Q2 2021 Johnson & Johnson Earnings Call

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Good morning, and welcome to Johnson <unk> Johnson second quarter 2021 earnings Conference call.

Operator: Good morning, and welcome to Johnson & Johnson's second quarter 2021 earnings conference call. All participants will be in listen-only mode until the question and answer session of the conference. This call is being recorded. If anyone has any objections, they may disconnect at this time. If you experience technical difficulties during the conference, you may press star zero to reach the operator. I would now like to turn the conference call over to Johnson & Johnson. You may begin.

All participants will be in listen only mode until the question and answer session of the conference.

Paul is being recorded if anyone has any objections you may disconnect at this time.

If you experience technical difficulties during the conference you May press star zero to reach the operator.

I would now like to turn the conference call over to Johnson <unk> Johnson you may begin.

Good morning. This is crystal wharf as Vice President of Investor Relations for Johnson <unk> Johnson welcome to our company's review of business results for the second quarter and our updated financial outlook for 2021, joining me on today's call is Joe Wolk Executive Vice President Chief Financial Officer.

Chris Schott: Good morning. This is Chris DeLorfus, Vice President of Investor Relations for Johnson & Johnson. Welcome to our company's review of business results for the second quarter and our updated financial outlook for 2021. Joining me on today's call is Joe Wolk, Executive Vice President and Chief Financial Officer. Also joining Joe and myself during the Q&A portion of the call will be Jennifer Talbert, Executive Vice President and Worldwide Chair of Pharmaceuticals; Thibaut Mangan, Executive Vice President and Worldwide Chair of Consumer Health; and Ashley McEvoy, Executive Vice President and Worldwide Chair of Medical Devices. A few logistics before we get into the details.

Also joining Joe and myself during the Q&A portion of the call will be Jennifer Taubert Executive Vice President and worldwide Chair Pharmaceuticals.

T Rowe Mongol executive Vice President and worldwide Chair consumer health, and Ashley Mcevoy Executive Vice President and worldwide Chair medical devices, a few logistics before we get into the details.

This review is being made available via webcast accessible through the Investor Relations section of the Johnson <unk> Johnson website at Investor Dog, J&J Dot Com, where you can also find additional materials, including today's presentation and associated schedules. Please.

Chris Schott: This review is being made available via webcast, accessible through the Investor Relations section of the Johnson & Johnson website at investor.jnj.com, where you can also find additional materials, including today's presentation and associated schedules. Please note that today's presentation includes forward-looking statements. We encourage you to review the cautionary statement included in today's presentation, which identifies certain risks and factors that may cause the company's actual results to differ materially from those projected. In particular, there is uncertainty about the duration and contemplated impact of the COVID-19 pandemic.

Please note that today's presentation includes forward looking statements.

We encourage you to review the cautionary statement included in today's presentation, which identifies certain risks and factors that may cause the company's actual results to differ materially from those projected in particular, there is uncertainty about the duration and contemplated impact of the COVID-19 pandemic.

This means that results could change at any time and the contemplated impact of COVID-19 on the company's business results and outlook is our best estimate based on the information available as of today's date.

Chris Schott: This means the results could change at any time, and the contemplated impact of COVID-19 on the company's business results and outlook is a best estimate based on the information available as of today. A further description of these risks, uncertainties, and other factors can be found in our SEC filings, including our 2020 Form 10-K and subsequent Form 10-Qs, along with reconciliations of the non-GAAP financial measures utilized for today's discussion to the most comparable GAAP measures. Also, reconciliations of the non-GAAP financial measures utilized for today's discussion to the most comparable GAAP measures are also available at investor.jnj.com. Several of the products and compounds discussed today are being developed in collaboration with strategic partners or are being licensed from other companies. This slide acknowledges those relationships.

A further description of these risks uncertainties and other factors can be found in our SEC filings, including our 2020 form 10-K, and subsequent form 10 Qs.

Along with reconciliations of the non-GAAP financial measures utilized for today's discussion to the most comparable GAAP measures are also available at Investor Dodge J&J Dot com.

Several of the products and compounds discussed today are being developed in collaboration with strategic partners or licensed from other companies.

This slide acknowledges those relationships.

Moving to today's agenda I will review the second quarter sales and P&L results for the corporation and the 3 business segments.

Chris Schott: Moving to today's agenda, I will review the second quarter sales and P&L results for the corporation and the three business segments. Joe will provide insights about our cash position and capital allocation deployment and will outline our updated guidance, including the COVID-19 vaccine for 2021. Then we will begin the Q&A session with each of the segment leaders providing a brief update on their respective businesses. The remaining time will be available for your questions. We anticipate the webcast will last up to 75 minutes.

Joe will provide insights about our cash position and capital allocation deployment.

Outline our updated guidance inclusive of the COVID-19 vaccine for 2021.

We will begin the Q&A session with each of the segment leaders, providing a brief update on their respective businesses.

The remaining time will be available for your questions.

We anticipate the webcast will last up to 75 minutes.

Now, let's move to the second quarter results worldwide sales were $23.3 billion for the second quarter of 2021, an increase of 27, 1% versus the second quarter of 2020.

Chris Schott: Now let's move to the second quarter results. Worldwide sales were $23.3 billion in the second quarter of 2021, an increase of 27.1% versus the second quarter of 2020. Operational sales growth, which excludes the effect of translational currency, increased 23%, as currency had a positive impact of 4.1 points, and U.S. sales increased 24.9% and regions outside the U.S. our reported growth was 29.5%. Operational sales growth outside the U.S. was 20.9%, with currency positively impacting our reported OUS results by 8.6 points. Excluding the net impact of acquisitions and 25.1% live in the U.S., and 22.4% outside the U.S.

Operational sales growth, which excludes the effect of translational currency increased 23% as currency had a positive impact of 4.1 points in the U S sales increased 24, 9% in regions outside the U S. Our reported growth was 29, 5%.

Operational sales growth outside the U S was 29% with currency positively impacting our reported <unk> results by 8.6 points.

Excluding the net impact of acquisitions and divestitures adjusted.

<unk> sales growth was 23, 8% worldwide.

25, 1% in the U S and 22, 4% outside the U S.

Turning now to earnings for the quarter net earnings were $6.3 billion and diluted earnings per share was $2.35 versus diluted earnings per share of $1.36 a year ago.

Chris Schott: Turning now to earnings. For the quarter, net earnings were $6.3 billion, and diluted earnings per share was $2.35. Compared with diluted earnings per share of $1.36 a year ago, excluding after-tax intangible asset amortization expense and special items for both periods, adjusted net earnings for the quarter were $6.6 billion, and adjusted diluted earnings per share was $2.48, representing increases of 49% and 48.5%, respectively, On an operational basis, adjusted diluted earnings per share increased 44.9%.

Excluding after tax intangible asset amortization expense and special items for both periods.

<unk> net earnings for the quarter were $6.6 billion in.

And adjusted diluted earnings per share was $2.48, representing increases of 49% and 48, 5%, respectively compared to the second quarter of 2020.

On an operational basis adjusted diluted earnings per share increased 44, 9%.

I will now comment on business segment sales performance highlighting items that build upon the slides you have in front of you.

Chris Schott: I will now comment on business segment sales performance, highlighting items that build upon the slides you have in front of you. Unless otherwise stated, percentages quoted represent the operational sales change in comparison to the second quarter of 2020 and therefore exclude the impact of currency translation. Beginning with consumer health, worldwide consumer health sales totaled $3.7 billion and increased 9.2%, with increases in the U.S. of 12.4% and growth of 6.3% outside of the U.S. Excluding the impact of divestitures, worldwide growth was 10%.

Unless otherwise stated percentages quoted represent the operational sales change in comparison to the second quarter of 2020, and therefore exclude the impact of currency translation.

Beginning with consumer health.

Why consumer health sales totaled $3.7 billion in increased 9.2% with increases in the U S of 12, 4% and growth of 6.3% outside of the U S.

Excluding the impact of divestitures worldwide growth was 10%.

Year to date adjusted operational growth was 3.3% and is more reflective of performance given the quarterly fluctuations of COVID-19 impacts.

Chris Schott: Year-to-date adjusted operational growth was 3.3% and is more reflective of performance given the quarterly fluctuations of COVID-19 impacts. Over-the-counter medicines grew 8.9% globally, driven by strong growth in Zyrtec due to both the timing of and increased incidence in the allergy season. Digestive health grew double digits driven by U.S. Pepsid's new SKU stocking in the club channel coupled with share growth and increased COVID-19 related health care professional recommendations for the hydration benefit offering ORSL in the Asia-Pacific region. The skin health beauty franchise grew 12.9% globally, with the U.S. increasing 23% and OUS increasing 1.4%. Skin health and beauty outside the U.S. was negatively impacted by approximately 300 basis points due to divestitures.

Over the counter medicines grew 8.9% globally driven by strong growth in Zyrtec due to both the timing of an increased incidents in the allergy season.

Adjusted Health grew double digits, driven by U S. Perhaps it new skus stocking in the club channel coupled with share growth and increased COVID-19 related health care professional recommendations for the hydration benefit offering or so in the Asia Pacific region.

The skin health beauty franchise grew 12, 9% globally with.

With the U S, increasing 23% and O U S increasing 1.4%.

Skin health beauty outside the U S was negatively impacted by approximately 300 basis points due to divestitures.

Worldwide growth was driven by market recovery in key markets increased U S stocking for new products and comparisons to COVID-19 related Destocking dynamics.

Chris Schott: Worldwide growth was driven by market recovery in key markets, increased U.S. stocking for new products, and comparisons to COVID-19-related destocking dynamics. Neutrogena and Aveeno delivered strong performance in the U.S., primarily due to market recovery, new product innovation, and higher stocking due to the Neutrogena Rapid Firming product launch, partially offset by competitive pressures. OGX and MAUI growth was driven by share gains and market growth in hair care. Oral care grew 2.5% globally due to strong OUS performance for Listerine, reflecting an accelerated category and increased demand for continued successful promotional campaigns. Divestitures in the quarter negatively impacted results by 310 basis points.

Neutrogena and Aveeno delivered strong performance in the U S primarily due to a market recovery, new product innovation and higher stocking due to the neutrogena rapid firming product launch, partially offset by competitive pressures.

Oh, Gx and Mali growth was driven by share gains and market growth in hair care.

Oral care grew 2.5% globally due to strong U S performance for LISTERINE.

<unk> accelerated category and increased demand from continued successful promotional campaigns.

Best interest in the quarter negatively impacted results by 310 basis points.

The baby care franchise grew by 5% as a result of market recovery and O U S strength, and Johnson and Aveeno Baby in E Commerce.

Chris Schott: The baby care franchise grew by 5% as a result of market recovery and OUS strength in Johnson's and Aveeno Baby in e-commerce. WoundCare delivered strong growth of 13.4% driven by U.S. market growth with increased consumer behaviors focused on preparedness and infection prevention and seasonal stocking versus prior year COVID-19 destocking dynamics. Moving on to our pharmaceutical segment, worldwide pharmaceutical sales of $12.6 billion grew 13.6%, with strength in both the U.S. increasing by 12.2% and O.U.S. with sales increasing by 15.4%. Excluding the impact of divestitures, worldwide growth was 14.1%.

<unk> care delivered strong growth of 13, 4% driven by U S market growth with increased consumer behaviors focused on preparedness and infection prevention and seasonal stocking versus prior year COVID-19 Destocking dynamics.

Moving on to our pharmaceutical segment worldwide pharmaceutical sales of $12.6 billion grew 13, 6% with strength in both the U S. Increasing by 12, 2% and O U S with sales increasing by 15, 4%.

Excluding the impact of divestitures worldwide growth was 14, 1%.

Global sales in the quarter included a $164 million contribution from the COVID-19 vaccine.

Chris Schott: Global sales in the quarter included a $164 million contribution from the COVID-19 vaccine. Additionally, as a reminder, for comparison purposes, Q2 of 2020 was negatively impacted by access-related constraints due to COVID-19, resulting in a decrease of roughly 300 to 350 basis points in total across key brands. Our strong portfolio of products and commercial capabilities continues to enable us to deliver strong, adjusted operational growth at above market levels. Our immunology therapeutic area delivered global sales growth of 17%, driven by strong double-digit performance of Stelara and Tremfya, offset by declines in Remicade due to biosimilar competition.

Additionally, as a reminder for comparison purposes Q2 of 2020 was negatively impacted by access related constraints due to COVID-19, resulting in a decrease of roughly 300 to 350 basis points in total across key brands.

Our strong portfolio of products and commercial capabilities continues to enable us to deliver strong adjusted operational growth at above market levels.

Our immunology therapeutic area delivered global sales growth of 17% driven by strong double digit performance as to Lora and from fire offset by declines in Remicade due to Biosimilar competition.

<unk> continued to show strength in all regions growing at 35% driven by increased market growth and share gains with U S share increasing roughly 4 points in crohn's disease, and nearly 8 points in ulcerative colitis.

Chris Schott: Stelara continued to show strength in all regions, growing at 30.5%, driven by increased market growth and share gains, with U.S. share increasing roughly 4 points in Crohn's disease and nearly 8 points in ulcerative colitis. Tremfya was up 36.8% with strong double-digit growth worldwide due to share gains, continued global expansion into new markets, and additional penetration into the psoriatic arthritis indication that was approved in 2020. The U.S. share increased over 2 points in psoriasis and nearly 3 points in psoriatic arthritis in the quarter.

<unk> was up 36, 8% with strong double digit growth worldwide due to share gains continued global expansion into new markets and additional penetration into the psoriatic arthritis indication that was approved in 2020.

U S share increased over 2 points in psoriasis and nearly 3 points in psoriatic arthritis in the quarter.

Our oncology portfolio delivered another strong quarter with growth of 21, 5%.

Chris Schott: Our oncology portfolio delivered another strong quarter with growth of 21.5%. Darzalex continued its exceptional performance trajectory, growing 53.8%, driven by share gains and increased penetration of the subcutaneous formulation in the U.S. and EU. Darzalex continues to grow share across all lines of therapy, with nearly four points of share growth in line one in the U.S. this quarter.

<unk> continued its exceptional performance trajectory growing 53, 8% driven by share gains and increased penetration of the subcutaneous formulation in the U S and EU.

