors care?

I would say the first thing that investors should care about is you saw in our medical device business last year we were down about 35% year-on-year comparison. So the fact that the vaccine does offer an option with respect to I say stabilizing, or not only our medical device business, in terms of elective procedures, but also consumer business with you, look at this skin health section or franchise there, getting people back out travelling is certainly important to our success there. And then even in pharmaceuticals where folks would forego doctor visits and therefore diagnosis. So I think just stabilizing the society, if you will, has a benefit to our business.

You should not interpret it though that just because we've come out with not-for-profit pricing, that that's the model into perpetuity as it relates to the pandemic. It's difficult to say what it will be in terms of 2022 outlook, a lot of that is going to be determined by the pandemic itself. You can see now, even today, Pfizer and Moderna are looking at what's the next generation? Will re-immunization be required? Will there be booster shots? Will they be different than the versions we have out there today? Now that we've got our main platform out on the market, we're also going to assess those types of options for us as well.

And then I think at that point, you could expect pricing that's much more in line with a commercial opportunity. We're following the Bill & Melinda Gates Foundation, not for profit definition that does allow us to recoup the costs. So that's how I would encourage investors to kind of look ahead to see what kind of commercial opportunity is there on the horizon? Probably not in 2021, because I suspect that the pandemic period will be in place for the majority of this year, if not the entire piece of this year. But as we move to 2022, we are looking at it more as a business opportunity.

Jayson Bedford

Okay. Joe, have you commented on how much you've spent so far on developing the vaccine?

Joe Wolk

We have not Jayson. We're in partnerships, obviously, with the government. And at this point in time, we have not communicated the level of investment. It continues to be a fluid situation as we add capacity. That is part of what can be put into the not-for-profit model during a pandemic period as well. So we'll update at the appropriate time when we have a much more comprehensive look. And I would point to people probably to the first quarter earnings call in April as a pretty good gauge when we'll have some more information.

Jayson Bedford

Okay, and just, you kind of touched on it in terms of the pandemic period. What needs to happen for the pandemic period to be over? I know that's a difficult question, but what are you looking at? And how do you define that?

Joe Wolk

Yeah, that's a really good question. Again, it's another one that's fluid. I think when we look at it it's not going to be something that's dictated to us. So we think in terms of getting through this, I'd say, bolus of lockdown, where people have been vaccinated to a pretty sizable percentage. I can't give you specifics percentages today. And it could even vary by region, if you think about just what the US has contracted for. If you just look at the pure numbers, what they've contracted for, they could vaccinate everyone in the US about 1.6 times right. And so that to me would indicate a pretty clear sign that the pandemic period, emergency pandemic period is over.

Jayson Bedford

Okay. And just, you mentioned, contractual agreements for J&J for what we know and please correct me if I'm wrong, a 100 million to the US, 200 million to Europe, 200 million to Gavi, for total about 500 million so far in 2021. First, is that correct? And then second, there's a bunch of headlines out there from a manufacturing standpoint, so can you just level set us on where you are in terms of manufacturing and where you want to end the year?

Joe Wolk

Yeah. So you're correct with respect to the amounts that you've listed, maybe some slight modifications is, both the US and Europe have options that they could pick up as well. And then with Gavi, the contract is actually for 500 million doses of which 200 was promised to this year. In terms of the headlines that you're probably referencing relate to this morning, neither ourselves nor Merck have made any announcements, so we'll just wait to see what happens there. But I will say, we've been, really since this time last year, really working collaboratively with a number of partners, Emergent, Catalent, GRAM to ensure that we would have capacity should this prove as it has to be an effective therapy or treatment for the pandemic.

Based on the current agreements that we have in place today, which we've announced, we feel pretty good about getting to that billion doses this year give or take a little bit by the end of this year. So we think we're in very good position. If there's other agreements that can occur that can help amplify and support the capacity in a bigger way, we'll certainly entertain those. What I would caution folks is, just because a deal may be signed today doesn't mean that manufacturing starts tomorrow. There's obviously tech transfer and some complexity. So if you think about what Alex Gorsky was on the airwaves with yesterday of 20 million doses in March, and 100 million doses by the end of June for the US, I think that's what people should hang their hat on is that's really what the current supply network could fashion today.

Jayson Bedford

Okay. And international is a bigger component this year, longer term, do you expect the vaccine to be partially due to the handling and logistical benefits of the product? Do you expect this to be more of an international product than a US product?

