Johnson & Johnson Reports 2018 Second-Quarter Results

NEW BRUNSWICK, N.J., July 17, 2018 /PRNewswire/ -- Johnson & Johnson (NYSE: JNJ) today announced sales of $20.8 billion for the second quarter of 2018, an increase of 10.6% as compared to the second quarter of 2017. Operational sales results increased 8.7% and the positive impact of currency was 1.9%. Domestic sales increased 9.4%. International sales increased 11.8%, reflecting operational growth of 7.9% and a positive currency impact of 3.9%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 6.3%, domestic sales increased 5.7% and international sales increased 6.8%.*

Net earnings and diluted earnings per share for the second quarter of 2018 were $4.0 billion and $1.45, respectively. Second-quarter 2018 net earnings included after-tax intangible amortization expense of approximately $1.0 billion and a charge for after-tax special items of approximately $0.8 billion. Second-quarter 2017 net earnings included after-tax intangible amortization expense of approximately $0.4 billion and a charge for after-tax special items of approximately $0.8 billion. Excluding after-tax intangible amortization expense and special items, adjusted net earnings for the current quarter were $5.7 billion and adjusted diluted earnings per share were $2.10, representing increases of 14.0% and 14.8%, respectively, as compared to the same period in 2017.* On an operational basis, adjusted diluted earnings per share also increased 11.5%.* A reconciliation of non-GAAP financial measures is included as an accompanying schedule.

“Our strong second-quarter results reflect double-digit growth in our Pharmaceutical business and the accelerating sales momentum in our Medical Devices business, driven by the continued growth of our market leading products and strategic new launches. We remain focused on investing in innovation and meeting the needs of our customers by delivering innovative products and solutions that position the company to deliver long-term, sustainable growth,” said Alex Gorsky, Chairman and Chief Executive Officer. “Our talented J&J colleagues are united in our efforts to address some of the most critical health and consumer needs of people around the world.”

The Company updated its sales guidance for the full-year 2018 to a range of $80.5 to $81.3 billion. This reflects an increase in expected operational growth to a range of 4.5% to 5.5%, partially offset by the estimated lower favorable impact of currency. Additionally, the Company updated its adjusted earnings guidance for full-year 2018 to a range of $8.07 to $8.17 per share. This reflects an increase in expected operational growth to a range of 8.5% to 9.9%, partially offset by the estimated lower favorable impact of currency.

Segment Sales Performance
Worldwide Consumer sales of $3.5 billion for the second quarter 2018 represented an increase of 0.7% versus the prior year, consisting of an operational decrease of 0.4% and a positive impact from currency of 1.1%. Domestic sales decreased 0.7%, international sales increased 1.9%, which reflected no change in operational sales and a positive currency impact of 1.9%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 0.9%, domestic sales decreased 0.7% and international sales increased 2.1%*.

Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by over-the-counter products including TYLENOL analgesics and digestive health products, international beauty products primarily NEUTROGENA, OGX and Dr. Ci Labo, partially offset by lower sales of baby care products. During the quarter, the divestiture of the anti?dandruff shampoo brand NIZORAL and certain other ketoconazole?based shampoo brands was completed.

Worldwide Pharmaceutical sales of $10.4 billion for the second quarter 2018 represented an increase of 19.9% versus the prior year with an operational increase of 17.6% and a positive impact from currency of 2.3%. Domestic sales increased 17.7%; international sales increased 22.9%, which reflected an operational increase of 17.5% and a positive currency impact of 5.4%. Sales included the impact of Actelion Ltd which contributed 6.6%, to worldwide operational sales growth. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 11.0%, domestic sales increased 10.2% and international sales increased 11.9%.*

Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by STELARA (ustekinumab), a biologic for the treatment of a number of immune-mediated inflammatory diseases, ZYTIGA (abiraterone acetate), an oral, once-daily medication for use in combination with prednisone for the treatment of metastatic, castration-resistant prostate cancer, DARZALEX (daratumumab), for the treatment of patients with multiple myeloma, IMBRUVICA (ibrutinib), an oral, once-daily therapy approved for use in treating certain B-cell malignancies, a type of blood or lymph node cancer, TREMFYA (guselkumab), for the treatment of adults living with moderate to severe plaque psoriasis. SIMPONI/SIMPONI ARIA (golimumab), a biologic for the treatment of a number of immune- mediated inflammatory diseases, INVEGA SUSTENNA/XEPLION/TRINZA/TREVICTA (paliperidone palmitate), long-acting, injectable atypical antipsychotics for the treatment of schizophrenia in adults, and XARELTO (rivaroxaban), an oral anticoagulant.

During the quarter, the U.S. Food and Drug Administration (FDA) approved an additional indication for DARZALEX (daratumumab) in combination with VELCADE (bortezomib), a proteasome inhibitor; melphalan, an alkylating agent; and prednisone for the treatment of patients with newly diagnosed multiple myeloma who are ineligible for autologous stem cell transplant. The European Commission granted marketing authorization for JULUCA (dolutegravir/rilpivirine), a two-drug regimen, once-daily, single-pill for the treatment of HIV-1. A supplemental New Drug Application was submitted to the FDA seeking to expand the indication of OPSUMIT (macitentan) to include the treatment of adults with inoperable chronic thromboembolic pulmonary hypertension (CTEPH, WHO Group 4) to improve exercise capacity and pulmonary vascular resistance.

Also in the quarter, the acquisition of BeneVir Biopharm, Inc., a privately-held, biopharmaceutical company specializing in the development of oncolytic immunotherapies, was completed. In addition, a worldwide collaboration was entered into with Bristol-Myers Squibb Company to develop and commercialize Factor XIa inhibitors, including BMS-986177, for the prevention and treatment of major thrombotic conditions.