<unk> continues to grow share across all lines of therapy with nearly 4 points of share growth in line 1 in the U S. This quarter.

<unk> also continued its global momentum with growth of 73, 7% in the quarter driven by market share, which increased by nearly 2 points across indications.

Chris Schott: Erleada also continued its global momentum with growth of 73.7% in the quarter driven by market share which increased by nearly two points across indications and penetration gains, especially in the metastatic indication. Ambruvica grew 12.5% globally due to volume gains driven by our market-leading share, but this was partially offset by modest share losses in the U.S. due to novel oral competition and a market that remains slightly depressed due to temporary COVID-19 impacts on new patient starts.

Penetration gains, especially in the metastatic indication.

Rebecca grew 12, 5% globally due to volume gains driven by our market leading share, but was partially offset by modest share losses in the U S to novel oral competition in a market that remains slightly depressed due to temporary COVID-19 impacts on new patient starts.

In neuroscience, our Palo Verde on long acting portfolio had strong double digit growth of 10, 6%.

Chris Schott: In neuroscience, our palipertone long-acting portfolio had strong double-digit growth of 10.6%, driven by market and share growth due to increased new patient starts and strong persistency. Cardiovascular Metabolism Other declined 7.3% this quarter, driven by continued biosimilar competition for Procred and competitive pressures in Invokana, which was partially offset by growth of 1.8% in Xarelto due to continued demand strength.

Driven by market and share growth due to increased new patient starts and strong persistency.

Cardiovascular and metabolism other declined 7.3% this quarter driven by continued biosimilar competition for Procrit and competitive pressures in <unk>, which was partially offset by growth of 1.8% in sorel tow due to continued demand strength.

Lastly, our pulmonary hypertension portfolio achieved growth of 8.7% with summit growth of 11, 9% and up Trabi growth of 9.8%, both driven by market penetration and share gains.

Chris Schott: Lastly, our Pulmonary Hypertension portfolio achieved growth of 8.7%, with Absomic growth of 11.9%, and Uptravi growth of 9.8%, both driven by market penetration and share gains. I'll now turn your attention to the medical devices segment. Worldwide medical devices sales of $7 billion grew 57.2%, with the U.S. increasing 77.2% and OUS increasing 41.9%, primarily due to the recovery of procedures from COVID-19 restrictions that occurred in the second quarter of 2020, coupled with the success of recently launched products and commercial activities across the business. Selling days had a minor positive impact on growth this quarter. We expect the full-year impact from selling days, excluding the impact of the 53rd week in 2020, to be minimal.

I'll now turn your attention to the medical devices segment worldwide medical devices sales of $7 billion grew 57, 2% with the U S. Increasing 77, 2% and O U S. Increasing 41, 9% primarily due to the recovery of procedures from COVID-19 restrictions.

That occurred in the second quarter of 2020, coupled with the success of recently launched products and commercial activities across the business.

Selling days had a minor positive impact on growth. This quarter, we expect a full year impact from selling days, excluding the impact of the 50 <unk> week in 2020 to be minimal.

Given the extent of the procedure disruption from COVID-19 in 2020 I thought it may be helpful to provide context for our current quarter performance versus the second quarter of 2019.

Chris Schott: Given the extent of the procedure disruption from COVID-19 in 2020, I thought it may be helpful to provide context for our current quarter performance versus the second quarter of 2019, worldwide medical devices grew about 7% versus Q2 2019, with 8 of our 11 billion dollar platforms showing growth versus 2019. The pace of market recovery in knees, spine, and vision surgeries has been slower than the other markets in which we compete as these procedures are perceived to be more deferrable by patients.

Worldwide medical devices grew about 7% versus Q2.2019 with 8 of our $11 billion platforms showing growth versus 2019.

The pace of market recovery and knees spine envision surgical has been slower than the other markets in which we compete as these procedures are perceived to be more deferrable by patients Jean.

Graphically, both the U S and Asia Pacific markets surpassed Q2, 2019, while EMEA and Latin American markets have been slower to recover in Q2 results remained at or below 2019 levels.

Chris Schott: Geographically, both the U.S. and Asia-Pacific markets surpassed Q2 2019, while EMEA and Latin America markets have been slower to recover, and Q2 results remained at or below 2019 levels. Looking at results for each of our platforms, interventional solutions delivered another strong quarter with worldwide growth of 71.3% and strong double-digit growth versus the second quarter of 2019. Electrophysiology reinforced our global market share leadership position, growing 74.4%, driven by recovery in the market, coupled with our market expansion activities, the strength of our broad-based portfolio, and new products.

Looking at results for each of our platforms Inc.

<unk> solutions delivered another strong quarter with worldwide growth of 71, 3% and strong double digit growth versus the second quarter of 2019 electric.

Electrophysiology reinforced our global market share leadership position growing 74, 4% driven by recovery in the market coupled with our market expansion activities the strength of our broad based portfolio and new products.

Worldwide Orthopedics delivered 48, 6% growth versus the prior year, driven primarily by market recovery and success of newer product launches.

Chris Schott: Worldwide orthopedics delivered 48.6% growth versus the prior year, driven primarily by market recovery and successive newer product launches. Worldwide trauma delivered growth of 24.8%, reflecting market recovery, the strength of our comprehensive portfolio, and the success of newer product introductions. This quarter, we expanded our market-leading portfolio of products with the launch of a next-generation variable-angle clavicle plate system designed to enhance plate-to-bone fit on a broad range of patients and simplify implant selection for the surgeon.

Worldwide trauma delivered growth of 24, 8% reflecting market recovery.

<unk> of our comprehensive portfolio.

And success of newer product introductions.

This quarter, we expanded our market leading portfolio of products with the launch of a next generation variable angle clavicle plate system designed to enhance fleet to bone fit on a broad range of patients and simplify implant selection for the surgeon and we launched an advanced tibial nailing system designed to.

Chris Schott: We launched an advanced tibial nailing system designed to provide a more stable implant solution and create efficiency within the healthcare system by streamlining instrumentation across our portfolio. Worldwide hips grew 68.1% this quarter, driven by market recovery, our continued leadership position in the anterior approach, demand for the active stem aided by our other enabling technologies, such as Velys hip navigation, and innovative commercial programs focused on expanding coverage and access for hip fracture patients in parts of Europe and Latin America. NIS returned to growth this quarter, increasing 94.6% globally, primarily due to market recovery.

A more stable implant solution and create efficiency within the healthcare system by streamlining instrumentation across our portfolio.

Worldwide Hips grew 68, 1% this quarter driven by market recovery, our continued leadership position in the anterior approach demand for the actis stem aided by our other enabling technologies, such as Dallas hip navigation and innovative commercial programs focused on expanding coverage and access for him.

<unk> patients in parts of Europe, and Latin America.

Knees returned to growth this quarter, increasing 94, 6% globally, primarily due to market recovery.

Results reflect continued COVID-19 challenges and the related impact on procedures in markets, like India, Japan, and Australia, and other dynamics, including faster recovery trends in primary knee procedures compared to revisions.

Chris Schott: Results reflect continued COVID-19 challenges and the related impact on procedures in markets like India, Japan, and Australia, as well as other dynamics, including faster recovery trends in primary need procedures compared to revision. This quarter, we began commercializing our Velys robotic-assisted solution for total knee procedures in the U.S. We believe this launch, along with our differentiated Velys digital solutions and Attune Knee platform, including the second half 2021 launch of Attune Cementless Fixed Bearing Knee with Affixium 3D printed technology, will enhance our portfolio and competitiveness as procedures continue to recover.

This quarter, we began commercialization of our Bellus robotic assisted solution for total knee procedures in the U S.

We believe this launch along with our differentiated <unk> digital solutions and attune knee platform, including the second half of 2021 launch of the tune some atlas fixed bearing with a fixing them 3 D printed technology will enhance our portfolio and competitiveness as procedures continue to recover.

Spine returned to worldwide growth this quarter, increasing 51, 7%, reflecting market recovery and positive impact from recently launched products Symphony conduit and fiber graft as well as strategic partnerships, which further enhance our offerings such as the X Pac expandable cage.

Chris Schott: Spine returned to worldwide growth this quarter, increasing 51.7%, reflecting market recovery and a positive impact from recently launched products Symphony, Conduit, and Fibregraft, as well as strategic partnerships which further enhance our offerings, such as the XPAC expandable cage.

Advanced surgery grew 44, 3% versus prior year.

Chris Schott: Advanced surgery grew 44.3% versus the prior year. In addition to the positive impact of procedure recovery, biosurgery delivered sales growth of 48% and positive share momentum driven by new products and commercial strategies to expand market penetration and adoption. Endocutters in energy both grew around 40% globally, primarily due to procedure recovery, new product introductions, and China Tier 2 and 3 hospital market expansion activities, partially offset by competitive pressure in the U.S. We also achieved a significant milestone within the quarter with our Monarch robotic platform surpassing 100 customers and 8,000 procedures.

In addition to the positive impact of procedure recovery Biosurgery delivered sales growth of 48% and positive share momentum driven by new products and commercial strategies to expand market penetration and adoption.

<unk> cutters and energy both grew around 40% globally, primarily due to a procedure recovery, new product introductions, and China tier 2 and 3 hospital market expansion activities, partially offset by competitive pressure in the U S.

We also achieved a significant milestone within the quarter with our monarch robotic platform, surpassing 100 customers and 8000 procedures.

General surgery grew 67, 8% globally with.

Chris Schott: General surgery grew 67.8% globally, with wound closure growing 50.1% globally, driven by recovery in the markets, continued strength of our market-leading suture portfolio, including our PLUS sutures and Stratafix BARB suture family, and a change in channel inventory levels in the US, contributing about six points to global growth. Global general surgery sales were positively impacted by 23 points due to a prior year unfavorable pricing adjustment in the U.S., as we communicated last year.

With wound closure growing 51% globally, driven by recovery in the markets continued strength of our market, leading suture portfolio, including our plus sutures and strat effects Barb suture family and the change in channel inventory levels in the U S contributing about 6 points to global growth.

General surgery sales were positively impacted by 23 points due to a prior year unfavorable pricing adjustment in the U S. We communicated last year.

Worldwide vision grew 66% this quarter, primarily driven by market recovery.

Chris Schott: Worldwide vision grew 66% this quarter, primarily driven by market recovery. U.S. contact lens growth of 73.6% reflects the strength of our market-leading Acuvue portfolio. Commercial initiatives, such as our Prioritize Your Eyes campaign, launched to raise awareness around the importance of routine screenings.

U S contact lens growth of 73, 6% reflects the strength of our market leading active you portfolio commercial initiatives such as our prioritize your eyes campaign launch to raise awareness around the importance of routine screenings.

New products, including early success from active you multifocal.

Chris Schott: New products, including early success with Acuvue Multifocal and an inventory build contributing about five points. Growth outside the U.S. of 43.1% reflects market recovery and the strength of Acuvue One Day and the recent Asia-Pacific Acuvue Define Fresh beauty launch. Lowell Surgical Vision delivered growth of 115.8%, driven by market recovery and positive momentum related to new products like Tecnis IHANTS and Tecnis Synergy, which both launched this year in the U.S. market, and Veritas, our next-generation phacoemulsification device.

And an inventory build contributing about 5 points.

Growth outside the U S. A 43, 1% reflects market recovery and strength of vacuum for you 1 day and recent Asia Pacific active you define fresh beauty launch.

Well all surgical vision delivered growth of 115, 8% driven by market recovery and positive momentum related to new products like Technacy hanse techniques synergy, which both launched this year in the U S market and Veritas are next generation FICO, most suffocation device.

Now regarding our consolidated statement of earnings for the second quarter of 2021. Please direct your attention to the box section of the schedule you will see we have provided our earnings adjusted to exclude intangible amortization expense and special items as reported this morning, our adjusted EPS of $2.48.

Chris Schott: Now, regarding our consolidated statement of earnings for the second quarter of 2021, please direct your attention to the box section of the schedule. You will see we have provided our earnings adjusted to exclude intangible amortization expense and special items.

Chris Schott: As reported this morning, our adjusted EPS of $2.48 reflects a reported increase of 48.5% and an operational increase of 44.9%. I'd like to now highlight a few noteworthy items that have changed on the Statement of Earnings compared to the same quarter last year. Cost of products sold improved by 340 basis points, primarily driven by the recovery of medical devices from prior year COVID-19 related inventory impacts and fixed cost deleveraging. Selling, marketing, and administrative margins improved by 110 basis points due to the recovery of medical device sales from the prior year's negative COVID-19 impact. We continue to invest in research and development at competitive levels, investing 14.6% of sales this quarter. The $3.4 billion investment was a 25% increase versus the prior year due to portfolio progression.

It reflects a reported increase of 48, 5% and an operational increase of 44, 9%.

I'd like to now highlight a few noteworthy items that have changed on the statement of earnings compared to the same quarter last year.

Cost of product sold improved by 340 basis points, primarily driven by the recovery in medical device from prior year, COVID-19 related inventory impacts and fixed cost deleveraging.

Selling marketing and administrative margins improved 110 basis points due to the recovery of medical device sales from the prior year's negative COVID-19 impact.

We continue to invest in research and development at competitive levels investing $14, 6% of sales this quarter.

The $3.4 billion dollar investment was a 25% increase versus the prior year due to portfolio progression.

The other income and expense line showed net income of $488 million in the second quarter of 2021.

Chris Schott: The other income and expense line showed net income of $488 million in the second quarter of 2021 compared to net expense of $24 million in the second quarter of 2020, primarily due to reduced litigation-related items, partially offset by lower unrealized gains on security. Regarding taxes in the quarter, on a gap basis, our effective tax rate declined from 8% in the second quarter of 2020 to 5.8% in the second quarter of 2021, primarily driven by a one-time tax benefit the company recognized in the second quarter of 2021, resulting from an internal reorganization of certain international subsidiaries.

Compared to net expense of $24 million in the second quarter of 2020, primarily due to reduced litigation related items, partially offset by lower unrealized gains on securities.

Regarding taxes in the quarter on a GAAP basis, our effective tax rate declined from 8% in the second quarter of 2020, 258% in the second quarter of 2021.