Joe Wolk

Yeah, I would say, just the pure numbers of population would dictate it likely will be. You do note that because our refrigeration requirements are a little less demanding that that does benefit some parts of the world. So I think it's probably a fair assumption that we would have more international people vaccinated just simply because of the demand.

Jayson Bedford

Joe? Joe, can you hear me?

Joe Wolk

I can hear you Jayson, can you hear me?

Jayson Bedford

Yeah. It may have been my internet on my side. So let's keep going here.

Joe Wolk

Did you get the answer to my last question or?

Jayson Bedford

I did. So I guess you mentioned the indirect benefit that the vaccine will have on your device, business and areas of consumer. I guess I'm wondering, do you think that the vaccine will pull through additional revenues, specifically international markets where oftentimes you're selling to the government?

Joe Wolk

Boy, you'd like to think so right, Jason, but I think that would be a little bit of a bridge too far. We continue to face pricing pressures and negotiations, no matter what market we're in. We did it because it was the right thing to do. It was a credit-based action. And we had expertise in a specific platform, which we had a very high degree of confidence would be safe and tolerable, which is proven to be, and we also had a pretty good sense it was going to be efficacious, and that's borne out as well. So we didn't really view it as saying, well, what - when we sat down this time last year, a little bit earlier, we didn't sit down and say, well, boy, how much can we expect a lift in our medical device, pharma consumer business because, again, we thought we had a responsibility as the world's largest health care company to step up, much like we did with Ebola a number of years ago. And when you think about just the stabilizing effect it could have on society where people may be more comfortable to go visit a doctor, to go out on vacation or simply get that elective procedure instead of putting it off, which is important for their health. That's where we saw the true benefit, but to say that we've incorporated any kind of halo effect, or think this is going to help us in the next tough negotiation. I'd like to think so. But I think that would be a little bit too optimistic.

Jayson Bedford

Okay, that's a fair and appropriate answer, Joe. And just to remind viewers, if you have questions, I think you can click the icon in the top left, and I can certainly try to address those. So maybe just shifting gears a little bit away from the vaccine, the growth algorithm, excluding COVID, the COVID dynamic, a long viewed the growth algorithm at J&J is kind of 4% to 6%, top line growth or 4% to 5%, top line growth, with 6% to 8% per EPS growth. Is there anything that you see to disrupt this growth algorithm over the next few years?

Joe Wolk

No, like the size of our business, Jayson, you probably have it pegged pretty well. I do like that you've noted that our earnings would grow a little bit faster than sales. That is something that we try to do on a consistent basis over a number of years. We try to hit each and every year. But sometimes, there's just so good of an investment opportunity, and particularly here where it may be closer to a one-to-one factor versus a 1.2 or 1.5 factor. I do think that as I look at each of the segments inform, I feel very good about the current portfolio that we have on market. And I think there's even more promise to come with respect to some of the products that we will file either for submission or have filed and they expect approval on. Consumer, I would expect that there is a little bit of a new normal with respect to personal health. There we've seen an uptick in brands that have sanitary features or fight germs such as a LISTERINE.

And then in medical devices, we were on a very good trajectory, I thought from 17 on where we were adding a point to a point that half of growth now, we had some work to do there, admittedly. But Ashley and her team have done a nice job in being focused on execution, and also reinvigorating that pipeline within innovation for a firmer outlook as well. So I would say that I think we're in pretty good shape to hit that 4% to 6%. And I don't see that slowing down. Matter of fact, when we look at our business, we want to make sure that we're keeping each segment and their leadership kind of accountable to be better than the peers in which they compete against. So that 4% to 6% would be a very healthy rhythm for medical device and consumer should we hit that. What I do feel very good about as a CFO is probably it's the strongest, I felt in my tenure of about three years now that all three sectors at the same time could potentially be at or above market in the very near term.

Jayson Bedford

Okay, that's helpful. Okay. In terms of margins, and I want to get to each of the segments, but just in terms of margins, because you mentioned the earnings strength. So in 2021, the implied op margin I think is 32.5% to 33% range, which I believe is J&J's highest ever. At least, it's been a long time since you've seen that level of op margin, certainly a 200 basis point improvement from 2020. Why let the op margin expand so much in '21? And then I guess the corollary to that is, are you seeing efficiencies in the business being driven by COVID?