Worldwide Medical Devices sales of $7.0 billion for the second quarter 2018 represented an increase of 3.7% versus the prior year consisting of an operational increase of 1.9% and a positive currency impact of 1.8%. Domestic sales increased 1.1%; international sales increased 6.0%, which reflected an operational increase of 2.5% and a positive currency impact of 3.5%. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales increased 2.9%, domestic sales increased 1.7% and international sales increased 4.1%.*

Worldwide operational results, excluding the net impact of acquisitions and divestitures, were driven by ACUVUE contact lenses and surgical products in the Vision business; electrophysiology products in the Interventional Solutions business; biosurgicals and international endocutters in the Advanced Surgery business; wound closure products in the General Surgery business and trauma products in the Orthopaedics business, partially offset by declines in the Diabetes Care business and spine products in the Orthopaedics business.

During the quarter, the Company announced acceptance of the binding offer from Platinum Equity to acquire its LifeScan business for approximately $2.1 billion, subject to customary adjustments. The Company also announced receipt of a binding offer from Fortive Corporation to acquire its Advanced Sterilization Products business for an aggregate value of approximately $2.8 billion, subject to customary adjustments. In addition, the FDA approved iDESIGN Refractive Studio, part of a next generation LASIK platform that measures the eye inside and out to enable highly precise personalized vision correction.

In July, the acquisition of assets from Medical Enterprises Distribution, LLC, a privately held developer of surgical impactor technology, including the automated ME1000 Surgical Impactor for use in hip replacement, was completed.

About Johnson & Johnson
At Johnson & Johnson, we believe good health is the foundation of vibrant lives, thriving communities and forward progress. That’s why for more than 130 years, we have aimed to keep people well at every age and every stage of life. Today, as the world’s largest and most broadly-based health care company, we are committed to using our reach and size for good. We strive to improve access and affordability, create healthier communities, and put a healthy mind, body and environment within reach of everyone, everywhere. We are blending our heart, science and ingenuity to profoundly change the trajectory of health for humanity.

* Operational sales growth excluding the net impact of acquisitions and divestitures, as well as adjusted net earnings, adjusted diluted earnings per share and operational adjusted diluted earnings per share excluding after-tax intangible amortization expense and special items, are non-GAAP financial measures and should not be considered replacements for, and should be read together with, the most comparable GAAP financial measures. Except for guidance measures, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the accompanying financial schedules of the earnings release and the Investor Relations section of the company’s website at www.investor.jnj.com. Johnson & Johnson does not provide GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, acquisition-related expenses and purchase accounting fair value adjustments without unreasonable effort. These items are uncertain, depend on various factors, and could be material to Johnson & Johnson’s results computed in accordance with GAAP.

Johnson & Johnson will conduct a conference call with investors to discuss this news release today at 8:30 a.m., Eastern Time. A simultaneous webcast of the call for investors and other interested parties may be accessed by visiting the Johnson & Johnson website at www.investor.jnj.com. A replay and podcast will be available approximately two hours after the live webcast by visiting www.investor.jnj.com.

Copies of the financial schedules accompanying this press release are available at www.investor.jnj.com/historical-sales.cfm. These schedules include supplementary sales data, a condensed consolidated statement of earnings, reconciliations of non-GAAP financial measures, and sales of key products/franchises. Additional information on Johnson & Johnson, including adjusted income before tax by segment, a pharmaceutical pipeline of selected compounds in late stage development and a copy of today’s earnings call presentation can be found on the company’s website at www.investor.jnj.com.

NOTE TO INVESTORS CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things: future operating and financial performance, product development, market position and business strategy. The reader is cautioned not to rely on these forward- looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Johnson & Johnson. Risks and uncertainties include, but are not limited to: economic factors, such as interest rate and currency exchange rate fluctuations; competition, including technological advances, new products and patents attained by competitors; challenges inherent in new product research and development, including uncertainty of clinical success and obtaining regulatory approvals; uncertainty of commercial success for new and existing products; challenges to patents; the impact of patent expirations; the ability of the company to successfully execute strategic plans, including restructuring plans; the impact of business combinations and divestitures; manufacturing difficulties or delays, internally or within the supply chain; product efficacy or safety concerns resulting in product recalls or regulatory action; significant adverse litigation or government action, including related to product liability claims; changes to applicable laws and regulations, including tax laws, global health care reforms and import/export and trade laws; trends toward health care cost containment; changes in behavior and spending patterns of purchasers of health care products and services; financial instability of international economies and legal systems and sovereign risk; increased scrutiny of the health care industry by government agencies. A further list and descriptions of these risks, uncertainties and other factors can be found in Johnson & Johnson’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, including in the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and in the company’s subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov, www.jnj.com or on request from Johnson & Johnson. Any forward-looking statement made in this release speaks only as of the date of this release. Johnson & Johnson does not undertake to update any forward-looking statement as a result of new information or future events or developments.

