Johnson & Johnson - Index

Johnson & Johnson - report - Index

care market where we currently do not compete.
That $2.8 trillion slice of the pie offers tremendous
possibilities for us.
Our plan for winning in health care is twofold:
execute exceptionally well to capture high-growth
opportunities in our three current business sectors
and identify and build entirely new businesses in
health care.
We plan to further strengthen our current businesses
by growing existing products, expanding
our iconic brands, and ensuring that our pipelines
across the enterprise enable us to develop and
sustain leadership positions. We’ve also identified
high-growth product categories where our
presence is small and where we plan to establish
leadership positions.
At this juncture in history, there are
tremendous growth opportunities in the field of
medical devices and diagnostics. To fully capitalize
on these, we created two groups within MD&D:
a Surgical Care Group and a Comprehensive Care
Group. Each focuses on different subsets of the
MD&D market, but they leverage many existing
support structures.
Ever since the day Johnson & Johnson opened
its doors, we have been transforming surgery
by bringing to market advances that set new
standards of care. The Surgical Care Group will
explore new ideas for transforming and redefining
surgery in the coming years by taking an integrated
approach to the needs of surgical patients and
surgeons.
With the newly formed Comprehensive Care
Group, we plan to transform treatment of some
of the world’s most pervasive chronic diseases
by putting individual patients at the center of
our businesses. We will take a holistic view of
medical needs through their eyes. In 2005, nearly
50 percent of the world’s disease burden and
60 percent of mortalities were due to chronic
diseases. In fact, about 45 percent of global mortalities
were attributed to four major chronic diseases
where Johnson & Johnson has a significant presence:
cardiovascular disease, cancer, diabetes, and arthritis.
The businesses under the umbrella of our new
Comprehensive Care Group—our diabetes, cardiovascular,
diagnostics, and eye health businesses—will examine the
needs of patients in these categories throughout the full life
cycle of their health: from wellness and prevention to disease
management and treatment. This patient-centric business
model will unlock an array of new growth opportunities for
these companies.
In addition, we created the Office of Strategy and Growth
(OSG). The OSG will explore business opportunities in
markets where we currently do not compete but in which we
see new opportunities. It also will explore opportunities in
markets that do not yet exist but where we see the potential
for transformational products and technologies. The OSG will
identify where and how we build the next lines of business
Our plan for winning in
health care is twofold:
execute exceptionally well
to capture high-growth
opportunities in our three
current business sectors and
identify and build entirely
new opportunities in
health care.
ABUNDANT OPPORTUNITIES FOR GROWTH
2006 Split of Global Health Care Spending
(100% = $4 trillion)
Consumer
Pharmaceuticals
12%
14% Medical Devices
& Diagnostics
6%
Other
Health Care Markets
68%
Source: OECD; Espicom, Euromonitor (2007); HRI Global MD&D Report; CIA World Fact Book
that will take their place beside our existing businesses in
consumer health, pharmaceuticals, and medical devices
and diagnostics.
Whether within our current markets or in markets waiting
to be created, superb R&D capabilities and productive
pipelines are critical to winning in health care. We continue
to invest heavily in internal R&D to achieve organic growth
and build our businesses for the long term. In 2007, we spent
$7.7 billion in R&D across the enterprise. Like our operating
companies, our R&D organizations throughout the world are
decentralized, with all the advantages of small company environments.
But they are closely networked around the globe,
and have ready access to the full breadth of the Company’s
engineering prowess, formulation and materials expertise, and
deep knowledge of customers, diseases and conditions. This
allows us to capitalize on R&D capabilities across the broad
array of our businesses in ways our competitors cannot. It also
C H A I R M A N ’ S L E T T E R 5