Joe Wolk

Yeah, so Jayson that's a fair question. And when we looked at it to compare it to '20 would have been very misleading. So what we did is we went back to 2019. And I think it's about if I remember correctly, 80 to 90 basis points above, where we were in 2019. But you're right, because of the pandemic, we are working differently, all of us are here, not doing this in person, we're doing this over a Zoom call, which has some efficiencies associated with it. I also think that there's more opportunity with respect to technology and clinical trials, being more specific in terms of who we recruit? How we develop drugs? There's opportunities there. So when we looked at the size of our business, the scale again, I think investors have an expectation that given our size, we should leverage each and every year. We've got a respectable growth rate. What I love about the equation is we don't cut on R&D.

Last year, even in a year of pandemic, we went up about $800 million, which was a pretty sizable increase given the year it was. So we're very much focused on the long-term. And when we can get more efficient in administrative functions, or the clinical trial development, or even as we go to our customers now, some of this is happening by technology, not all of it and I'm not suggesting that we're going to be one of these companies that declare we're 100% work from home. We are a company that's based on innovation. Ideating in person, I think is very important to our success. But there are opportunities where you can see things on the margin that don't impact our long-term outlook, and the products and services that we can offer as healthcare solutions such as travel and meeting expense, those will likely be reduced going forward.

Jayson Bedford

Okay. And these efficiencies, I assume, are kind of long lasting, meaning when you look a year ago, pre-COVID and you look at the margin potential of the business, it feels like its higher today than it was pre-COVID. Is that a fair assumption?

Joe Wolk

It is. But remember, I don't say - some of it is what I just referenced in terms of COVID has changed the way we've worked and probably will have some impact going forward. Also recall though, a few years ago, Jayson, we had a restructuring charge in our supply chain, so one of our key areas of focus is around gross margin improvement both in our consumer and medical device businesses specifically. And so those investments that we made a few years back are now starting to kick in, in '21, more in '22 and '23.

Jayson Bedford

Okay, fair enough. So let's dig into some of the segments here. Med devices, consensus for '21 has growth of 2% over 2019. I realized you don't guide by segment, but I guess what's factored into your thinking on 2021 procedure volumes. And how do you envision volumes trending throughout the year in devices?

Joe Wolk

Yeah, so the guidance that I provided back in January, I would say, specific to med devices. And you're right, we don't guide by segment. But it did take into account some moderate COVID headwinds persisting that we saw coming out of the fourth quarter and then continuous improvement in the surgical markets over the balance of the year with growth in each quarter versus the prior year. It'll be most pronounced in the second quarter where we did see in 2020, a 33% drop in business. Some of this will be dependent upon the procedures type. It'll be dependent upon geography in some cases. So I think the efficacy of vaccines has been established. But then the speed of which vaccinations roll out is critically important, and how can we get patients comfortable going back to seek care? One thing we are watching is anything that could occur with instability in employment.

So any job loss that may lead to insurance loss is something that we are keeping an eye on, nothing notable as of yet. And just the ability for hospitals and again, if you - I'm sure you've heard, either myself or others from Johnson & Johnson say just the tremendous resiliency that the hospital and hospital administrators demonstrated throughout last year. I remember the early days of March and April, where hospitals were essentially shut down, waiting for those COVID patients to come. They quickly adapted their models and were able to get these important procedures done, and have a piece of their hospital dedicated to COVID, but not the entire hospital. So I think we're in good position to have a very solid year, math will take you there alone, assuming the recovery comes about, as I just called for.

Jayson Bedford

Okay. Joe, you mentioned geographical differences. Can you just maybe comment on where you see the lift coming the quickest and maybe the slowest, either from a US, Europe emerging market standpoint?

Joe Wolk

Yeah, I would say, probably the quickest and best performing market for us, and you saw a little bit of this in the fourth quarter would be our Asia Pacific region. So they had the biggest hit in the early part of last year, but they were probably the quickest to recover, we see that recovery continuing to take place. So I'd say that's probably the area where I'd be least concerned. In terms of slowest recovery, you'd probably point to either Latin America or select parts of Europe.

Jayson Bedford

And is it part of that just the lack of available vaccine right now or is it just those geographies that are hard hit?

Joe Wolk

No, I think in EMEA specifically right, you've got some health systems and the government's have expressed some concerns related to the new strains, which are extending mobility restrictions, some stay at home measures through the first quarter. But there are positive signs that some of the major countries such as Germany, UK, and Italy are seeing less hospitalizations, less case counts. So again, it's going to be I think, a little bit more spotty in Europe than it will be, let's say, an Asia Pacific or even a US recovery.