I'm really driven by a onetime tax benefit the company recognized in the second quarter 2021, resulting from an internal reorganization of certain international subsidiaries.

In the second quarter of 2020, the company recorded additional tax benefits related to the transitional provisions of Swiss tax reform, which benefited the 2020 tax rate.

Chris Schott: In the second quarter of 2020, the company recorded additional tax benefits related to the transitional provisions of Swiss tax reform, which benefited the 2020 tax rate. Excluding special items, the effective tax rate was 14.8% versus 16.7% in the same period last year.

Excluding special items, the effective tax rate was 14, 8% versus 16, 7% in the same period last year.

I encourage you to review our 10-Q for additional details on specific tax matters.

Chris Schott: I encourage you to review our 10-Q for additional details on specific tax matters. Let's now look at Adjusted Income Before Tax by segment. In the second quarter of 2021, our adjusted income before tax for the enterprise as a percentage of sales increased from 29.1% to 33.4%. The following are the main drivers of change to adjusted income before tax by segment. Medical devices margin improved from 1.2% to 28.6%, driven primarily by overall expense leveraging resulting from the COVID-19 related sales recovery.

Let's now look at adjusted income before tax by segment.

In the second quarter of 2021, our adjusted income before tax for the enterprise as a percentage of sales increased from 29, 1% to 33, 4%.

The following are the main drivers of change to the adjusted income before tax by segment.

Medical devices margin improved from 1.2% to 28, 6% driven primarily by overall expense leveraging resulting from the COVID-19 related sales recovery.

Consumer health margins improved by 380 basis points, primarily driven by supply chain efficiencies, including the benefit from our SKU rationalization program, partially offset by increased investments in brand marketing expenses.

Chris Schott: Consumer health margins improved by 380 basis points, primarily driven by supply chain efficiencies, including the benefit from our SKU rationalization program, partially offset by increased investments in brand marketing expenses. Pharmaceutical margins decreased by 450 basis points, primarily driven by increased research and development investment, inclusive of the COVID-19 vaccine net costs and general portfolio progression.

Pharmaceutical margins decreased by 450 basis points, primarily driven by increased research and development investment inclusive of the COVID-19 vaccine that costs and general portfolio progression.

Moving to important developments, here's a slide summarizing notable developments occurring in the second quarter.

Chris Schott: Moving to important developments, here is a slide summarizing notable developments occurring in the second quarter. I'll highlight a few, starting with our pharmaceutical business. We continue to make positive progress advancing our strong pipeline of innovative medicines and therapies. As we've shared previously, we are rigorous in focusing on differentiated, transformational medical innovation. In the quarter, we announced our decision not to continue a collaboration and license agreement for Kuzituzumab, an investigational therapeutic antibody that targets CD70.

I'll highlight a few starting with our pharmaceutical business.

We continue to make positive progress advancing our strong pipeline of innovative medicines and therapies.

As we've shared previously we are rigorous and focusing on differentiated transformational medical innovation in the quarter, we announced our decision not to continue a collaboration and license agreement for <unk>, an investigational therapeutic antibody that targets CD 70.

The decision is based upon Janssens review of all available data and in consideration of the evolving standard of care for the treatment of AML.

Chris Schott: The decision is based upon Janssen's review of all available data and in consideration of the evolving standard of care for the treatment of AML. We received EU approval for Ponvuri in relapsing multiple sclerosis and also EU approval of Rybrevant for the treatment of patients with locally advanced or metastatic non-small cell lung cancer with epidermal growth factor receptor exon 20 insertion mutations.

We received EU approval for <unk> in relapsing multiple sclerosis, and also U S approval of Robert Van <unk> for the treatment of patients with locally advanced or metastatic non small cell lung cancer with epidermal growth factor receptor exon 20 insertion mutations. In addition, we completed our EU filing for <unk>.

Chris Schott: In addition, we completed our EU filing for silpacel, a BCMA CAR-T for the treatment of multiple myeloma. We anticipate U.S. approval for our BCMA CAR-T later this year, which will represent a third NME approval this year. Within our medical device portfolio, we continue to make meaningful advancements in our innovation pipeline, launching 17 major first country launches in the first half of 2021, including eight products this quarter. As noted earlier, we received FDA approval and launched Technus Synergy and Technus Synergy TORIC-2 intraocular lenses in the U.S. These are next-generation presbyopia correcting lenses and deliver the widest range of continuous vision and the best near vision among leading PCIOLs.

Built to sell a <unk> car T for the treatment of multiple myeloma, we anticipate U S approval for our <unk> car T. Later, this year, which will represent a third NME approval this year.

Within our medical device portfolio, we continue to make meaningful advancements in our innovation pipeline launching 17 major first country launches in the first half of 2021, including 8 products this quarter.

As noted earlier, we received FDA approval and launched <unk> synergy and techniques synergy torque to intraocular lenses in the U S. These are next generation presbyopia correcting lenses and deliver the widest range of continuous vision and the best near vision, among leading PC <unk>.

Finally within the surgery business, the NCL X 1 curve you all tissue sealer launched in the U S expanding the ethicon advanced bipolar energy portfolio.

Chris Schott: Finally, within the surgery business, the EnSeal X1 Curved Jaw Tissue Sealer launched in the U.S., expanding the Ethicon Advanced Bipolar Energy portfolio. That concludes the sales, P&L, and pipeline highlights for Johnson & Johnson's second quarter. I'm now pleased to turn the call over to Joe Walk. Thank you, Chris.

That concludes the sales P&L and pipeline highlights for Johnson <unk> Johnson second quarter.

Now pleased to turn the call over to Joe walk.

Chris.

Morning, and thanks to all of you for joining us today to discuss our strong first half of 2021, specifically the high growth we experienced in the second quarter and our updated outlook for the balance of the year I hope everyone is having a safe healthy and enjoyable summer.

Joseph J. Wolk: Good morning, and thanks to all of you for joining us today to discuss our strong first half of 2021, specifically the high growth we experienced in the second quarter and our updated outlook for the balance of the year. I hope everyone is having a safe, healthy, and enjoyable summer. As Chris referenced, Johnson & Johnson's businesses remain leaders or are better positioned within the markets in which they compete. While the pandemic makes it difficult to reliably gauge what results will be in any given quarter, you likely noticed that all three segments beat your expectations.

As Chris referenced Johnson <unk> Johnson businesses remain leaders or are better positioned within the markets in which they compete well.

While the pandemic makes it difficult to reliably gauge what results will be in any given quarter.

You likely noticed that all 3 segments beat your expectations.

We continued to be poised for further growth and value creation, not just in 2021, but more importantly for 2022 and beyond.

Joseph J. Wolk: We continue to be poised for further growth and value creation, not just in 2021 but, more importantly, for 2022 and beyond. Over the past 18 months, our people have been a driving force behind our success, and, guided by our credo, they have demonstrated resilience and agility while remaining committed to ensuring our life-saving medicines and products reach patients and consumers around the world. Thanks to the efforts of our 136,000 colleagues across the world, Johnson & Johnson continues to make significant strides towards our mission of improving the human health and well-being of everyone, everywhere. Foundational to any healthy business is a focus on and commitment to broader stakeholder stewardship.

Over the past 18 months, our people have been a driving force behind our success.

Guided by our credo, they have demonstrated resilience and agility, while remaining committed to ensuring our life saving medicines and products reach patients and consumers around the world.

Thanks to the efforts of our 136000 colleagues across the World Johnson <unk> Johnson continues to make significant strides towards our mission of improving human health and wellbeing of everyone everywhere.

Foundational to any healthy business is a focus and commitment to broader stakeholders stewardship. We are proud to share. The progress we are making in a transparent and accountable manner. A few weeks ago, we held our annual ESG investor update following the publication of our 2020.

Joseph J. Wolk: We are proud to share the progress we are making in a transparent and accountable manner. A few weeks ago, we held our annual ESG Investor Update following the publication of our 2020 Health for Humanity Report and our 2025 goals. Through these goals, we aim to deliver even greater long-term value to our broad set of stakeholders. I hope you had the opportunity to view this webcast. If you have not already, the replay is still available on the Johnson & Johnson website.

Health for humanity report and our 2025 goals.

Through these goals, we aim to deliver even greater long term value to a broad set of stakeholders I hope you had the opportunity to view this webcast.

If you have not the replay is still available on the Johnson <unk> Johnson website.

Let's get into the results with an update on our cash position, we continue to generate strong free cash flow with approximately $8 billion year to date. We ended the second quarter with approximately $25 billion of cash and marketable securities and approximately $33 billion of debt, resulting in.

Joseph J. Wolk: Let's get into the results with an update on our cash position. We continue to generate strong free cash flow with approximately $8 billion year-to-date. We ended the second quarter with approximately $25 billion of cash and marketable securities and approximately $33 billion of debt, resulting in $8 billion of net debt.

$8 billion of net debt.

Our financial position and balance sheet remained strong.

Joseph J. Wolk: Our financial position and balance sheet remain strong. As we enter the back half of the year, we are well positioned to continue to deploy capital in a strategic, value-creating way that will benefit stakeholders over the long term. Our dividend remains a key priority, and during the quarter, we distributed $2.8 billion to shareholders.

As we enter the back half of the year, we are well positioned to continue to deploy capital in a strategic value, creating way that will benefit stakeholders over the long term.

Our dividend remains a key priority and during the quarter, we distributed $2.8 billion to shareholders.

Regarding M&A, we continually evaluate strategic opportunities that have the potential to further enhance our business, while also driving better health outcomes for patients and consumers.

Joseph J. Wolk: Regarding M&A, we continually evaluate strategic opportunities that have the potential to further enhance our business, while also driving better health outcomes for patients and consumers. Since Chris covered highlights from our second quarter performance, and our worldwide chairs will provide sector-specific commentary to open the Q&A session. I will now move directly to providing the update to our full year 2021 guidance, which reflects our strong year-to-date performance. For clarity, I will first comment on our core business revenue and then remark on our anticipated COVID-19 vaccine revenue, which is now included in our enterprise guidance.

Since Chris covered highlights from our second quarter performance and our worldwide chairs will provide sector specific commentary to open the Q&A session.

We'll now move directly to providing the update to our full year 2021 guidance, which reflects our strong year to date performance.

For clarity I will first comment on our core business revenue and then remark on our anticipated COVID-19 vaccine revenue, which is now included in our enterprise guidance.

For full year 2021, we continue to expect our base business defined as excluding our COVID-19 vaccine to remains strong.

Joseph J. Wolk: For full year 2021, we continue to expect our base business, defined as excluding our COVID-19 vaccine, to remain strong. Based on this confidence, we are increasing and tightening our adjusted operational sales range to 9.5% to 10.5%. This adjusted operational sales growth is on a constant currency basis consistent with how we manage our business performance. We are maintaining our estimate for the net impact of acquisitions and divestitures of approximately 50 basis points, which accounts for previously completed divestitures in medical devices, consumer health, as well as within other oncology and pharmaceuticals, resulting in an operational sales range of 9.0% to 10.0%, or $90 billion to $90.8 billion for a midpoint of 9.5%, or $90.4 billion.

Based on this confidence we are increasing and tightening our adjusted operational sales range to 9.5% to 10, 5%.

This adjusted operational sales growth is on a constant currency basis, consistent with how we manage our business performance.

We are maintaining our estimate for the net impact of acquisitions and divestitures of approximately 50 basis points, which accounts for previously completed divestitures in medical devices consumer health as well as within other oncology and pharmaceuticals.

Salting in an operational sales range of 9.0% to 10.0% with $90 billion to $90.8 billion for a midpoint of 9.5% or 94 billion.

While we don't predict currency movements utilizing the euro spot rate relative to the U S. Dollar as of last week at 1.18 and in consideration of other currency movements. There is no change from our previous estimates, resulting in favorable currency impact of $1.3 billion or a year over year.

Joseph J. Wolk: While we don't predict currency movements, utilizing the euro's spot rate relative to the U.S. dollar as of last week at 1.18, and in consideration of other currency movements, there was no change from our previous estimates, resulting in a favorable currency impact of $1.3 billion, or a year-over-year increase of 150 basis points.

<unk> of 150 basis points.

This results in an estimated reported sales in the range of $91.3 billion to $92.1 billion.

Joseph J. Wolk: This results in estimated reported sales in the range of $91.3 billion to $92.1 billion, an increase of 10.5% to 11.5% or 11% at the midpoint versus 2020. Now, a few words on the expected contribution of our COVID-19 vaccine to our updated full year 2021 guidance. Our goal has always been to bring forth our scientific capabilities and resources to develop a safe and efficacious vaccine that would complement other measures to end the global pandemic.

An increase of 10, 5% to 11, 5% or 11% at the midpoint versus 2020.

Now a few words on the expected contribution of our COVID-19 vaccine to our updated full year 2021 guidance.

Our goal has always been to bring forth, our scientific capabilities and resources to develop a safe and efficacious vaccine that would complement other measures to end the global pandemic.

We are proud to have been part of the unprecedented collaboration in the health care industry that has led to a number of authorized vaccines in the marketplace.

Joseph J. Wolk: We are proud to have been part of the unprecedented collaboration in the healthcare industry that has led to a number of authorized vaccines in the marketplace. Chris shared earlier that we recorded vaccine revenue in the quarter. Specifically, our COVID-19 vaccine contributed $164 million in revenue in the second quarter, bringing the year-to-date total to $264 million. At this point, revenue from the first half of the year was provisionally recorded at $5 per dose, given that volumes during the pandemic period were uncertain.

Chris shared earlier that we recorded vaccine revenue in the quarter, specifically, our COVID-19 vaccine contributed $164 million in revenue in the second quarter, bringing the year to date total to $264 million.

At this point revenue from the first half of the year was provisionally recorded at $5 per dose given that volumes during the pandemic period, we're uncertain.

Currently we expect the ultimate final not for profit price could be as much as $8 per dose the.

Joseph J. Wolk: Currently, we expect the ultimate final not-for-profit price could be as much as $8 per dose. The final not-for-profit price will fluctuate until the end of the year when we know precisely all the variables that go into the calculation, namely the net cost incurred as well as volumes produced during the pandemic period.