 Johnson & Johnson and Subsidiaries ---------------------------------- Supplementary Sales Data (Unaudited; Dollars in Millions) SECOND QUARTER SIX MONTHS ------------------------------- -------------- ---------- Percent Change Percent Change 2018 2017 Total Operations Currency 2018 2017 Total Operations Currency ---- ---- ----- ---------- -------- ---- ---- ----- ---------- -------- Sales to customers by segment of business Consumer U.S. $1,476 1,487 (0.7)% (0.7) - $2,912 2,901 0.4% 0.4 - International 2,028 1,991 1.9 0.0 1.9 3,990 3,805 4.9 0.5 4.4 3,504 3,478 0.7 (0.4) 1.1 6,902 6,706 2.9 0.4 2.5 ----- ----- --- ---- --- ----- ----- --- --- --- Pharmaceutical U.S. 5,899 5,010 17.7 17.7 - 11,253 9,882 13.9 13.9 - International 4,455 3,625 22.9 17.5 5.4 8,945 6,998 27.8 19.9 7.9 10,354 8,635 19.9 17.6 2.3 20,198 16,880 19.7 16.4 3.3 ------ ----- ---- ---- --- ------ ------ ---- ---- --- Medical Devices U.S. 3,265 3,229 1.1 1.1 - 6,426 6,321 1.7 1.7 - International 3,707 3,497 6.0 2.5 3.5 7,313 6,698 9.2 3.3 5.9 6,972 6,726 3.7 1.9 1.8 13,739 13,019 5.5 2.5 3.0 ----- ----- --- --- --- ------ ------ --- --- --- U.S. 10,640 9,726 9.4 9.4 - 20,591 19,104 7.8 7.8 - International 10,190 9,113 11.8 7.9 3.9 20,248 17,501 15.7 9.3 6.4 Worldwide $20,830 18,839 10.6% 8.7 1.9 $40,839 36,605 11.6% 8.6 3.0 --------- ------- ------ ---- --- --- ------- ------ ---- --- --- 

 Johnson & Johnson and Subsidiaries ---------------------------------- Supplementary Sales Data (Unaudited; Dollars in Millions) SECOND QUARTER SIX MONTHS ------------------------------- -------------- ---------- Percent Change Percent Change 2018 2017 Total Operations Currency 2018 2017 Total Operations Currency ---- ---- ----- ---------- -------- ---- ---- ----- ---------- -------- Sales to customers by geographic area U.S. $10,640 9,726 9.4% 9.4 - $20,591 19,104 7.8% 7.8 - ---- ------- ----- --- --- --- ------- ------ --- --- --- Europe 4,810 4,232 13.7 6.5 7.2 9,607 8,090 18.8 8.2 10.6 Western Hemisphere excluding U.S. 1,540 1,499 2.7 6.7 (4.0) 3,107 2,953 5.2 6.9 (1.7) Asia-Pacific, Africa 3,840 3,382 13.5 10.2 3.3 7,534 6,458 16.7 11.9 4.8 International 10,190 9,113 11.8 7.9 3.9 20,248 17,501 15.7 9.3 6.4 ------------- ------ ----- ---- --- --- ------ ------ ---- --- --- Worldwide $20,830 18,839 10.6% 8.7 1.9 $40,839 36,605 11.6% 8.6 3.0 --------- ------- ------ ---- --- --- ------- ------ ---- --- --- 

 Johnson & Johnson and Subsidiaries ---------------------------------- Condensed Consolidated Statement of Earnings (Unaudited; in Millions Except Per Share Figures) SECOND QUARTER ------------------------------------------------ -------------- 2018 2017* Percent ---- ---- Percent Percent Increase Amount to Sales Amount to Sales (Decrease) Sales to customers $20,830 100.0 $18,839 100.0 10.6 Cost of products sold 6,927 33.3 5,846 31.0 18.5 Gross Profit 13,903 66.7 12,993 69.0 7.0 ------------ ------ ---- ------ ---- --- Selling, marketing and administrative expenses 5,743 27.5 5,289 28.1 8.6 Research and development expense 2,639 12.7 2,296 12.2 14.9 Interest (income) expense, net 127 0.6 122 0.6 Other (income) expense, net 364 1.7 527 2.8 Restructuring 57 0.3 11 0.1 ------------- --- --- --- --- Earnings before provision for taxes on income 4,973 23.9 4,748 25.2 4.7 Provision for taxes on income 1,019 4.9 921 4.9 10.6 Net earnings $3,954 19.0 $3,827 20.3 3.3 ------------ ------ ---- ------ ---- --- Net earnings per share (Diluted) $1.45 $1.40 3.6 Average shares outstanding (Diluted) 2,721.3 2,741.5 Effective tax rate 20.5% 19.4% Adjusted earnings before provision for taxes and net earnings (1) Earnings before provision for taxes on income $7,014 33.7 $6,285 33.4 11.6 Net earnings $5,718 27.5 $5,017 26.6 14.0 Net earnings per share (Diluted) $2.10 $1.83 14.8 Effective tax rate 18.5% 20.2% ------------------ ---- ---- (1)See Reconciliation of Non-GAAP Financial Measures. *2017 Statement of Earnings line items have been restated to reflect impact of ASU 2017-07 

 Johnson & Johnson and Subsidiaries ---------------------------------- Condensed Consolidated Statement of Earnings (Unaudited; in Millions Except Per Share Figures) SIX MONTHS ------------------------------------------------ ---------- 2018 2017* Percent ---- ---- Percent Percent Increase Amount to Sales Amount to Sales (Decrease) Sales to customers $40,839 100.0 $36,605 100.0 11.6 Cost of products sold 13,541 33.2 11,255 30.8 20.3 Gross Profit 27,298 66.8 25,350 69.2 7.7 ------------ ------ ---- ------ ---- --- Selling, marketing and administrative expenses 11,006 27.0 10,052 27.5 9.5 Research and development expense 5,043 12.3 4,366 11.9 15.5 Interest (income) expense, net 272 0.7 205 0.6 Other (income) expense, net 424 1.0 308 0.8 Restructuring 99 0.2 96 0.2 ------------- --- --- --- --- Earnings before provision for taxes on income 10,454 25.6 10,323 28.2 1.3 Provision for taxes on income 2,133 5.2 2,074 5.7 2.8 Net earnings $8,321 20.4 $8,249 22.5 0.9 ------------ ------ ---- ------ ---- --- Net earnings per share (Diluted) $3.05 $3.00 1.7 Average shares outstanding (Diluted) 2,728.5 2,749.4 Effective tax rate 20.4% 20.1% Adjusted earnings before provision for taxes and net earnings (1) Earnings before provision for taxes on income $13,872 34.0 $12,388 33.8 12.0 Net earnings $11,353 27.8 $10,055 27.5 12.9 Net earnings per share (Diluted) $4.16 $3.66 13.7 Effective tax rate 18.2% 18.8% ------------------ ---- ---- (1)See Reconciliation of Non-GAAP Financial Measures. *2017 Statement of Earnings line items have been restated to reflect impact of ASU 2017-07 