Jayson Bedford

Okay. And in the US, are you starting to see a bit of a recovery today? Meaning, obviously, in the fourth quarter, we had some pockets of softness, I'm just wondering what does this slope look like and are you starting to see it now?

Joe Wolk

Yeah, I think, Jayson, the best thing I can point to rather than comment on our business, given that we're in mid quarter is the fact that hospitalizations and case counts have come down, as reported publicly, from the early days of January. So that's a positive sign. I would also say one thing to consider, which isn't a concern, because it was the middle month of the quarter versus the last month of the quarter is the weather in the US has been a little bit of a hindrance. So again, I think those will be - those procedures that possibly were delayed by a day or two will recover in March. But that is something that - it's hard to get a really good gauge here, as we stand on March 2 versus let's say last winter, where there really wasn't an impact in the US at least around weather concerns.

Jayson Bedford

Fair enough. I wanted to ask about backlogs specifically in devices and procedures. I guess, how do you define backlog? Do you feel like you have visibility into a backlog of patients who have deferred treatment because of COVID?

Joe Wolk

Yeah, so if you think about where - the procedures in which we play or where our products play, they're really addressing chronic or life threatening in some cases medical intervention. So these can include surgeries to remove tumors or cancerous tissues, sometimes it's related to debilitating pain such as hip or knee replacement, heart failure, potentially reducing the risk of stroke or cataracts, which is one of the five senses that people are most fearful of losing as their sight. So there's really not been significant changes to the rates in which these diagnoses are occurring in the populations. But there has been a disruption from COVID in terms of patients getting either the routine screenings as I mentioned earlier, or just even when it's diagnosed, going and getting the necessary procedures done. Yeah, again, credit to Ashley and her team for continually reaching out to the customer.

We did it in the very early days of the pandemic all throughout last year. And we continue to do that to this day as to how we can be a partner. You mentioned a little bit earlier, you asked about the vaccine having a halo effect. That's one area where I hope we do see a halo effect just the relationships, we were able to solidify with hospitals and administrators in our medical device business. We were there we were able to supply while many work from home, about a third of our workforce remained open for business supplying these products on a reliable basis. So they were there when needed. But the backlog I think is really going to be dependent on some of the recovery measures that I mentioned earlier.

Jayson Bedford

Okay. And are you anticipating once the vast majority of the US has been vaccinated, are you expecting a bolus of procedures or is it a slow, gradual increase?

Joe Wolk

I think it's more of a slow gradual one. I might expect more of a bolus if 2020, let's say third and fourth quarter didn't rebound as much as it did, as you saw in some of the guidance that we provided last year. I remember coming out in April and saying we know we expected to be maybe 10 or 15% off of where we would have liked to be in the fourth quarter. That was closer to 5% off. So again, the bolus of backlog I don't think it's going to come back with such ferocity because it wasn't as deep as maybe we had thought this time last year.

Jayson Bedford

Okay. And then just quickly, you've got a lot of new products coming. Can you just talk generally about hospital receptivity to new products? Meaning, I feel like 2020 was an unfortunately difficult year to launch new products. I'm just curious as to how willing are hospitals to take time to learn and acquire new product?

Joe Wolk

Yeah, so you're speaking specifically for medical devices, given the major requirement?

Jayson Bedford

Correct.

Joe Wolk

Yeah, listen, I think it - they're always willing to listen and to learn about new products and innovation. Matter of fact, we have to continually challenge ourselves to ensure that we're innovating, there'll be more of an appetite going forward. If I look at some of our businesses, where I feel pretty good and some new innovation is on the horizon, I look in orthopaedics. We're pretty excited about the FDA clearance of our VELYS Robotic-Assisted Solution for knee replacement. We think that in combination with the Attune platform, this could be a differentiator in the marketplace. It's a smaller footprint. I think there's a reduced cost.

And the team's being very novel and creative in terms of how we can get those systems placed in hospitals, even at alternate sites of care. In our surgery business I think that you still have the same needs, where you want to stop bleeding or leaks. And so SURGICEL Powder out of our - in our hemostat platform will be very good. The ECHELON Staple Line will be a reinforcement of products. So I do think that hospitals will continue to be very receptive. And quite frankly, demand innovation and not just innovation that is newer or slicker to use, but has proven better outcomes. I think that will be critically important as we continue to refine healthcare.