The final not for profit price will fluctuate until the end of the year. When we know precisely all the variables that go into the calculation, namely the net cost incurred as well as volumes produced during the pandemic period.

Given the firm contracts, we have in place pending advanced purchase agreements, we expect to recognize a vaccine sales of approximately $2.5 billion in 2021 with more than half of that revenue likely to occur in the fourth quarter.

Joseph J. Wolk: Given the firm contracts we have in place, pending advance purchase agreements, we expect to recognize vaccine sales of approximately $2.5 billion in 2021, with more than half of that revenue likely to occur in the fourth quarter. Regarding vaccine manufacturing, we continue to expand our global network to include 10 manufacturing sites for various stages of production. On July 2nd, the European Medicines Agency's Committee for Medicinal Products for Human Use approved an expansion of our facility in the Netherlands, increasing our capacity to produce active drug substances.

Regarding vaccine manufacturing, we continue to expand our global network to include 10 manufacturing sites for various stages of production.

On July 2nd the European Medicines Agency's committee for medicinal products for human use a prudent expansion of our facility in the Netherlands, increasing our capacity to produce active drug substance. The FDA also released 5 batches of drug substance manufactured at the emergent bio solutions Bayview facility.

Joseph J. Wolk: The FDA also released five batches of drug substance manufactured at the Emergent Biosolutions Bayview Facility under the Emergency Use Authorization, and we continue to work with health authorities on the approval of additional drug substances manufactured at Emergent. Now, I do appreciate that many of you are understandably looking beyond 2021 to 2022. It is simply too early to provide specific information on a 2022 outlook for our COVID-19 vaccine, given the uncertainty about the need for boosters and new variants. But as recent published clinical data indicate, our vaccine appears to have durability for at least eight months and is effective against the recent Delta variant and other highly prevalent viral variants.

<unk> under the emergency use authorization and we continue to work with health authorities on the approval of additional drug substance manufactured at emergent.

I do appreciate that many of you are understandably looking beyond 2021 to 2022. It is simply too early to provide specific information on a 2022 outlook for our COVID-19 vaccine given the uncertainty on the need for boosters and new variance, but as recent published clinical data indicates.

Our vaccine appears to have durability for at least 8 months and is effective against the recent delta variant and other highly prevalent viral variants.

At this time I would caution you to wait to include future year vaccine projections in your models for our business.

Joseph J. Wolk: At this time, I'd caution you to wait to include future year vaccine projections in your models for our business. The COVID-19 vaccine market will continue to evolve, and we look forward to sharing additional details as more data become available, including the role our vaccine will play for you to forecast future years. Given this and what I already provided on our base business, our new updated guidance expectations are reflected on this slide, reflecting an enterprise total revenue of $94.2 billion at the midpoint. Moving to other items of the P&L.

The COVID-19 vaccine market will continue to evolve and we look forward to sharing additional details as more data become available, including the role our vaccine will play for you to forecast future years.

Given this and what I already provided on our base business, our new updated guidance expectations are reflected on this slide reflecting an enterprise total revenue of $94.2 billion at the midpoint.

Moving to other items of the P&L, we are now expecting our operating margins to be nearly 200 basis point improvement over last year slightly less than our prior guidance as we continue to invest for the long term.

Joseph J. Wolk: We are now expecting our operating margins to be nearly a 200 basis point improvement over last year, slightly less than our prior guidance as we continue to invest for the long term. We are increasing our other income estimate to a range of $800 million to $900 million. This increase is primarily attributable to increased investment returns related to our employee benefit programs. As a reminder, pension service costs are recorded in operating expenses, while any investment performance related to our employee benefit programs is recorded in other income and expense.

We are increasing our other income estimate to a range of $800 million to $900 million.

This increase is primarily attributable to increased investment returns related to our employee benefit programs.

As a reminder, pension service costs are recorded in operating expenses, while any investment performance related to our employee benefit programs are recorded in other income and expense.

Moving to interest expense based on our year to date experience, we are lowering our estimate to a range of $100 million to $200 million.

Joseph J. Wolk: Moving to interest expense, based on our year-to-date experience, we are lowering our estimate to a range of $100 million to $200 million. Finally, we are lowering our effective tax rate estimate to a range of 16.0% to 17.0% based on certain one-time benefits realized in the first half of the year.

Finally, we are lowering our effective tax rate estimate to a range of 16.0% to 17.0% based on certain 1 time benefits realized in the first half of the year.

The result of these updates translate to increasing our earnings guidance. We are also tightening the guidance range. The new adjusted operational per share guidance range is 18, 4% to 19, 6% or $9.50.

Joseph J. Wolk: The results of these updates translate to increasing our earnings guidance. We are also tightening the guidance range. The new adjusted operational per share guidance range is 18.4% to 19.6% or $9.50 to $9.60, with a midpoint of 19% or $9.55 per share. While not predicting currency movements, but to provide some direction on the impact of currency fluctuations on our reported adjusted EPS, we expect a slight change from what we communicated on the Q1 earnings call. Currency will now impact EPS by 1.2%, or $0.10 per share.

$2.9.60.

With a midpoint of 19% or $9.55 per share.

While not predicting currency movements, but to provide some direction on the impact of currency fluctuations on our reported adjusted EPS, We expect a slight change from what we communicated on the Q1 earnings call.

Currency will now impact EPS by 1.2% or 10 cents per share.

Accounting for that.

Joseph J. Wolk: Accounting for that, we would be comfortable with your models reflecting reported adjusted EPS ranging from $9.60 to $9.70, or a midpoint of $9.65, increasing 20.2%. Consistent with what we shared before, given the not-for-profit nature of the vaccine, there will be no significant EPS contribution in 2021, and therefore, the EPS guidance I provided is inclusive of the vaccine revenue. I am pleased and want to thank our worldwide chairs, Jennifer Calvert, Thibaut Mangan, and Ashley McEvoy, for their participation in the Q&A portion of our call today. I know this audience values having these leaders on earnings calls from time to time.

We would be comfortable with your models, reflecting reported adjusted EPS ranging from $9.60.

$2.9.70.

Or a midpoint of $9.65, increasing 22%.

Consistent with what we shared before given the not for profit nature of the vaccine. There was no significant EPS contribution in 2021, and therefore, the EPS guidance I provided is inclusive of the vaccine revenue.

I am now pleased and want to thank our worldwide chairs, Jennifer Taubert, Tebow, Mongol and Ashley Mcevoy for their participation in the Q&A portion of our call today I know this audience of values, having these leaders on earnings calls from time to time, so before we jump into the Q&A portion of the call I'd like to add.

Joseph J. Wolk: So before we jump into the Q&A portion of the call, I'd like to ask Jennifer, Thibaut, and Ashley each to provide a brief business segment update and qualitative outlook for the remainder of 2021. Jennifer, let's start with the pharmaceutical segment. Well, thank you, Joe, and hello, everyone.

Jennifer Tivo and Ashley each to provide a brief business segment update and qualitative outlook for the remainder of 2021, Jennifer let's start with the pharmaceutical segment.

Well, thank you, Joe and Hello, everyone. It's a pleasure to be here with you today I'd like to start by thanking my Johnson and colleagues around the world for their relentless focus on delivering for patients as a result, I'm proud to share that our pharmaceutical sector had another strong quarter of above market growth.

Jennifer Taubert: It's a pleasure to be here with you today. I'd like to start by thanking my Janssen colleagues around the world for their relentless focus on delivering for patients. As a result, I'm proud to share that our pharmaceutical sector had another strong quarter of above-market growth. As you heard from Chris, our pharmaceutical business delivered $12.6 billion in worldwide sales in the second quarter, with adjusted operational growth of approximately 14%. Our base business, excluding the COVID-19 vaccine, demonstrated robust growth at 12.6%.

As you heard from Chris our Pharmaceuticals business delivered $12.6 billion in worldwide sales in the second quarter with adjusted operational growth of approximately 14%.

Our base business, excluding the COVID-19 vaccine demonstrated robust growth at 12, 6%.

This is our third consecutive quarter with sales exceeding $12 billion and our growth was broadly based across geographic regions and our therapeutic area. We continue to maximize the value of our industry, leading portfolio delivering double digit growth for 9 key brands, including our oncology medicines <unk> improve our cotton.

Jennifer Taubert: This was our third consecutive quarter of sales exceeding $12 billion, and our growth was broadly based across geographic regions and our therapeutic areas. We continue to maximize the value of our industry-leading portfolio, delivering double-digit growth for nine key brands, including our oncology medicines Darzalex, Imbruvica, and Erleada, our immunology medicines Trumfaya and Stelara, our pulmonary hypertension medicines Opsumet and Our leading commercial and market access capabilities enabled increased market penetration and share gains across our key promoted brands. And, as we shared in our Transparency Report this year, our growth continues to come from volume gains and not price.

Our leader, our immunology medicines from finance to Lora or pulmonary hypertension medicines up summit, Neptune, Robby and in Vegas, as Stan and trends in our neuroscience portfolio.

Our leading commercial and market access capabilities enabled increased market penetration and share gains across our key promoted brands.

And as we shared in our transparency report this year our growth continues to come from volume gains and not price. This is a strong indication that our life changing medicines are reaching more patients each day worldwide.

Jennifer Taubert: This is a strong indication that our life-changing medicines are reaching more patients each day worldwide. And it's important to note that we continue to be a top investor in research and development. This investment fuels our pipeline and builds the foundation for our long-term growth. During the second quarter, we continue to deliver on our pipeline of transformational medicines. I'll highlight just a few of the key milestones and achievements. First, in May, the FDA approved amivantamab, now known as Rybrevant. This is the first bispecific antibody approved for the treatment of non-small cell lung cancer characterized by EGFR exon 20 insertion mutations.

It is important to note we continue to be an investor in research and development. This investment fuels, our pipeline and build the foundation for our long term growth.

The second quarter, we continued to deliver on our pipeline of transformational medicines.

Just a few of the key milestones and achievements.

First in May the FDA approved <unk> now known as Ryan prevent this is the first bi specific antibody approved for the treatment of non small cell lung cancer characterized by Egfr exon 20 insertion mutation. This is our first approved treatment for lung cancer, which we hope will be an important area for us going forward.

Jennifer Taubert: This is our first approved treatment for lung cancer, which we hope will be an important area for us going forward. This is our second NME approval of this year. Ponvori, or Ponesimod, was our first 2021 NME approval, and the FDA approved it in March for the treatment of adults with relapsing forms of multiple sclerosis.

This is our second NME approvals this year.

<unk> or <unk> with our first 2021 and EMEA approval and this was by the FDA in March for the treatment of adults with relapsed and forms of multiple sclerosis in the second quarter. It was also approved by the European Commission and Health Canada.

Jennifer Taubert: In the second quarter, it was also approved by the European Commission and Health Canada. We also advanced our BCMA CAR-T cell therapy program, Cil-2-Cell, for patients with multiple myeloma. In the second quarter, the U.S. FDA granted BCMA CAR-T priority review. A marketing authorization was filed with the European Medicines Agency, and submission was made to the Brazilian Health Regulatory Agency. We anticipate FDA approval of Cil-2-Cell as our third NME approval later this year.

We also advanced our Bcm, a car T cell therapy program cell to cell for patients with multiple myeloma in the second quarter. The U S. FDA granted RBC and a car T priority review, our marketing authorization was filed with the European Medicines Agency and submission was made to the Brazilian health regulatory agency, we Ain't.

<unk> FDA approval, a cell to cell as our third NDA approval later this year.

In addition, our subcutaneous pharma guys Nellix continues to benefit an increasing number of patients in the second quarter. The European Commission approved Garza lax for 2 additional patient populations as combination therapy for the treatment of adults with newly diagnosed systemic light chain amyloidosis, which is the first and only approved therapy for this.

Jennifer Taubert: In addition, our subcutaneous form of Darzalex continues to benefit an increasing number of patients. In the second quarter, the European Commission approved Darzalex for two additional patient populations, as combination therapy for the treatment of adults with newly diagnosed systemic light-chain amyloidosis, which is the first and only approved therapy for this rare and life-threatening blood disorder, and as combination therapy for adults with pre-treated multiple myeloma.

It's rare and life threatening blood disorder, and as combination therapy for adults with pretreated multiple myeloma. Additionally, subsequent to the quarter. The FDA approved Ars like fast product in combination with Paul <unk> and dexamethasone for the treatment of patients with multiple myeloma. After first our subsequent relapse or sixth indication.

Jennifer Taubert: Additionally, subsequent to the quarter, the FDA approved Darzalex Fast Pro in combination with pomalidomide and dexamethasone for the treatment of patients with multiple myeloma after first or subsequent relapse, our sixth indication specific to our subcutaneous form of Darzalex. I'm proud of our pharmaceutical results in the second quarter and feel confident in our ability to make 2021 our 10th consecutive year of above-market growth. Our outlook for the rest of the year remains strong.

Specific to our subcutaneous form of <unk> I'm proud of our pharmaceutical results in the second quarter and feel confident in our ability to make 2021, our 10th consecutive year of above market growth our outlook for the rest of the year remains strong.

Before I close I'd like to invite you to join US for our pharmaceutical business review on November 18th.

Jennifer Taubert: Before I close, I'd like to invite you to join us for our Pharmaceuticals Business Review on November 18th. We look forward to sharing a comprehensive overview of our business, our robust pipeline, and our long-term growth outlook. We'll cover our key therapeutic areas, including oncology and immunology, which are always areas of high interest. And we'll delve deeper into some of our newer areas, including our retina and gene therapy pipeline, and the details behind the breadth of our autoantibody program that came through our acquisition of Momenta last year. I hope you'll be able to join us. So, again, it's a pleasure to have this opportunity to connect with you today. Thibault, I'll now turn it over to you.

Look forward to sharing a comprehensive overview of our business a robust pipeline and our long term growth outlook will cover our key therapeutic areas, including oncology and immunology, which are always areas of high interest and we will go deeper into some of our newer areas, including our retina and gene therapy pipeline and the details behind the breath of our auto.

Antibody program that came through our acquisition of momentum last year, I hope, you'll be able to join us.

Again, it's a pleasure to have this opportunity to connect with you today.

I'll now turn it over to you.