 Johnson & Johnson and Subsidiaries Reconciliation of Non-GAAP Financial Measures Second Quarter % Incr. / Six Months YTD % Incr. / -------------- -------------- (Dollars in Millions Except Per Share Data) 2018 2017 (Decr.) 2018 2017 (Decr.) ------------------------------------------ ---- ---- ------ ---- ---- ------ Earnings before provision for taxes on income - as reported $4,973 4,748 4.7% $10,454 10,323 1.3% Intangible asset amortization expense 1,084 480 2,199 809 Litigation expense, net 703 493 703 493 Restructuring/Other (1) 176 128 283 289 Actelion acquisition related cost 64 213 160 213 Diabetes asset impairment 4 182 4 182 AMO acquisition related cost 25 41 46 79 Unrealized loss/(gain) on securities (39) - (12) - Other 24 - 35 - Earnings before provision for taxes on income - as adjusted $7,014 6,285 11.6% $13,872 12,388 12.0% ------ ----- ---- ------- ------ ---- Net Earnings - as reported $3,954 3,827 3.3% $8,321 8,249 0.9% Intangible asset amortization expense 967 378 1,963 622 Litigation expense, net 609 352 609 352 Restructuring/Other 152 101 233 222 Actelion acquisition related cost 64 199 156 199 Diabetes asset impairment 3 125 3 125 AMO acquisition related cost 22 35 39 286 Unrealized loss/(gain) on securities (31) - (10) - Impact of tax legislation (2) (40) - 12 - Other 18 - 27 - Net Earnings - as adjusted $5,718 5,017 14.0% $11,353 10,055 12.9% ------ ----- ---- ------- ------ ---- Diluted Net Earnings per share - as reported $1.45 1.40 3.6% $3.05 3.00 1.7% Intangible asset amortization expense 0.36 0.14 0.72 0.23 Litigation expense, net 0.22 0.13 0.22 0.13 Restructuring/Other 0.06 0.03 0.09 0.08 Actelion acquisition related cost 0.02 0.07 0.05 0.07 Diabetes asset impairment - 0.05 - 0.05 AMO acquisition related cost 0.01 0.01 0.01 0.10 Unrealized loss/(gain) on securities (0.01) - - - Impact of tax legislation (0.02) - 0.01 - Other 0.01 - 0.01 - Diluted Net Earnings per share - as adjusted $2.10 1.83 14.8% $4.16 3.66 13.7% ----- ---- ---- ----- ---- ---- Operational Diluted Net Earnings per share - as adjusted at 2016 foreign currency exchange rates 1.86 3.72 Impact of currency at 2017 foreign currency exchange rates (0.06) (0.03) (0.19) (0.06) Operational Diluted Net Earnings per share - as adjusted at 2017 foreign currency exchange rates $2.04 1.83 11.5% $3.97 3.66 8.5% ----- ---- ---- ----- ---- --- (1)Includes $44M recorded in cost of products sold and $75M recorded in other (income) expense for the second quarter 2018. Includes $50M recorded in cost of products sold and $134M recorded in other (income) expense for six months 2018 YTD. Includes $13M recorded in cost of products sold and $104M recorded in other (income) expense for the second quarter 2017. Includes $17M recorded in cost of products sold and $176M recorded in other (income) expense for six months 2017 YTD. (2)Includes foreign currency translation 

 Johnson & Johnson and Subsidiaries Reconciliation of Non-GAAP Financial Measure Operational Sales Growth Excluding Acquisitions and Divestitures SECOND QUARTER 2018 ACTUAL vs. 2017 ACTUAL Segments -------- Consumer Pharmaceutical Medical Devices Total -------- -------------- --------------- ----- Operational %(1) --------------- WW As Reported: (0.4)% 17.6% 1.9% 8.7% --------------- ----- ---- --- --- U.S. (0.7)% 17.7% 1.1% 9.4% International 0.0% 17.5% 2.5% 7.9% Pulmonary Hypertension Actelion (6.3) (3.0) U.S. (7.4) (3.8) International (5.2) (2.0) Cardiovascular / Metabolism / Other Actelion (0.3) (0.1) U.S. (0.1) (0.1) International (0.4) (0.2) Spine & Other Codman Neuroscience 1.0 0.4 U.S. 0.6 0.2 International 1.5 0.6 Wound Care / Other 1.0 0.2 Compeed 0.0 0.0 U.S. 1.7 0.4 International All Other Acquisitions and Divestitures 0.3 0.0 0.1 U.S. 0.0 0.0 0.0 International 0.4 0.1 0.1 WW Ops excluding Acquisitions and Divestitures 0.9% 11.0% 2.9% 6.3% ---------------------------------------------- === ==== === === U.S. (0.7)% 10.2% 1.7% 5.7% International 2.1% 11.9% 4.1% 6.8% (1)Operational growth excludes the effect of translational currency 