Jayson Bedford

And health of hospitals, your primary end customer here in devices, do you feel like hospitals are healthy from a capacity standpoint as well as just a capital standpoint?

Joe Wolk

I do. Yeah, if you think about - part of their resiliency was self-preservation too, right. When the COVID patients didn't come as expected, and the hospitals were shut down, they realized that there is a significant financial impact on not doing the elective procedures. So I do feel that they course corrected quickly enough. And they have an appreciation for just how important it is to their business. So I do feel good about the financial capacity of the hospital systems. And probably the best thing I can point you to Jayson with respect to evidence is, in the first quarter, we had a significant bad debt reserve. We wound up reversing most of that by the end of the year. So we anticipated something much worse and it just did not come to fruition.

Jayson Bedford

Okay. That's a good example. Just lastly on devices, we realize that you're always looking at optimizing the portfolio. But how close are we to a fully optimized portfolio? Meaning do you anticipate any portfolio moves over the next couple of years?

Joe Wolk

So under Alex's tenure over the last almost decade now, I would say he's been rigorous about ensuring that we not just add to our portfolio, but call when necessary. And I think you've seen that throughout the last couple of years specifically, in medical devices. It started with probably the acquisition of Synthes right prior to his tenure, and then we divested OCD, ASP and the diabetes business, because we just didn't have the innovative platforms going forward to win in those markets. We want to be number one or number two in any of the markets in which we play. In terms of optimizing the portfolio in med devices, we're always looking to complement all of our businesses quite frankly. Where areas that makes strategic sense for us we've got an expertise, whether that be clinical or scientific knowledge, or maybe a commercial advantage, and then make sure that we go on a return that will reward investors for the risks that we're burying on their behalf. So that construct will be in place.

We're continually looking, I think, over the last five years, while they haven't been major deals, maybe save for one, I would say we've done 46 acquisitions, I believe, about a, let's call it anywhere from a third to a half of our growth comes from inorganic opportunities, whether that be through acquisitions, and we also include major licensing deals in that component as well. And we've had tremendous success there. So we'll continue to look, I guess, by optimize maybe you're suggesting more complete are be all things to everybody in medical devices. I think we look for opportunities to do that. We've got to make sure though, that that last component that I mentioned, that we earn a fair return for the risks that we're bearing on shareholders behalf is in place and sometimes it gets a little bit difficult to do because these businesses that we'd like to have as part of our portfolio are pretty well run and fairly valued by you guys.

Jayson Bedford

Okay. That's a fair answer. Just last one on devices I guess, when you look at the segments within devices, interventional, orthopaedic, surgery vision, where do you feel your best position to take share?

Joe Wolk

Yeah, so I would say a couple places. I would go back to orthopaedics and the VELYS Robotic system and Attune. We also have a full Cementless platform. So I feel really good about our opportunity to take share in the knee category. We have been, I would say disadvantaged in the past with some of our offerings. And now I think there's the complete portfolio there where we could see some noticeable gains. In electrophysiology, I would not put a pause, Swaminathan and his team to continue to gain share there, they've done it continuously for over a decade. We've got some new products coming out there with the ThermoCool SmartTouch Ablation Catheter. And I see them probably able to continue to gain share. Again, we spoke earlier about innovation. They lead the market in electrophysiology on innovation.

In our surgery business, I would say again, some of the products that I mentioned, whether it be the SURGICEL Powder, the ECHELON Staple Line, we are number one or number two, depending on what geography you're looking at. And then lastly, I'm optimistic about our vision business. So Contact Lenses continues to innovate and continues to lead the market. But I also think we can do a little bit better with the Medical Optics surgical platform that we acquired from Abbott a few years back, we've got some new products there with TECNIS Eyhance, which is the first monofocal intraocular lens in 20 years and TECNIS Synergy, which is a continuous range of intraocular lens that will provide patients with the ability to see ranges of distance, so longer distances. So I do feel that those. But if I go to knees and I go to surgical optics, I think those were - we've lagged a little bit, that have the platform and are set up for success going forward.

Jayson Bedford

Okay. That's great. That's very helpful. Let's shift gears a little bit to pharma. Our sense is that market growth in the areas you compete to roughly about 5%. You've managed to grow faster than this rate for many years. You do have some LOEs coming up in the middle part of the decade. So I guess the first question is do you believe you can grow above market through these LOEs?