Alright, Thank you Jennifer and good morning to all of you on the call I would like to start by congratulating My consumer health colleagues for their continued focus on flawlessly executing against our strategy last year. This focus on execution across a broad base portfolio delivered solid results growing 3% operationally and this year.

Thibaut Mangan: All right, thank you, Jennifer, and good morning to all of you on the call. I would like to start by congratulating my consumer health colleagues for their continued focus on flawlessly executing against our strategy. Last year, this focus on execution across our broad-based portfolio delivered solid results, ranking 3% operationally, and this year, we continue to demonstrate a strong level of performance. The strategy we set a couple of years ago for the consumer health segment to be focused on personal health with science-based, professionally endorsed brands and advancing our digital capabilities continues to strengthen our ability to meet the needs of our consumers and customers worldwide, resulting in strong quarterly results and solid year- Our consumer health sector grew 9.2% operationally in the quarter and 2.7% on a year-to-date basis. Our adjusted operational growth for acquisitions and investments was 10% in the quarter and 3.3% on a year-to-date basis.

We continue to demonstrate a strong level of performance the.

The strategy, we set a couple of years ago for the consumer health segment to be focused on personal health with science based professionally endorsed brands and advancing our digital capabilities.

To strengthen our ability to meet the needs of our consumers and customers worldwide.

<unk> strong quarterly results and solid year to date performance.

Our consumer health sector grew 9.2% operationally in the quarter and 2.7% on a year to date basis.

Our adjusted operational growth for acquisitions, and divestitures was 10% in the quarter and 333% on a year to date basis and as Chris stated in his remarks. These year to date results are a better representation of outperformance given the fluctuations we've seen the market.

Thibaut Mangan: And, as Chris stated in his remarks, these year-to-date results are a better representation of our performance, given the fluctuations we see in the market due to COVID-19 dynamics and seasonality overall. We saw strong year-to-date performance for brands in our two strongholds, such as Zyotec, Pepsi, and Nicorette in OTC, or Aveeno, Neutrogena, and OGX in skin In our specialty areas, brands like Listerine, Aveeno Baby, and BoundAid also contributed nicely to our year-to-date results. And from a geographic perspective, we are encouraged to see that we grew across all regions in the quarter.

Due to COVID-19 dynamics and Susan ITT overall.

We saw strong year to date performance for brands to strongholds, such Zertec Betsy the Nicorette T C or IV pneumonia to Jean I know gx and skin health.

In our specialty areas brands like LISTERINE Aveeno baby inbound aide also contributing nicely to our year to date results.

And from a geographic perspective, we are encouraged to see that we grew across all regions in the quarter.

Now if we look into the future even if we will continue to see if our ability category, depending on seasonality and local market conditions.

Thibaut Mangan: Now, looking into the future, even if we will continue to see viability in categories depending on seasonality and local market conditions, we are confident that our strategy is working. We have the right portfolio to continue to deliver solid results, well balanced both in terms of categories we compete in and in terms of geographic presence. And lastly, we have been able to achieve our solid sales results while simultaneously improving our margin profile. Our efforts on end-to-end profitability improvement, including portfolio optimization and network improvements, have delivered on plan. Our year-to-date adjusted IBT is approximately 27%, or another 250 basis point improvement over last year.

We are confident that our strategy is working we have the right portfolio to continue to deliver solid results well balanced both in terms of categories. We compete in and in terms of geographic presence.

And lastly, we have been able to achieve solid sales results, while simultaneously improving our margin profile.

It puts an end to end profitability improvement, including portfolio optimization and network improvements have delivered to plan.

Year to date adjusted EBT is approximately 27%, while another 250 basis point improvement over last year.

We have made great strides in increasing our profitability to become a leader within our peer set and we will continue to look for opportunities to improve our margin profile, while at the same time investing to grow the top line.

Thibaut Mangan: We have made great strides in increasing our profitability to become a leader within our Peer Set, and we will continue to look for opportunities to improve our margin profile while at the same time investing to grow the top line, launching new products, Chris referenced some of them in his remarks, and managing through anticipated higher commodity and distribution costs in the back half of 2021. So, in a nutshell, Consumer Health delivered a strong quarter and a solid first half.

<unk>, new products and Chris referenced some of them in these remarks, and managing through anticipated higher commodity and distribution costs in the back half of 'twenty or 'twenty 1.

So you know not child consumer health delivered a strong quarter and a solid first half our strategy is working and we are confident in our ability to continue to deliver profitable growth in line with the categories in the market in which we compete.

Thibaut Mangan: Our strategy is working, and we are confident in our ability to continue to deliver profitable growth in line with the categories and market in which we compete. Now, let me hand over to Ashley McEvoy.

And now let me hand over to Ashley Mcevoy Ashley. Thank you and thank you Tina and good morning, and thanks for joining.

Ashley A. McEvoy: Thank you. Thank you, Thibault, and good morning. Thanks for joining us.

And let me just begin with across J&J, how prevalent should we fail to work in health care, because we recognize that what we do matters, especially now when United by our purpose to profoundly change the trajectory of health for humanity and were propelled by our med Tech aspiration to re imagine the feature of health today in 3 ways.

Ashley A. McEvoy: Let me just begin by saying across JNJ how privileged we feel to work in healthcare because we've recognized that what we do matters, especially now. We're united by our purpose to profoundly change the trajectory of health for humanity. And we are propelled by our MedTech aspiration to reimagine the future of health in three ways. One is innovating across the continuum of patient care. Two is prioritizing and modernizing health care, and three is promoting health equity and wellness.

1 is innovating across the continuum of patient care, he was prioritizing and modernizing health and 3 is promoting health equity and wellness.

We continue to see strong evidence that our focus and actions to impact human health and improve our competitiveness is working this.

Ashley A. McEvoy: We continue to see strong evidence that our focus and actions to impact human health and improve our competitiveness are working. This quarter, MedTech delivered sales of $7 billion, representing adjusted operational growth of 59% versus 2020 and, as Chris mentioned, up 7% versus 2019, bringing our first half of 2021 revenue performance to just over 5% compared to 2019. Our sales reflect market recovery and our positive competitive momentum. Eight of our $11 billion MedTech platforms grew versus the second quarter of 2019. And quarter 121 share trends show that we have maintained or gained share in 10 of these platforms.

Med Tech delivered sales of 7 billion, representing adjusted operational growth of 59% versus 2020, and as Chris mentioned up 7% versus 2019, bringing our first half of 2021 revenue performance to just over 5% compared to 2019.

Our sales reflect market recovery and our positive come at competitive momentum 8 of our 11 billion dollar Med Tech platforms grew versus the second quarter 2019.

In quarter, 1 'twenty 1 share trends show that we have maintained or gained share in 10 of these platforms.

We have an exciting pipeline of we've achieved some truly amazing results in the first half of this year, which position us well to continue our growth momentum. We've launched 17 major products in the first half of 2021. This is the highest number of first half of the year launches in 5 years for our business.

Ashley A. McEvoy: We have an exciting pipeline, and we've achieved some truly amazing results in the first half of this year, which positions us well to continue our growth momentum. We launched 17 major products in the first half of 2021, this is the highest number of first half of the year launches in five years for our business.

These include products, which will strengthen our core like Technet synergy our most advanced premier intraocular lens and surgical vision and the NCL excellent curve tissue seal or a next generation advanced energy solution and our surgery franchise.

Ashley A. McEvoy: These include products which will strengthen our core, like Technus Synergy, our most advanced premier intraocular lens in surgical vision, and the EnSeal X1 Curved Tissue Sealer, a next generation advanced energy solution in our surgery franchise. We continue to focus on significant global health concerns, including myopia management, where we plan to have a portfolio of solutions for patients. And we are progressing all things digital, with solutions covering the entire paradigm of care, including open and laparoscopic procedures, orthopedics, and illuminal interventional and vision.

We continue to focus on significant global health concerns, including Myopia management, what are we plan to have a portfolio of solutions for patients and we are progressing all things digital with solutions covering the entire paradigm of care, including open elaborate laparoscopic procedures, orthopedics and alumina interventional envy.

Yeah.

Our monarch platform achieved a significant milestone reaching over 100 customers and enabling over 8000, bronchoscopy, which is life changing and potentially lifesaving and the detection and treatment of lung cancer.

Ashley A. McEvoy: Our Monarch platform achieved a significant milestone, reaching over 100 customers and enabling over 8,000 bronchoscopies, which is life-changing and potentially life-saving in the detection and treatment of lung cancer. Velys, our robotic-assisted solution for total knee procedures, launched in the United States and received regulatory approval in Australia this month.

Valley sought robotic assisted solution for total knee procedures launched in the United States and received regulatory approval in Australia. This month, we are extremely pleased with the early customer engagement and feedback confirming the differentiation of this next generation solution I know, Tom or soft tissue digital surgery offering continues to progress.

Ashley A. McEvoy: We are extremely pleased with the early customer engagement and feedback confirming the differentiation of this next-generation solution. And Otava, our soft-tissue digital surgery offering, continues to progress its key development milestones. We also recognize that the digitization of healthcare is happening and rapidly accelerating technology like this, making it possible to deliver new ways of care. An example of this is from our innovative team in China, who developed a virtual solution powered by artificial intelligence and machine learning to more effectively train and expand the number of highly skilled electrophysiologists and provide broader access to high-quality care.

With its key development milestones.

We also recognized that the Digitization of health care is happening and rapidly accelerating technology like this making it possible to deliver new ways of Kerr and.

An example of this is from our innovative team in China, who developed a virtual solution powered by artificial intelligence and machine learning to more effectively train and expand the number of highly skilled electrophysiologist and provide broader access to high quality care.

Learning curves went from novice to experts from a year to 4 months and the first 4 months of launch 150 newly trained physicians deliver care to 7500 patients. It's no surprise, our electrophysiology business in China is so strong.

Ashley A. McEvoy: Learning curves went from novice to experts in just a year to four months, and in the first four months of launch, 150 newly trained physicians delivered care to 7,500 patients. It's no surprise our electrophysiology business in China is so strong. And we continue to leverage science to influence industry trends and positively impact patient outcomes and human health. For example, just this month, the UK modified its NICE guidelines to recommend the use of plus sutures as a standard of care, giving the evidence supporting their role in reducing surgical site infections and unnecessary costs to the healthcare system.

And we continue to lever science to influence industry trends and positively impact patient outcomes and human health. Just this month the U K modified their nice guidelines to recommend ease of Puss futures as a standard of care given the evidence supporting their role in reducing surgical site infections and unnecessary cost to the health care system.

Okay regarding the pandemic, we are seeing light at the end of the COVID-19 panel, but this remains as we all know a very fluid situation. The pace of continued recovery will depend on multiple factors, including the speed at which global populations are vaccinated health care capacity and the ability to manage through surges.

Ashley A. McEvoy: Okay, regarding the pandemic, we are seeing light at the end of the COVID-19 tunnel, but this remains, as we all know, a very fluid situation. The pace of continued recovery will depend on multiple factors, including the speed at which global populations are vaccinated, healthcare capacity, and the ability to manage through surges, as well as the rate at which patients seek treatment.

Well as the rate at which patients seek treatment.

Ashley A. McEvoy: In closing, I'd like to emphasize that our strong quarter two results and continuing momentum can be attributed to our purpose-driven, globally diverse team, which embody a winning spirit every day. Their resilience, agility, and creativity have taken us to the next level in our business, built stronger relationships with our customers and patients, and defined a clear vision of our future. Thank you, and I look forward to your questions. Thank you, Jennifer. Thanks, Thibaut, and thanks, Ashley.

The other thing I'd like to emphasize that our strong quarterly results and continuing momentum can be attributed to our purpose driven globally diverse theme, which embody a winning spirit every day.

Resilience agility and creativity have taken us to the next level in our business now stronger relationships with our customers and patients and defined a clear vision of our future.

Thank you and I look forward to your questions.

Great. Thank you Jennifer Thanks, Tebow and thanks, Ashley, let's now move to the Q&A portion of the webcast.

Joseph J. Wolk: Let's now move to the Q&A portion of the webcast. Rob, can you please provide instructions for those on the line wishing to ask a question? Yes, thank you. Ladies and gentlemen, if you'd like to ask a question at this time, please press star, then 1 on your telephone keypad. If you'd like to withdraw your question, press star, then 2. Please let me know your name and phone number.

Rob can you. Please provide instructions for those on the line wishing to ask a question.

Thank you, ladies and gentlemen, if you'd like to ask a question at this time. Please press Star then 1 on your telephone keypad, if you'd like to withdraw your question Press Star then 2 please.

Please limit your questions to 1 question only.

Your first question comes from Louise Chen with Cantor Fitzgerald.

Hi, congratulations on the strong quarter and thanks for taking my question. My question is about the global searching Covid. There there has been a surge despite high rates of vaccinations in many places in the world. So just curious how you think this could impact your business in the second half 'twenty 1 if it continues to get worse. Thank you.

Operator: Yes, thank you. Ladies and gentlemen, if you'd like to ask a question at this time, please press star then 1 on your telephone keypad. If you'd like to withdraw your question, press star then 2. Please limit your questions to one only. Your first question comes from Louise Chin on Cantor Fitzgerald.

Yeah. Thanks for the question Louise I think it's probably best maybe that you hear from both Ashley and Jennifer on this specific perspective, so Ashley.

Joseph J. Wolk: Yeah, thanks for the question, Louise. I think it's probably best, maybe, that you hear from both Ashley and Jennifer on this specific issue.

Ashley A. McEvoy: Perspectives, Ashley.

Ashley A. McEvoy: Yeah, Lili, I would say, listen, we're encouraged by, quite frankly, several things, you know, the ability that hospitals can manage through capacity and surges and labor, as well as obviously the vaccination efforts around the world. And just as a patient, there's a significant backlog of care. If I look at the UK, my goodness, there are like 5 million patients waiting for medical intervention, 400,000 of those folks waiting for surgery for the past 12 months. But, as we know, it's not going to be linear.

I would say listen we're encouraged by and quite frankly, several things out you know the ability that hospitals can manage through capacity interrogation and labor as well as obviously the vaccination efforts around the world and just a patient there's a significant backlog of care if I look at the U K.