 Johnson & Johnson and Subsidiaries Reconciliation of Non-GAAP Financial Measure Operational Sales Growth Excluding Acquisitions and Divestitures SIX MONTHS 2018 ACTUAL vs. 2017 ACTUAL Segments -------- Consumer Pharmaceutical Medical Devices Total -------- -------------- --------------- ----- Operational %(1) --------------- WW As Reported: 0.4% 16.4% 2.5% 8.6% --------------- --- ---- --- --- U.S. 0.4% 13.9% 1.7% 7.8% International 0.5% 19.9% 3.3% 9.3% Pulmonary Hypertension Actelion (6.8) (3.1) U.S. (7.4) (3.8) International (5.9) (2.4) Cardiovascular / Metabolism / Other Actelion (0.3) (0.2) U.S. (0.2) (0.1) International (0.5) (0.2) Spine & Other Codman Neuroscience 1.0 0.3 U.S. 0.6 0.2 International 1.4 0.6 Wound Care / Other Compeed 0.9 0.2 U.S. 0.0 0.0 International 1.5 0.4 Vision Vision Surgical & Eye Health Business (1.5) (0.5) U.S. (1.4) (0.5) International (1.6) (0.6) All Other Acquisitions and Divestitures 0.1 0.0 0.0 U.S. 0.0 (0.2) 0.0 International 0.3 0.1 0.1 WW Ops excluding Acquisitions and Divestitures 1.4% 9.3% 2.0% 5.3% ============================================== === === === === U.S. 0.4% 6.3% 0.7% 3.6% International 2.3% 13.5% 3.2% 7.2% (1)Operational growth excludes the effect of translational currency 