Joe Wolk

I do. It's funny Jason, I'm smirking a little bit here because it wasn't all that long ago where we were facing an LOE or biosimilar with our largest product Remicade. Though the middle of the decade that you referenced is really around Stelara, which is now our largest product. We were able to manage Remicade pretty well. It's a persistent, let's call it 15% to 20% decline each year, but not the cliff that we maybe all had feared. But I really point to just the portfolio that we have today. And then what's kind of on the comet, if you will, within our pipeline. So there if you look at amivantamab for small cell lung cancer, we just presented some data not too long ago at the World Lung Conference, ESMO a few months back.

That could be partnered with lazertinib to be a meaningful offering in small cell lung cancer and we expect that to be $1 billion platform. I do think we've kind of jumped over a bridge here with vaccines where we could be much more of a vaccine player going forward, not for profit aside for this year. I do think if you look at some of the work that we've done, on the adenovirus, AdVac 26 platform with RSV and HIV, those can look very promising as well. We're very excited about the acquisition we did in the third quarter of last year, Momenta. And the lead asset there around Nipocalimab, again, we think that has better than $1 billion potential. And then probably, most near term would be the Car-T that we licensed from Legend, which is unrolling submission for approval. So we feel pretty good about our ability to continue to have success in multiple myeloma, which is already a very strong portfolio for us.

Jayson Bedford

Okay. So as I kind of - we could obviously spend a lot more time on pharma and each of the drugs, but when I think of the segments here, you've got devices growing kind of four, five - pharma five plus, that certainly getting back to the earlier comment certainly gives us confidence here that business should be able to grow the top line in that kind of four to five, 4% to 6%.

Joe Wolk

That would be my recommendation.

Jayson Bedford

Okay, a couple of questions from the audience. I guess the first one. Do you expect any change in the US corporate tax rate in 2022?

Joe Wolk

In '22, okay, that's an astute question. '21, I don't, I just think it's - there's other things that seem to be the priority for the new administration. I probably do expect something I couldn't say today, what it is, what I do hope is we have a fact-based dialogue as we reduce corporate tax rates to the levels that they are today, that still just puts us in the middle of the pack for OECD. One of the things that we did at Johnson & Johnson was invest more in the US, about 25%, more than we had the previous four years. In the subsequent four years, this would be your four of that. And we're on track to do that. We think that leads to healthier business, certainly, but also a healthier economy. And since we've reduced rates in the US a few years back, countries that we - seven countries that we compete with, for employment, for IP, have reduced their rates further as well. So I just hope there's a good semblance of dialogue and fact-based assessment of where the corporate rates actually stand, and the type of employment opportunities that it does provide for the country.

Jayson Bedford

Okay. Another question that we had come in was emerging markets across healthcare have been a little sluggish here, understandably due to COVID. How do you see the return to growth in emerging markets? And how does J&J view that geography from a growth perspective?

Joe Wolk

Yeah, it's an important part to our growth. I mean, that the biggest one I would say we've had success. I don't know if we still consider some of the markets still emerging. But I would say we were on a good trajectory there. There is access specifically for our pharmaceutical products, being advanced and being received very well by governments in some of those markets. I would expect that that may accelerate quite frankly as COVID-19 has taken everybody has forced everyone to take a step back and realize just how important good health is. If you looked at the people who suffered most from COVID were people who were probably unfortunately unhealthy to begin with. We got to make sure that we create greater access, whether that be through government systems or market-based systems to ensure that good health is affordable and certainly within reach. It doesn't do anybody good, including our business, if we've got great solutions, but people can't access them.

Jayson Bedford

Okay, that's fair. Joe, I think we're bumping up against our allotted time. It certainly seems to me that there should be and this isn't a question. It's more of a comment. There should be a halo effect from this vaccine, in multiple areas of your business in multiple geographies. So that's, kind of my observation from this conversation. Is there anything else you'd like to add in the minute we have left?

Joe Wolk

No, Jayson, like I said, it wasn't our mission to say how can the vaccine help our other businesses other than to stabilize society and get us to some sense of normalcy and to ensure that we use some of our scientific expertise in advantage to provide better health care. If there happens to be a financial benefit to that we certainly won't say no to that. We'll, hope for that. I hope your assessment is correct, but that wasn't the motivation as we started this.

Jayson Bedford

Okay. Joe, thank you so much. Good luck with the rollout. We're all cheering for you.

Joe Wolk

Great, thanks, Jayson. Appreciate your support. Have a good day, everyone.