There's like 5 million patients waiting for medical intervention 400000 of those folks waiting for surgery for.

For the past 12 months, but as we know it's not going to be linear we do know hospital systems in the United States are starting to delay care right now.

Jennifer Taubert: We do know hospital systems in the United States are starting to delay care right now. So I think quarter to quarter, it will improve, but it will never be a linear line. Yeah, I can add on the pharma side, most of our core categories are pretty much back to the pre-COVID level, you know, the exception to that actually being CLL. But we're really seeing strength coming back, for example, in the United States and in Europe.

I think quarter to quarter, it will improve but it will never be a linear line.

Yeah, I can add in on the on the pharma side most of our core categories are pretty much back to the pre COVID-19 level.

An exception on that actually being a C. L L.

But we're really seeing strength coming back for example, in the United States and in Europe, and we do anticipate some some modest ups and downs, but I think our team really did an extraordinary job last year.

Jennifer Taubert: And, you know, we do anticipate some modest ups and downs. But I think our team really did an extraordinary job last year of partnering with healthcare systems and physicians and patients to make sure that they could get on and stay on the therapies that they need. So our outlook for the rest of the year really remains strong for our sector, regardless of what happens with, you know, emerging variants and any, you know, continued blips as it relates to COVID.

Partnering with health care systems, and physicians and patients to make sure that they could get on and stay on the therapies that they need so our outlook for the rest of the year really remains strong for our sector, regardless of what happens with emerging variance in any continued blimps as it relates to Celtic Yeah. I'd also add Louise that I think we've got a really.

Jennifer Taubert: Yeah, I'd also add, Louise, that I think we've got to really tip our hat to the healthcare administrators and health professionals across the globe. We're in a much better position to handle a pandemic than we were in March of last year. And so certainly that would have, I would say, a favorable impact on whatever unfavorable events may occur. And so we really need to recognize just the great resilience and agility that those individuals have shown as well. Tebow, do you want to share a little bit about consumers and the momentum you see there, and maybe a couple of the category dynamics as well? No, we see strong momentum across our broad-based portfolio.

Tip, our cap to the Ah.

Health care administrators health professionals across the globe, we're in a much better position to handle a pandemic than we were a march of last year and so certainly that would have I would say a favorable impact on whatever unfavorable events may occur so a.

We really need to recognize just the great resiliency and agility that those individuals' have shown as well.

Bill do you want to share a little bit about consumer and the momentum you see there and maybe a couple of the category dynamics as we see strong momentum across our broad based portfolio.

I told you earlier this morning.

Joseph J. Wolk: As I told you earlier this morning,

You know all categories, we continue to be impacted by market level conditions seasonality.

Thibaut Mangan: You know, our categories will continue to be impacted by market-level conditions and seasonality. Having said that, we have proven over the past 18 months that our broad-based portfolio, in terms of both categories and geographies, allows us to weather whatever external conditions happen, and we expect continued momentum in the back half of the year.

<unk> said that we have proven over the past 18 months that our broad based portfolio in terms of both categories and geographies allows us to wherever whatever external conditions happen and we expect continued momentum into the back half of the year.

Great terrific. Thanks Louise appreciate the question Rob next question. Please.

Joseph J. Wolk: Great. Terrific. Thanks, Felice. I appreciate the question. Rob, next question, please.

Your next question comes from the line of Larry <unk> with Wells Fargo. Please proceed with your question.

Operator: Your next question comes from the line of Larry Beagleson with Wells Fargo. Please proceed with your question.

Good morning, Thanks for taking the question just a Ashley just a finer point on that quarter over quarter improvement in devices. You mentioned do you expect continued acceleration relative to 2019 in Q3, and Q4 and Joe could you just help us think about.

Joseph J. Wolk: Good morning. Thanks for taking the time to answer the question. Ashley, just a finer point on the quarter-over-quarter improvement in devices you mentioned. Do you expect continued acceleration relative to 2019 in Q3 and Q4? And Joe, could you just help us think about the operational ex-COVID vaccine sales and EPS cadence in the second half, given the easier comp in Q3 and the extra week in Q4 2020? Thanks for taking the question. Sure, thanks for the question, Larry.

The operational ex Covid vaccine sales and EPS cadence in the second half given the easier comp in Q3 and the extra week in Q4.2020, thanks for taking the questions.

Sure. Thanks for the question, Larry and I think what you heard is in quarter..2 we were up about 7% relative to 2019 and that was pretty broad based.

Ashley A. McEvoy: You know, I think what you heard is in quarter two, we were up about 7% relative to 2019, and that was pretty broad-based. You know, when I say all three out of four of our franchises posted growth versus 2019, orthopedics was down about a point. We were up in the United States about a point, down about three points in orthopedics in the U.S. in quarter two, really due to some of the slower-moving countries like Japan and India and the kind of opening up in COVID.

3 out of 4 of our franchises posted growth for 2019 orthopedics was down about a point and we were up in the United States about a point and down about 3 points in orthopedics in the U S in quarter, 2 really due to some of that.

The slower moving countries like Japan, and India and of kind of opening up in Covid, when I think about quarter, 3 and quarter..4 I do expect continued momentum you'll recall last year, we were down about 3% in quarter 3 versus 2019, and we were down about 1.5%.

Joseph J. Wolk: When I think about quarter three and quarter four, I do expect continued momentum. You'll recall last year, we were down about 3% in quarter three versus 2019, and then we were down about 1.5% in quarter four 2020 versus 19. So I do expect continued progress. I expect orthopedics to go positive.

In quarter, 4.2020 versus 19, so I do expect.

Continued progress I expect orthopedics to go positive I expect vision to accelerate given a lot of the new product launches.

Ashley A. McEvoy: I expect Vision to accelerate, given a lot of the new product launches. You know, as we've discussed, we think the category's gonna be high double-digit, and we expect it to be more in the high single-digit at the end of this year versus 2019. Yeah, and Larry, with respect to your question on guidance overall, I think I almost have to mirror a little bit what Ashley had said, the comparables were going to be most pronounced for the second quarter, and there'll be a little bit of benefit as we look into the third and fourth quarters. As you know, we don't provide guidance by quarter.

As we've discussed we think the category is going to be high double digit and we expect to be more in the high single digit Denbighshire versus 2008 Paul.

Yeah, and Larry with respect to your question on guidance overall, I think I almost have to mirror a little bit what actually had said the comparables.

To be most pronounced for the second quarter there'll be a little bit of benefit as we look into the third and fourth quarter. As you know, we don't provide guidance by quarter.

But I really looking at the underlying strength of each of our businesses improved share in the markets in which we lead.

Joseph J. Wolk: But I'm really looking at the underlying strength of each of our businesses, improved share in the markets in which we lead, and for those which we don't lead, in addition to what you heard from all three of our segment leaders, just an improved cadence of innovation, new approvals, new offerings that offer better healthcare solutions. So that's how we're thinking about it. From an EPS perspective, we are challenging our teams to continue to invest.

And for those that which we don't lead in addition to the what you heard from all 3 of our segment leaders.

The improved cadence of innovation, new approvals of new offerings that offer better health care solutions. So that's how we're thinking about it.

From an EPS perspective, we are challenging our teams to continue to invest we think when we have 10% topline growth and EPS growth that will approach 20%.

Joseph J. Wolk: We think when we have 10% top-line growth and EPS growth that will approach 20%, we think that's very healthy to take it up today on top of what we delivered in January, which surprised the upside as well. We want to make sure that we don't only deliver strong results in the current quarter or the next two quarters but really in the middle and back half of this decade as well.

We think that's a very healthy to take it up today on top of what we delivered in January which surprised to the upside as well we want to make sure that we don't not only deliver strong results in the current quarter or the next 2 quarters, but really in the middle and back half of this decade as well, we think we're very well positioned to do that.

Great. Thanks, Larry I appreciate the question Rob next question. Please.

Your next question comes from the line of Chris Schott with J P. Morgan. Please proceed with your question.

Joseph J. Wolk: This decade as well. We think we're very well positioned to do that.

Thanks, so much for the questions.

Operator: Great. Thanks, Larry. I appreciate the question. Rob, next question, please.

Yes. My question was just on the core revenue growth guidance I think you've raised it twice this year and I'm just looking for a little bit more color of what's driving the upside versus your expectation. So is this more device versus pharma or consumer is it share gain versus the overall market growth. Other geographies that are standing out I'm trying to get a sense of like really would have been the real.

Operator: Your next question comes from the line of Chris Schutt with J.P. Morgan. Please proceed with your question.

Joseph J. Wolk: Thanks so much for the questions. I guess my question is just on the core revenue growth guidance. I think you've raised it twice this year, and I'm just looking for a little bit more color on what's driving the upside versus your expectations. So is this more device versus pharma or consumer? Is it share gain versus overall market growth? Are there geographies that are standing out? I'm just trying to get a sense of what the real options were.

Sides versus your initial expectations.

Slip a second quick 1 in I think you mentioned the pharma margins were impacted by increased investments in <unk> I guess should we be thinking about that as a onetime event with the COVID-19 COVID-19 vaccine expenses et cetera, or are we entering kind of a sustained period of R&D ramp here, where we could see some of those margins under pressure. Thank you.

Joseph J. Wolk: Yeah, Chris, let me take a stab at that, and maybe Jennifer can chime in with anything that I might have missed. But with respect to the revenue guidance, Chris, I would say, you know, coming into the year, just like every other company and probably every other industry, we remained a little bit cautious with respect to how the recovery would unfold, whether there would be new variants. And so we took what I thought was a very responsible and prudent approach to our expectations at the beginning of the year. That being said, I don't want to undermine just the operational performance that each of the teams is executing on as we go throughout this year.

Yeah, So Chris let me take a stab at that and maybe Jennifer you can chime in with anything that I might have missed but with respect to the revenue guidance, Chris I would say you know coming into the year just like every other company in probably every other industry. We remained a little bit cautious with respect to how the recovery would unfold would there be new variants.

And so we took a what I thought it was a very responsible and prudent approach to our expectations at the beginning of the year that being said I don't want to undermine just the operational performance that each of the teams are executing upon as we go throughout this year, what we did learn and it really is a credit to the leaders that you've heard from today and their teams just how important.

Joseph J. Wolk: What we did learn, and it really is a credit to the leaders that you've heard from today and their teams, was just how important it was to reach out to customers during the last 18 months, not only to find out what the status of COVID-19 was and how it was impacting their businesses, but also how Johnson & Johnson could help them in the recovery. And I think that is having some, I'll call it, a goodwill factor with respect to how we're approaching our business today.

It is reaching out to customers during the last 18 months not only to find out what the status of COVID-19 was and how it was impacting their businesses, but also how Johnson <unk> Johnson can help them in their recovery and I think that is having some I'll.

I'll call it a goodwill factor with respect to how we're approaching our business today.

With respect to operating margins in R&D I would say that the COVID-19 investment for the vaccine specifically is a small part of it what we're seeing and really what we all take great Pride in is there's not 1 big outlying expense item or investment item in the quarter.

Joseph J. Wolk: With respect to operating margins in R&D, I would say that the COVID investment for the vaccine specifically is a small part of it. What we're seeing and really what we all take great pride in is that there's not one big outlying expense item or investment item in the quarter or even year to date with respect to milestones. It's really just the maturity of the portfolio, again, across all three segments that really positions us well.

Or even year to date with respect to milestones, it's really just the maturity of the portfolio again across all 3 segments.

That really positions us well so last year, you might recall, we increased our R&D investment by $800 million of above 2019 levels, even with all the questions and uncertainty and even though maybe competitors pulled back a little bit we know the only right answer was to invest for the long term, we're actually at a pace this year through 6 months about 1.

Joseph J. Wolk: So last year, you might recall, we increased our R&D investment by $800 million above 2019 levels. Even with all the questions and uncertainty, and even though maybe competitors pulled back a little bit, we knew the only right answer was to invest for the long term. We're actually at a pace this year through six months, about $1.3 billion above last year's level on a six-month comparator, so we feel very well positioned. And again, as I answered Larry earlier on the EPS accretion, we kind of think we're hitting the mark across all aspects. I don't know, Jennifer, if there's anything else you want to add.

$1.3 billion above lashed last year's level on a 6 month comparator. So.

So we feel very well positioned and again with how I answered Larry earlier on the EPS accretion, we kind of think we're hitting the mark across all aspects.

If theres anything else you want to add so what I did and we really focus on being a transformational medical innovator and we know that we do disproportionately invest in R&D versus the other areas of our business. If you take a look at the strength of our pipeline.

Jennifer Taubert: and Pharmaceuticals are investing in digital surgery capabilities that

As well as the continued progression we are seeing more assets transitioning into those later stages of development that require additional costs and as Joe had indicated earlier the beauty right now of the strength that we have for the business is it's allowing us to invest for those future waves of innovation. So we feel real good about the level of investment for <unk>.

Joseph J. Wolk: All of these that Ashley mentioned were investing in the consumer space, connecting with the consumer in more digital-enabled ways, so it's really across the board. Yeah, Chris, and I would just add, I guess, on the medical device side, actually alluded to the amount of innovation we've seen in the quarter. So I think some of the strength you're seeing on the top line is clearly the result of the focus on bringing strong innovation to market.

Andy in the farm group, Yeah, just nobody has it takeaway we're only investing in our pharmaceuticals, we're investing in digital surgery capabilities that.

Ashley mentioned, we're investing in the consumer space connecting with the consumer and more digital enabled ways.

So it's really across the board.

Chris and I would just add I guess on the medical device side Ashley alluded to the amount of innovation, we've seen in the quarter. So I think some of the strength you're seeing on the topline is clearly the result of a focus on bringing strong innovation to market, we're well poised over 2 year period to deliver nearly 40, what we would call a major new product launches.

Joseph J. Wolk: We're well poised over a two-year period to deliver nearly 40, what we would call major new product launches, which is a significant increase from where we've been. I think you're seeing that coupled with the recovery in the MD results and then clearly in farm, double-digit growth year-to-date and strong above-market performance. So I think those investments are paying off, and focus on innovation will be a core focus of ours.

Which is significant increase from where we've been I think youre seeing that coupled with the recovery in the <unk> results and then clearly in farm double digit growth year to date strong above market performance. So I think those investments are paying off and focus on innovation will be a core focus of ours.