 REPORTED SALES vs. PRIOR PERIOD ($MM) ------------------------------------ SECOND QUARTER SIX MONTHS -------------- ---------- % Change % Change -------- -------- 2018 2017 Reported Operational (1) Currency 2018 2017 Reported Operational (1) Currency ---- ---- -------- -------------- -------- ---- ---- -------- -------------- -------- CONSUMER SEGMENT (2) ------------------- BABY CARE --------- US $89 $113 -21.2% -21.2% - $186 $226 -17.7% -17.7% - Intl 367 381 -3.7% -2.7% -1.0% 727 723 0.6% -0.8% 1.4% --- --- --- --- WW 456 494 -7.7% -6.9% -0.8% 913 949 -3.8% -4.8% 1.0% BEAUTY ------ US 637 649 -1.8% -1.8% - 1,248 1,216 2.6% 2.6% - Intl 472 427 10.5% 7.3% 3.2% 945 841 12.4% 6.8% 5.6% --- --- --- --- WW 1,109 1,076 3.1% 1.8% 1.3% 2,193 2,057 6.6% 4.3% 2.3% ORAL CARE --------- US 157 150 4.7% 4.7% - 314 306 2.6% 2.6% - Intl 236 244 -3.3% -5.5% 2.2% 458 450 1.8% -2.7% 4.5% --- --- --- --- WW 393 394 -0.3% -1.7% 1.4% 772 756 2.1% -0.6% 2.7% OTC --- US 454 432 5.1% 5.1% - 919 909 1.1% 1.1% - Intl 612 574 6.6% 2.5% 4.1% 1,219 1,110 9.8% 3.2% 6.6% --- --- ----- ----- WW 1,066 1,006 6.0% 3.7% 2.3% 2,138 2,019 5.9% 2.2% 3.7% WOMEN’S HEALTH -------------- US 4 3 33.3% 33.3% - 7 6 16.7% 16.7% - Intl 276 273 1.1% 1.9% -0.8% 516 512 0.8% -1.1% 1.9% --- --- --- --- WW 280 276 1.4% 2.2% -0.8% 523 518 1.0% -0.9% 1.9% WOUND CARE / OTHER ------------------ US 135 140 -3.6% -3.6% - 238 238 0.0% 0.0% - Intl 65 92 -29.3% -31.3% 2.0% 125 169 -26.0% -29.2% 3.2% --- --- --- --- WW 200 232 -13.8% -14.6% 0.8% 363 407 -10.8% -12.1% 1.3% TOTAL CONSUMER -------------- US 1,476 1,487 -0.7% -0.7% - 2,912 2,901 0.4% 0.4% - Intl 2,028 1,991 1.9% 0.0% 1.9% 3,990 3,805 4.9% 0.5% 4.4% ----- ----- ----- ----- WW $3,504 $3,478 0.7% -0.4% 1.1% $6,902 $6,706 2.9% 0.4% 2.5% ====== ====== ====== ====== See footnotes at end of schedule REPORTED SALES vs. PRIOR PERIOD ($MM) ------------------------------------ SECOND QUARTER SIX MONTHS -------------- ---------- % Change % Change -------- -------- 2018 2017 Reported Operational (1) Currency 2018 2017 Reported Operational (1) Currency ---- ---- -------- -------------- -------- ---- ---- -------- -------------- -------- PHARMACEUTICAL SEGMENT (2)(5) ---------------------------- IMMUNOLOGY ---------- US $2,317 $2,101 10.3% 10.3% - $4,317 $4,224 2.2% 2.2% - Intl 1,021 858 19.0% 14.6% 4.4% 2,063 1,665 23.9% 17.0% 6.9% ----- --- ----- ----- WW 3,338 2,959 12.8% 11.5% 1.3% 6,380 5,889 8.3% 6.3% 2.0% REMICADE -------- US 918 1,064 -13.7% -13.7% - 1,834 2,246 -18.3% -18.3% - US Exports (3) 104 127 -18.1% -18.1% - 246 292 -15.8% -15.8% - Intl 298 339 -12.1% -14.0% 1.9% 629 664 -5.3% -9.0% 3.7% --- --- --- --- WW 1,320 1,530 -13.7% -14.1% 0.4% 2,709 3,202 -15.4% -16.2% 0.8% SIMPONI / SIMPONI ARIA ---------------------- US 274 230 19.1% 19.1% - 498 459 8.5% 8.5% - Intl 274 209 31.1% 26.9% 4.2% 568 408 39.2% 32.0% 7.2% --- --- --- --- WW 548 439 24.8% 22.8% 2.0% 1,066 867 23.0% 19.6% 3.4% STELARA ------- US 919 680 35.1% 35.1% - 1,571 1,227 28.0% 28.0% - Intl 422 303 39.3% 32.0% 7.3% 831 579 43.5% 32.9% 10.6% --- --- --- --- WW 1,341 983 36.4% 34.2% 2.2% 2,402 1,806 33.0% 29.6% 3.4% OTHER IMMUNOLOGY ---------------- US 102 - * * - 168 - * * - Intl 27 7 * * * 35 14 * * * --- --- --- --- WW 129 7 * * * 203 14 * * * INFECTIOUS DISEASES ------------------- US 328 341 -3.8% -3.8% - 661 667 -0.9% -0.9% - Intl 521 451 15.5% 11.0% 4.5% 1,018 874 16.5% 8.5% 8.0% --- --- ----- --- WW 849 792 7.2% 4.6% 2.6% 1,679 1,541 9.0% 4.5% 4.5% EDURANT / rilpivirine --------------------- US 15 17 -11.8% -11.8% - 29 29 0.0% 0.0% - Intl 196 162 21.0% 13.1% 7.9% 392 299 31.1% 18.6% 12.5% --- --- --- --- WW 211 179 17.9% 10.7% 7.2% 421 328 28.4% 17.0% 11.4% PREZISTA / PREZCOBIX / REZOLSTA / SYMTUZA ----------------------------------------- US 277 278 -0.4% -0.4% - 550 537 2.4% 2.4% - Intl 215 176 22.2% 18.8% 3.4% 420 347 21.0% 14.1% 6.9% --- --- --- --- WW 492 454 8.4% 7.1% 1.3% 970 884 9.7% 7.0% 2.7% OTHER INFECTIOUS DISEASES ------------------------- US 36 46 -21.7% -21.7% - 82 101 -18.8% -18.8% - Intl 110 113 -2.7% -4.1% 1.4% 206 228 -9.6% -13.3% 3.7% --- --- --- --- WW 146 159 -8.2% -9.2% 1.0% 288 329 -12.5% -15.1% 2.6% --- --- ---- ---- --- --- --- ----- ----- --- REPORTED SALES vs. PRIOR PERIOD ($MM) ------------------------------------ SECOND QUARTER SIX MONTHS -------------- ---------- % Change % Change -------- -------- 2018 2017 Reported Operational (1) Currency 2018 2017 Reported Operational (1) Currency ---- ---- -------- -------------- -------- ---- ---- -------- -------------- -------- NEUROSCIENCE ------------ US 639 620 3.1% 3.1% - 1,263 1,284 -1.6% -1.6% - Intl 889 847 5.0% 1.4% 3.6% 1,824 1,680 8.6% 2.4% 6.2% --- --- ----- ----- WW 1,528 1,467 4.2% 2.1% 2.1% 3,087 2,964 4.1% 0.6% 3.5% CONCERTA / methlyphenidate -------------------------- US 68 76 -10.5% -10.5% - 134 184 -27.2% -27.2% - Intl 115 105 9.5% 6.9% 2.6% 222 206 7.8% 3.1% 4.7% --- --- --- --- WW 183 181 1.1% -0.4% 1.5% 356 390 -8.7% -11.2% 2.5% INVEGA SUSTENNA / XEPLION / TRINZA / TREVICTA --------------------------------------------- US 438 387 13.2% 13.2% - 838 759 10.4% 10.4% - Intl 282 242 16.5% 10.5% 6.0% 578 474 21.9% 12.8% 9.1% --- --- --- --- WW 720 629 14.5% 12.2% 2.3% 1,416 1,233 14.8% 11.3% 3.5% RISPERDAL CONSTA ---------------- US 80 91 -12.1% -12.1% - 162 186 -12.9% -12.9% - Intl 108 116 -6.9% -10.3% 3.4% 222 228 -2.6% -8.7% 6.1% --- --- --- --- WW 188 207 -9.2% -11.1% 1.9% 384 414 -7.2% -10.6% 3.4% OTHER NEUROSCIENCE ------------------ US 53 66 -19.7% -19.7% - 129 155 -16.8% -16.8% - Intl 384 384 0.0% -2.4% 2.4% 802 772 3.9% -1.0% 4.9% --- --- --- --- WW 437 450 -2.9% -5.0% 2.1% 931 927 0.4% -3.6% 4.0% ONCOLOGY -------- US 1,085 697 55.7% 55.7% - 2,018 1,361 48.3% 48.3% - Intl 1,371 1,030 33.1% 27.2% 5.9% 2,749 1,960 40.3% 30.7% 9.6% ----- ----- ----- ----- WW 2,456 1,727 42.2% 38.7% 3.5% 4,767 3,321 43.5% 37.8% 5.7% DARZALEX -------- US 298 212 40.6% 40.6% - 562 413 36.1% 36.1% - Intl 213 87 * * * 381 141 * * * --- --- --- --- WW 511 299 70.9% 67.7% 3.2% 943 554 70.2% 65.8% 4.4% IMBRUVICA --------- US 250 202 23.8% 23.8% - 477 392 21.7% 21.7% - Intl 370 248 49.2% 42.7% 6.5% 730 467 56.3% 45.7% 10.6% --- --- --- --- WW 620 450 37.8% 34.2% 3.6% 1,207 859 40.5% 34.7% 5.8% VELCADE ------- US - - - - - - - - - - Intl 280 290 -3.4% -8.0% 4.6% 593 570 4.0% -3.4% 7.4% --- --- --- --- WW 280 290 -3.4% -8.0% 4.6% 593 570 4.0% -3.4% 7.4% ZYTIGA ------ US 486 241 * * - 893 474 88.4% 88.4% - Intl 423 317 33.4% 27.3% 6.1% 861 607 41.8% 31.8% 10.0% --- --- --- --- WW 909 558 62.9% 59.5% 3.4% 1,754 1,081 62.3% 56.7% 5.6% OTHER ONCOLOGY -------------- US 51 42 21.4% 21.4% - 86 82 4.9% 4.9% - Intl 85 88 -3.4% -6.8% 3.4% 184 175 5.1% -1.5% 6.6% --- --- --- --- WW 136 130 4.6% 2.3% 2.3% 270 257 5.1% 0.6% 4.5% --- --- --- --- --- --- --- --- --- --- REPORTED SALES vs. PRIOR PERIOD ($MM) ------------------------------------ SECOND QUARTER SIX MONTHS -------------- ---------- % Change % Change -------- -------- 2018 2017 Reported Operational (1) Currency 2018 2017 Reported Operational (1) Currency ---- ---- -------- -------------- -------- ---- ---- -------- -------------- -------- PULMONARY HYPERTENSION(4) ------------------------ US 429 37 * * - 790 37 * * - Intl 236 48 * * * 460 48 * * * --- --- --- --- WW 665 85 * * * 1,250 85 * * * OPSUMIT ------- US 180 24 * * - 329 24 * * - Intl 131 21 * * * 253 21 * * * --- --- --- --- WW 311 45 * * * 582 45 * * * TRACLEER -------- US 71 2 * * - 139 2 * * - Intl 72 24 * * * 144 24 * * * --- --- --- --- WW 143 26 * * * 283 26 * * * UPTRAVI ------- US 155 8 * * - 279 8 * * - Intl 16 1 * * * 32 1 * * * --- --- --- --- WW 171 9 * * * 311 9 * * * OTHER ----- US 23 3 * * - 43 3 * * - Intl 17 2 * * * 31 2 * * * --- --- --- --- WW 40 5 * * * 74 5 * * * CARDIOVASCULAR / METABOLISM / OTHER ----------------------------------- US 1,101 1,214 -9.3% -9.3% - 2,204 2,309 -4.5% -4.5% - Intl 417 391 6.6% 1.9% 4.7% 831 771 7.8% 1.7% 6.1% --- --- --- --- WW 1,518 1,605 -5.4% -6.6% 1.2% 3,035 3,080 -1.5% -3.0% 1.5% XARELTO ------- US 679 642 5.8% 5.8% - 1,257 1,155 8.8% 8.8% - Intl - - - - - - - - - - --- --- --- --- WW 679 642 5.8% 5.8% - 1,257 1,155 8.8% 8.8% - INVOKANA / INVOKAMET -------------------- US 169 256 -34.0% -34.0% - 373 503 -25.8% -25.8% - Intl 46 39 17.9% 13.0% 4.9% 90 76 18.4% 11.7% 6.7% --- --- --- --- WW 215 295 -27.1% -27.7% 0.6% 463 579 -20.0% -20.9% 0.9% PROCRIT / EPREX --------------- US 156 174 -10.3% -10.3% - 345 343 0.6% 0.6% - Intl 80 81 -1.2% -5.9% 4.7% 167 159 5.0% -1.7% 6.7% --- --- --- --- WW 236 255 -7.5% -9.0% 1.5% 512 502 2.0% -0.1% 2.1% OTHER ----- US 97 142 -31.7% -31.7% - 229 308 -25.6% -25.6% - Intl 291 271 7.4% 2.7% 4.7% 574 536 7.1% 1.3% 