Thanks for the question Chris.

Operator: Thanks for the question, Chris. Rob, next question, please. You're next.

Rob next question. Please your next question comes from the line of Bob Hopkins with Bank of America. Please proceed with your question.

Operator: Your next question comes from the line of Bob Hopkins with Bank of America. Please proceed. Oh, great. Thank you very much.

Oh, great. Thank you very much just a quick 1 for me.

For for Med Tech. Thank you for giving that 7% number versus 2019 I was just curious is that a reported number or is that a number that adjust for currency.

Ashley A. McEvoy: For Medtech, thank you for giving that 7% number versus 2019. I'm just curious, is that a reported number or is that a number that adjusts for currency? And then one other thing I'd love a quick comment on is COVID-related questions. Just curious, especially on the device side, Ashley, is there kind of a major geography right now where increasing levels of COVID are happening?

And then 1 other thing I'd Love a quick comment on us.

On the Covid type questions, just curious, especially on the device side actually is there kind of a major geography right now we're increasing levels of hospitalization have you, particularly concerned or are we not quite at that stage yet.

Ashley A. McEvoy: Have you been particularly concerned, or are we not quite at that stage yet?

I guess first real quick Bob.

Ashley A. McEvoy: I guess, real quick, Bob, the 7% is an adjusted operating growth number, just for consistency so you understand the underlying organic. Yeah, and Bob, just to, again, thanks for the question.

7% is an adjusted op growth number just for consistency we understand underlying organic.

And Bob just to I guess, thanks for the question I you know again, we've had the benefit to learn from Lake how this virus manifests around the world starting with China.

Ashley A. McEvoy: You know, again, we've had the benefit of learning from, like, how this virus manifests around the world, starting with China. Asia is a region that is above 2019 in terms of procedure volume, clearly really driven by China. We know that Japan's in lockdown. We know that Australia went back to lockdowns recently. We know India's digging out.

Asia is.

A region that is above 2019 in terms of procedure volume clearly really driven by China.

We've seen it in Japan and locked down we know that Australia went back to Lockdowns recently, we know India dig it out so some of those other countries are going to be slower to recover.

Ashley A. McEvoy: So some of those other countries are going to be slower to recover. You know, EMEA, which has been at a slower pace than the United States, but we actually see a lot of acceleration happening right now in EMEA with the vast distribution and uptake of vaccinations and, quite frankly, the backlog of patients that really need to be cared for. As I mentioned, I shared a little bit of the waiting list data in the UK.

And they are we then which has been at a slower pace than the United States, We actually see a lot of acceleration happening right now in EMEA with the vast distribution and uptake of vaccinations and quite frankly that the backlog of patients that really need to be cared for as I mentioned I shared a little bit of the waiting list data in the U K.

And the U S in quarter, 2 has had significant recovery versus the first quarter.

Ashley A. McEvoy: And the U.S. in quarter two has had a significant recovery versus the first quarter. You know, I look at data like in January, we were down; medical procedures were down about 6% in January versus 2019. And in May, that went positive to up about 3%. But as I mentioned, it's not going to be a vertical line, given the recent surges that are happening in hospital systems in the U.S., like Florida, like Michigan and the Midwest.

I look at data like in January we were down medical procedures, Rick out about 6% in January versus 2019 and in May that went positive up about 3%, but as I mentioned, it's going to be not a vertical line given the recent searches that are happening in hospital systems, and even I think Florida like Mitch.

Again in the Midwest. So again I think our systems are unbelievably equipped to manage through this have huge respect and admiration for a lot of our customers who are managing COVID-19. It was non COVID-19 patients.

Ashley A. McEvoy: So again, I think our systems are unbelievably equipped to manage through this, and I have huge respect and admiration for a lot of our customers who are managing COVID as well as non-COVID patients. Thanks, Bob. Appreciate the question. Rob, next question, please.

Thanks, Paul I appreciate the question Rob next question. Please.

Next question is from the line of Josh Jennings with Cowen. Please proceed with your question.

Operator: The next question is from the line of Josh Jennings with Cowen. Please proceed with your question.

Hi, good morning, Thanks for taking the questions.

Operator: Hi, good morning; thanks for taking the questions. Joe, I was hoping just to, as we're thinking about 2022 and you are encouraging the street to exclude COVID vaccine revenues from our forecast, I was hoping just to better understand the COVID-19 vaccine margin impact in 2021. It seems to be margin dilutive as to how we should be thinking about the core.

I was hoping to just as we're thinking about 2022 and you are encouraging the street.

19 vaccines margin impact in 2021 is it seems to be margin dilutive.

If you're thinking about the core business is margin for a baseline for 2022 forecasts.

Joseph J. Wolk: for businesses' margin and as a baseline for 2022 forecasts.

Yeah, Josh I would say at this point, it's really a minimal in terms of both the segment as well as certainly Johnson <unk> Johnson's margin profile, thus far through 6 months, it's been a dilutive again to a minimal amount, we expect that dilution to kind of reverse itself in the second half of this year, but again being a not for profit there is no material impact on.

Joseph J. Wolk: Yeah, Josh, I would say at this point it's really minimal in terms of both the segment as well as certainly Johnson & Johnson's margin profile. Thus far, through six months, it's been dilutive, again, to a minimal amount. We expect that dilution to kind of reverse itself in the second half of this year. But again, being a not-for-profit, there's no material impact on EPS despite the $2.5 billion revenue estimate that we provided earlier today.

EPS, despite the $2.5 billion revenue estimate that we've provided earlier today.

Thanks, Josh appreciate the question. Rob next question. Please next question is from the line of Terence Flynn with Goldman Sachs. Please proceed with your question.

Operator: Thanks, Josh. I appreciate the question. Rob, next question, please. The next question is from the line of Terrence Flynn with Goldman Sachs. Please proceed with your question. Great. Thanks so much for taking the questions. I guess the first one is just on the duration of protection with the vaccines. I mean, Joe, you touched on this a little bit, but maybe just

Great. Thanks, so much for taking the questions I guess the first 1 is just on the duration of protection with the vaccines I mean, Joe you touched on this a little bit, but maybe just what's your perspective on how often a booster might be required here and then can you remind us the timing of your 2 dose phase III trial, and then Jennifer would love any more details you can provide.

Operator: Next question is from the line of Terrence Flynn with Goldman Sachs. Please proceed with your question.

On the <unk> sub 2 conversion and improving our competitive dynamics that you mentioned thank you.

Yes, so terence thanks for the questions I would say in terms of the booster, whether it's needed or not I think we should really defer to health officials around the world as to what that call will be we do like.

Joseph J. Wolk: Yes, so Terence, thanks for the questions. I would say in terms of the booster, whether it's needed or not, I think we should really defer to health officials around the world as to what that call will be. We do like the durability of at least eight months for our vaccine. We think that's better than some of the other vaccines that are out there, not to disparage them in any way whatsoever. But health officials still have not made any type of decisions on when or if a booster will be needed. So we'll just defer to them when more data is collected. Perfect.

Like the durability of at least 8 months for our vaccine, we think that's better than some of the other vaccines that are out there not to disparage them in any manner whatsoever, but health officials still have not made any type of.

Decisions on when or if a booster will be needed. So we'll just defer to them when more data is collected.

Jennifer Taubert: So then, as it relates to Darzalex, starting off with Darzalex, you saw the very strong results that we had in the quarter and also the significance of the additional indications that continue to come through, and our sixth indication specifically for the Darzalex FastPro application. As we take a look so far across the business, already 60% of our Darzalex business is in the subcutaneous form, and that's whether we look at the United States or whether we look outside the U.S. And so, very, very rapid adoption, as well as expansion into additional patient populations for Darzalex.

Perfect. So then as it relates to <unk> starting off with list <unk> you saw the very strong results that we had in the quarter also the significance of the additional indications that continue to come through and our sixth indication specifically for the <unk> fast pro application as we take a look so.

Far across the business already 60% of our <unk> business is in the subcutaneous form and that's whether we look at the United States or whether we look outside the U S and so very very rapid adoption.

As well as expanded into additional patient populations for <unk>. So we're very very confident in the uptake and this is really providing significant benefits for patients going from multiple hour infusion down to a 3 to 5 minute injection. So a lot of good things to come on <unk> as it relates to improve our cost.

Jennifer Taubert: So, we're very, very confident in the uptake, and this is really providing significant benefits for patients going from multiple-hour infusions down to a three- to five-minute injection. So, a lot of good things to come for Darzalex. As it relates to Imbruvica, we're seeing very strong growth for Imbruvica outside the United States. Right now, 22% growth in the quarter. As we take a look at Imbruvica overall, we had double-digit growth, but obviously less than that in the U.S.

We're seeing very strong growth for improvement outside the United States right now a 22% growth in the quarter.

We take a look at improving overall, we had double digit growth, but obviously less than that in the U S and the U S. We're still a bit impacted the patient volumes in new patient starts are still down a little bit and C. L. L. Due to COVID-19.

Jennifer Taubert: In the U.S., we're still a bit impacted. The patient volumes and new patient starts are still down a little bit in CLL due to COVID. For these patient populations, there can be more of a watchful waiting period or sometimes treatment with older therapies. And so, we did see a slower growth rate, particularly in the U.S., in the quarter, but we do anticipate that to rebound as we move forward and more people get vaccinated.

These patient populations, there can be more of a watchful waiting period or sometimes trader with treatment with older therapies and so we did see a slower growth rate, particularly in the U S. In the quarter, but we do anticipate that to rebound.

As we move forward and more people get vaccinated as it relates to the competitive dynamics improve OCA remains the number 1 prescribed treatment N C. L L and relapsed refractory Mcl and also Walgreens terms. So it is the number 1 b T hey, I wherever their prescribed it.

Jennifer Taubert: As it relates to the competitive dynamics, Imbruvica remains the number one prescribed treatment for CLL and relapsed refractory MCL and also Waldenstrom. So, it's the number one VTKI wherever they're prescribed. It's also the only agent that's got demonstrated overall survival in first-line CLL and a safety profile that's supported by over five years of follow-up and clinical experience. So, we believe we've got a great profile that stands up competitively with Imbruvica and will continue to be able to deliver great growth for us going forward. And Terrence, with respect to your question on the two-dose study for the vaccine, we would expect that data to be late Q3, early Q4 at this point.

It's also the only agent that Scott demonstrated overall survival in first line C. L L and a safety profile that's supported by over 5 years of follow up and clinical experience. So we believe we've got a great profile that stands up competitively with <unk> and we will continue to be able to deliver great growth for us going.

Howard.

And Terence with respect to your question on the 2 dose study for the vaccine we would expect that data to be either late Q3 early Q4 at this point.

Joseph J. Wolk: Thanks, Terrence. I appreciate the question. Rob, next question, please. Next question.

Thanks, Terence I appreciate the question Rob next question. Please.

Question is from the line of Matt Mexican with Credit Suisse. Please proceed with your question.

Operator: The next question is from the line of Matt Meksyk with Credit Suisse. Please answer your question.

Hey, Thanks, so much for taking our question just 1 quick follow up I know that there were some questions early on on sort of the tone of the market and COVID-19 and trends for the back half of the year, but just to clarify specifically for Ashley.

Operator: Hey, thanks so much for taking our question. One quick follow-up.

Ashley A. McEvoy: I know that there were some questions earlier on the sort of tone of the market in COVID and trends for the back half of the year. But just to clarify, specifically for Ashley, the third quarter, you know, for those businesses that are, you know, in the past, the MetaVise businesses that have been sort of seasonally off, down slightly, flat-ish from Q2 to Q3, you know, is that the pattern when you talk about improving momentum?

The third quarter.

For those businesses that are in the past and that advice businesses that have been sort of seasonally off.

Down slightly flattish from Q2 to Q3.

Is that the pattern when you're talking about improving momentum I mean is that the pattern, we should see sort of a normal seasonal pattern or is the momentum you're describing something that would that would actually take this some of those businesses up sequentially and I have 1 follow up if I could.

Ashley A. McEvoy: I mean, is that the pattern we should see, sort of a normal seasonal pattern? Or is the momentum you're describing something that would actually take some of those businesses up sequentially? And I have one follow-up question, if I could.

Ashley A. McEvoy: Yeah, Matt, I think, thank you for the question. I would tell you that, you know, maybe some bookends, you know, like our electrical physiology business, our AFib, treating cardiac ablation has kind of recovered, you know, very expeditiously. And that team right now is just really working on refilling the patient funnel. At the other end, I would say cataract surgeries, which are, you know, procedure volumes are still below 2019.

Yeah, Matt I think thank you for the question and I would tell you that what we've experienced is you know maybe some book and you know like our electrical physiology business. Our ace had the treating cardiac ablation has kind of recovered.

Very expeditiously and and that team right. Now is just really working on refilling. The patient final at the other book end I would say would be cataract surgeries, which procedure volumes are still below 2019.

We would expect that 1 to significantly accelerate.

Ashley A. McEvoy: So we would expect that one to significantly accelerate to, you know, on a balance to go. So it really depends on the procedure, you know; they really are meeting the bell curve, if you will. And again, as I kind of come back to what's going to affect the pace, it's really the pace at vaccinations, the pace at hospitals, being able to match the capacity and keep a highly engaged, healthy workforce and manage through some of the surges that we're seeing right now in the US and other pockets of the world.

On our balance to go so it really depends by procedure.

We are meeting the bell curve, if you will.

And again as I kind of come back to what's going to affect the pace, it's really the <unk>.

Patient vaccinations pace at hospitals being able to match the capacity in and keep a highly engaged healthy workforce and manage through some of the surveys that we're seeing right now in the U S. In other pockets of the World and then just really patient sentiment you know there's been a lot of investment there.

Ashley A. McEvoy: And then just really patient sentiment, you know, there's been a lot of investment that J&J has been doing to reassure patients to go seek medical care. And I think we've seen a lot of facts and data and publications on the impact on non-COVID patients who haven't sought care. So we expect that to continue. But we don't expect, again, a perfect linear line. I keep saying that because we learn every week, we take four steps forward, or maybe a step back.

Jane J has been doing to reassure patients to go seek medical care.