5.8% --- --- --- --- WW 388 413 -6.1% -9.2% 3.1% 803 844 -4.9% -8.6% 3.7% TOTAL PHARMACEUTICAL -------------------- US 5,899 5,010 17.7% 17.7% - 11,253 9,882 13.9% 13.9% - Intl 4,455 3,625 22.9% 17.5% 5.4% 8,945 6,998 27.8% 19.9% 7.9% ----- ----- ----- ----- WW $10,354 $8,635 19.9% 17.6% 2.3% $20,198 $16,880 19.7% 16.4% 3.3% ------- ------ ---- ---- --- ------- ------- ---- ---- --- See footnotes at end of schedule REPORTED SALES vs. PRIOR PERIOD ($MM) ------------------------------------ SECOND QUARTER SIX MONTHS -------------- ---------- % Change % Change -------- -------- 2018 2017 Reported Operational (1) Currency 2018 2017 Reported Operational (1) Currency ---- ---- -------- -------------- -------- ---- ---- -------- -------------- -------- MEDICAL DEVICES SEGMENT (2)(5) ----------------------------- DIABETES CARE ------------- US $129 $160 -19.4% -19.4% - $246 $314 -21.7% -21.7% - Intl 226 261 -13.4% -16.3% 2.9% 448 506 -11.5% -16.6% 5.1% --- --- --- --- WW 355 421 -15.7% -17.5% 1.8% 694 820 -15.4% -18.5% 3.1% DIAGNOSTICS ----------- US - - - - - - - - - - Intl - - - - - - 1 * * * --- --- --- --- WW - - - - - - 1 * * * INTERVENTIONAL SOLUTIONS ------------------------ US 323 285 13.3% 13.3% 0.0% 627 564 11.2% 11.2% - Intl 344 288 19.4% 14.1% 5.3% 680 558 21.9% 14.2% 7.7% --- --- --- --- WW 667 573 16.4% 13.7% 2.7% 1,307 1,122 16.5% 12.7% 3.8% ORTHOPAEDICS ------------ US 1,332 1,367 -2.6% -2.6% - 2,639 2,726 -3.2% -3.2% - Intl 930 926 0.4% -3.6% 4.0% 1,873 1,842 1.7% -4.6% 6.3% --- --- ----- ----- WW 2,262 2,293 -1.4% -3.0% 1.6% 4,512 4,568 -1.2% -3.8% 2.6% HIPS ---- US 211 208 1.4% 1.4% - 420 417 0.7% 0.7% - Intl 149 142 4.9% 0.8% 4.1% 303 285 6.3% -0.2% 6.5% --- --- --- --- WW 360 350 2.9% 1.2% 1.7% 723 702 3.0% 0.3% 2.7% KNEES ----- US 229 236 -3.0% -3.0% - 457 482 -5.2% -5.2% - Intl 153 149 2.7% -0.8% 3.5% 312 301 3.7% -2.5% 6.2% --- --- --- --- WW 382 385 -0.8% -2.2% 1.4% 769 783 -1.8% -4.2% 2.4% TRAUMA ------ US 394 390 1.0% 1.0% - 801 781 2.6% 2.6% - Intl 281 253 11.1% 6.7% 4.4% 570 504 13.1% 6.2% 6.9% --- --- --- --- WW 675 643 5.0% 3.3% 1.7% 1,371 1,285 6.7% 4.0% 2.7% SPINE & OTHER ------------- US 498 533 -6.6% -6.6% - 961 1,046 -8.1% -8.1% - Intl 347 382 -9.2% -13.2% 4.0% 688 752 -8.5% -14.5% 6.0% --- --- --- --- WW 845 915 -7.7% -9.4% 1.7% 1,649 1,798 -8.3% -10.8% 2.5% SURGERY ------- US 1,022 1,012 1.0% 1.0% - 2,015 2,007 0.4% 0.4% - Intl 1,493 1,372 8.8% 5.4% 3.4% 2,923 2,648 10.4% 4.7% 5.7% ----- ----- ----- ----- WW 2,515 2,384 5.5% 3.5% 2.0% 4,938 4,655 6.1% 2.9% 3.2% ADVANCED -------- US 402 400 0.5% 0.5% - 795 792 0.4% 0.4% - Intl 603 533 13.1% 9.1% 4.0% 1,176 1,018 15.5% 9.3% 6.2% --- --- ----- ----- WW 1,005 933 7.7% 5.4% 2.3% 1,971 1,810 8.9% 5.4% 3.5% GENERAL ------- US 436 423 3.1% 3.1% - 859 846 1.5% 1.5% - Intl 733 691 6.1% 2.9% 3.2% 1,437 1,342 7.1% 1.5% 5.6% --- --- ----- ----- WW 1,169 1,114 4.9% 2.9% 2.0% 2,296 2,188 4.9% 1.5% 3.4% SPECIALTY --------- US 184 189 -2.6% -2.6% - 361 369 -2.2% -2.2% - Intl 157 148 6.1% 4.2% 1.9% 310 288 7.6% 3.4% 4.2% --- --- --- --- WW 341 337 1.2% 0.4% 0.8% 671 657 2.1% 0.3% 1.8% VISION ------ US 459 405 13.3% 13.3% - 899 710 26.6% 26.6% - Intl 714 650 9.8% 7.2% 2.6% 1,389 1,143 21.5% 16.3% 5.2% --- --- ----- ----- WW 1,173 1,055 11.2% 9.6% 1.6% 2,288 1,853 23.5% 20.3% 3.2% CONTACT LENSES / OTHER ---------------------- US 320 274 16.8% 16.8% - 629 530 18.7% 18.7% - Intl 524 479 9.4% 6.8% 2.6% 1,022 906 12.8% 8.0% 4.8% --- --- ----- --- WW 844 753 12.1% 10.4% 1.7% 1,651 1,436 15.0% 12.0% 3.0% SURGICAL -------- US 139 131 6.1% 6.1% - 270 180 50.0% 50.0% - Intl 190 171 11.1% 8.6% 2.5% 367 237 54.9% 48.3% 6.6% --- --- --- --- WW 329 302 8.9% 7.5% 1.4% 637 417 52.8% 49.1% 3.7% TOTAL MEDICAL DEVICES --------------------- US 3,265 3,229 1.1% 1.1% - 6,426 6,321 1.7% 1.7% - Intl 3,707 3,497 6.0% 2.5% 3.5% 7,313 6,698 9.2% 3.3% 5.9% ----- ----- ----- ----- WW $6,972 6,726 3.7% 1.9% 1.8% $13,739 $13,019 5.5% 2.5% 3.0% ====== ===== ======= ======= * Percentage greater than 100% or not meaningful (1) Operational growth excludes the effect of translational currency (2) Unaudited (3) Reported as U.S. sales (4) Products acquired from Actelion acquisition on June 16, 2017 (5) Prior year amounts have been reclassified to conform to current year product disclosure 

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