And I think we've seen a lot of the facts and data and publications on the impact on non COVID-19 patients who haven't seek care. So we expect that to.

To continue we don't expect them.

Again, a perfect linear line I keep saying that because we learn every week a week.

Take 4 steps, Florida, maybe a step back.

Thank you and then just 1 on.

Ashley A. McEvoy: And then just one on vision, if I could, you know, you mentioned the approval of Synergy in the U.S. I know it's been out, this Presbyopia Correcting IOL has been out for a while in Europe, just wondering if you can tell us what that has done for the European business, what the response has been, and how you're thinking about that mapping over to the U.S. Thanks.

1 on vision, if I could you mentioned.

The approval of synergy in the U S. I know its been out. This is the prestige presbyopia correcting I O L has been out for a while in Europe. Just wondering if you can tell us.

What that has done for the European business, what the response has been and how you're thinking about that mapping over to the U S. Thanks.

Sure.

Ashley A. McEvoy: Yeah, sure. You know, we've seen really strong performance of the technist synergy in Amaya. We are growing market share in Amaya and vision surgery, and that market has had a lot of available premium interocular lenses. We're pleased to bring that technology to the United States. We just launched it in quarter two, and there's been very good pickup. It's also complemented, as Chris was mentioning, by kind of our first innovation in the Faco Amulsifier, the Veritas.

We've seen really strong performance of the techno synergy and in EMEA, we are growing market share in EMEA and vision surgery, and and that market has had a lot of available premium intraocular lenses, we're pleased to bring that technology to the United States.

We just launched in quarter 2 there has been very good pick up. It's also complemented as Chris was mentioning with kind of our first innovation and a faithful emulsifier. The veritas at a combination of those 2 with really our first advancement in mono phone calls and the techniques I hand, which just launched early in quarter, 1 the combination of <unk>.

Ashley A. McEvoy: So the combination of those two with really our first advancement in monofococals in the Technist IHans, which just launched earlier in quarter one, the combination of those three innovations, I expect, should improve our current run rate of revenue performance in the U.S. Surgical vision. And as you heard in quarter two, we did grow revenue versus 2019 in OUS. And so I expect that that should have the U.S. start to pick up more in the back half of the year.

3 innovations and I expect should improve our current run rate of revenue performance in the U S. Surgical vision and as you heard in quarter..2 we did grow revenue versus 2019 and N O U S.

And so I expect that that should get half the U S start to pick up more in the back half of the year.

Operator: Thanks, Ashley. I appreciate it. Matt, thanks for the question. Rob, next question, please.

Thanks, Ashley appreciate it Matt Thanks for the question Rob next question. Please.

The next question comes from the line of Joanne Wuensch with Citi. Please proceed with your question.

Operator: The next question comes from the line of Joanne Lynch with Citi. Please proceed with your question.

Good morning, and thank you for taking the question.

Operator: Good morning, and thank you for taking the question. There are two of them.

2 of them 1 could you used you did give us a little bit of update and color on the ortho taxi adoption you did provide some statistics on monarch, but anything else that you can sort of add in that bucket and then my second question is I might be reading the tea leaves a little bit here, but you sounded maybe just a little bit stronger on the idea.

Ashley A. McEvoy: One, could you sort of give us a little bit of an update and color on the orthotaxi adoption? You did provide some statistics on Monarch, but anything else that you can sort of add to that bucket? And then my second question is, I might be reading the tea leaves a little bit here, but you sounded maybe just a little bit stronger on the idea or concept of M&A. Am I interpreting that correctly? Thanks, Joan.

M&A am I interpreting that correctly.

Ashley A. McEvoy: I'll start, and then I'll turn to my colleagues to talk a bit about M&A and some of the other businesses as well. I would say we're very encouraged. We've had about 750 on-hand demonstrations with our Velys knee digital surgery offering, and we've done about 100 cases to date. What we keep hearing from customers who have been giving us really positive feedback on a couple things, the value of the system's smaller footprint, the images, interoperative capabilities, and really the ease of integration for surgeons and OR teams, as well as reducing the heavy physical and financial burdens of the currently available marketplace offering. So, you know, it's new.

Yeah. Thanks, John I'll start and then I'll I'll turn to my colleagues chocolate about M&A and some of the other businesses as well.

I would tell you. We're very encouraged you know we've had about 750 on hand demonstrations with our validus knee digital surgery offerings. We've done about 100 cases to date.

What we keep hearing from customers, who I think giving us really positive feedback on a couple of things the value of the system smaller footprint, the imager images interactive capabilities and really the ease of integration.

For surgeons and all of our teams the workflows, reducing the heavy physical and financial burdens of of the currently available marketplace offer and so on it's new we just got approval also in Australia. So we're going to start to do cases in Australia.

Ashley A. McEvoy: We just got approval in Australia, so we're going to start to do cases in Australia, and I would say it is very, very encouraging. We have several different commercial models that we're assessing, and we're seeing hospitals take really adopt multiple archetypes, so stay tuned on that. And then I think you had a second question, Joan, on M&A, and I would just say, you know, from a med tech point of view, you've seen, we've invested over $10 billion in capital in M&A, really behind getting into eye health, getting more significant into digital surgery, and then really starting to invest in, I'll call it, standard of care changing technologies, like new wave and ablation for liver ablation Right now, we are in a clinical trial to partner that technology with our endoluminal Monarch technology for lung cancer, the treatment of tumors, bleeding tumor cells.

And I would say very very encouraging and we have several different commercial models that we're assessing and we're seeing hospitals take really multiple archetypes. So stay tuned on that.

And then I think you had a second question Joanna on M&A.

And I would just say you know for Med Tech point of view, you've seen we've invested over $10 billion of capital in M&A really behind getting into IHOP getting more significant into digital surgery, and then really starting to invest in.

Paul like standard of care changing technologies, like Newwave and ablation for liver ablation. It was the first indication right now we are under a clinical trial to partner that technology with our Endo luminal monarch technology for lung cancer or the treatment of tumors I bleeding tumor cells were also on it.

First in human in oncologic viruses in drug delivery using monarch.

Jennifer Taubert: We're also in first in humans for oncolytic viruses and drug delivery using Monarch, as well as starting to get a stronger foothold in the fast-growing area of stroke. Our stroke business was up, you know, over 30% in quarter two relative to 2019, so, again, a procedure that was less affected in the COVID environment that we continue to bolt down on. But I'll turn to my colleagues to talk a little bit about M&A.

As well as starting to get a stronger foothold in the fast growing area of stroke.

<unk> business was up.

30% in truth and quota to relative to 2019, so again, a procedure that was less affected in the COVID-19 environment that we continue to build down too, but I'll turn to my colleagues to talk a little bit about M&A, yeah, well you know 1 of the things that that helps us be really successful here is that we're truly agnostic to the source of innovation.

Thibaut Mangan: Yeah, you know, one of the things that helps us be really successful here is that we're truly agnostic to the source of innovation. So, the win is having something that's really transformational and being able to get it to patients. It's not, you know, where it originated from.

The win is having something that's really transformational in being able to get it to patients, it's not where it originated from and so as a result about 50% of our products come internally, 50% externally. So for example, and let you know late last year, we brought in Birmingham App, we made the acquisition of moment.

Jennifer Taubert: And so, as a result, about 50% of our products come internally, 50% externally. So, for example, you know, late last year, we brought in Bermecamab. We made the acquisition of Momenta. We brought in Terris as a drug delivery device for the bladder, gene therapy for geographic atrophy, and age-related macular degeneration from Humira.

We brought in terrorists as a drug delivery device for bladder a gene therapy for geographic atrophy in age related macular degeneration from Humira and so we really do work very very assertively to find the best technologies in our key areas of focus and many times that's coming from our Inc.

Thibaut Mangan: And so, we really do work very, very aggressively to find the best technologies in our key areas of focus. And many times, that comes from our internal labs. But many times, it's also coming externally.

<unk> labs, many times, it's also coming externally so our strategy and interest there remains the same and making sure that our that we've got the best innovation for patients going forward and I feel like we're doing a really good job on that front.

Joseph J. Wolk: So, our strategy and interest there remain the same in making sure that we've got the best innovation for patients going forward. I feel like we're doing a really good job on that front. And in consumer health, I would say that we have a very strong portfolio of iconic brands that we continue to develop very quickly. Mostly, we continuously scan the market for opportunities to find either new go-to-market models or close gaps in our portfolio.

And in consumer health.

I would say that we have a very strong portfolio of iconic brands and that we continue to develop very quickly obviously, we continuously scan the market for opportunities to find.

Find either a new go to market models or close gaps in our portfolio, but if you look at the acquisitions. We have made over the past couple of years, we are really pleased with our performance.

Joseph J. Wolk: But if you look at the acquisitions we have made over the past couple of years, we are really pleased with their performance. All of them, whether it's in self-care or skin health, are performing well, and that's very encouraging for the future. And Joanne, I'll just say, you're going to force me to review the transcripts in maybe more detail than I usually do. I didn't think our language changed much. We always remain pretty aggressive when it comes to rigorous portfolio management, making sure that we're making the most of this scientific expertise, the commercial capabilities that we have, and we've just got to find deals that really fit the financial construct in a disciplined way. So, you know, whether it's in med tech or pharmaceuticals.

All of them, whether it's in the self care, all skinheads are performing well and and that's very encouraging for the future.

Joanne I'll, just say you're going to force me to review the transcripts and maybe more detail than I, usually do I didn't thank our language changed much we always remain pretty aggressive when it comes to rigorous portfolio management, making sure that we're making the most of this the scientific expertise the commercial capabilities that we have and we just got to find deals that really.

Joseph J. Wolk: TAR-210, JNJ-2113, Velys, Spravato, Aveeno, Techvayli, TAR-210, JNJ-2113, Uptravi, Papillon, Heliostar, Remicade, Tremfya, Farapulse, Nipocalimab, Tecvayli, GPRC5D CD3.

The financial construct in a disciplined way so whether.

Whether it's a in med tech pharmaceuticals, or consumer we look across the board really monthly if not more often at opportunities that may fit nicely within the Johnson and Johnson business.

Joseph J. Wolk: really monthly, if not more often, at opportunities that may fit nicely within the Johnson & Johnson business. Thanks, Joanne. Appreciate the question. Operator, last question, please.

Thanks, Joe I appreciate the question.

Operator last question please.

That question will be coming from the line of Jason Bedford with Raymond James. Please proceed with your question.

Operator: Hi, yes, that question will be coming from the line of Jason Bedford with Raymond James. Please proceed with your question. Uh, good morning.

Good morning, and thanks for squeezing me in.

Operator: Good morning, and thanks for squeezing me in. I have two unrelated questions that require, I think, quick answers. I'll ask both up front. First, on the potential knock-on impact of the vaccine. I appreciate the not-for-profit nature of the product, but do you expect to see a halo effect? Meaning, do you think the vaccine will help pull through or benefit other areas of the portfolio? And then, my second question, maybe for Thibault, at 28%, how much further can consumer margins go? And then, any further commentary on the inflationary pressures that you alluded to in your commentary? Thanks.

2 unrelated questions that require I think quick answers I'll ask both upfront I guess first on the potential knock on impact of the vaccine and I appreciate that.

Nature.

Of the product.

We expect to see a halo effect, meaning do you think the vaccine will help pull through or benefit other areas of the portfolio and then my second question maybe for Tivo.

28%, how much further can consumer margins. So and then any further commentary on the inflationary pressures that you alluded to in my commentary. Thanks.

So I'll jump in on the vaccine question first so so really we're really proud of what we've been able to do in bringing forward a COVID-19 vaccine and we see this as really the start of what will become a vibrant vaccine business for Johnson <unk>. Johnson. So you were talking about the Halo effect of our a knock on effect.

Jennifer Taubert: So I'll jump in on the vaccine question first. So, really, we're really proud of what we've been able to do in bringing forward a COVID vaccine. And we see this as really the start of what will become a vibrant vaccine business for Johnson & Johnson.

We believe the good that we're doing in the world and that we will continue to be doing on the Covid vaccine is a great start and in our pipeline right now we've got a number of vaccines in development that we hope to have positive results coming from including an RSV vaccine in HIV vaccine.

Jennifer Taubert: We believe the good that we're doing in the world and that we will continue to do on the COVID vaccine is a great start. And in our pipeline right now, we've got a number of vaccines in development that we hope to have positive results coming from, including an RSV vaccine, an HIV vaccine, one for prevention of sepsis, and others that we're looking at. So we hope this will be the start of what will become a very vibrant vaccine business for us over time.

<unk> for prevention of sepsis and others that we're looking at so we helped us to be a start of what will become a very vibrant vaccine business for us over time.

Yeah and to your question on consumer.

Jennifer Taubert: And to your question on consumers, as I said, we have seen the first half, and we continue to expect there will be pressure in parts of our portfolio in terms of commodity inflation and distribution costs.

Said, we are we have seen in the first half and we continue to expect them to it's a back half of the year.

Pressure in parts of our portfolio in terms of commodities inflation and <unk>.

And distribution cost.

We are prepared to absorb.

Thibaut Mangan: And in terms of margin improvement, we are committed to continuously improving our margin profile. But as I said, it's going to be a mix of continued search for efficiencies but also investment in our business, whether it's brand building activities or new innovation programs. Great. Thanks, Jason. I appreciate the question, and thanks to everyone for your questions and your continued interest. Apologies to those we couldn't get to because of time, but don't hesitate to reach out to the Investor Relations team as needed. I'll now turn the call back to Joe for some brief closing remarks. Great

<unk>.

And in terms of margin improvement, we are committed to continuously improve our margin profile, but as I said is going to be a mix of a continued search for efficiencies, but also investments in the business, whether it's brand building activities or.

New innovation program.

Great. Thanks, Jason appreciate the question and thanks to everyone for your questions and your continued interest and apologies to those we couldn't get to because of time, but don't hesitate to reach out to the investor relations team as needed I will now turn the call back to Joe for some brief closing remarks, great. Thank you, Chris and thank you really everyone for joining today's call to discuss our second quarter results and updated our.

Joseph J. Wolk: Thank you, Chris, and thank you, really, everyone, for joining today's call to discuss our second quarter results and updated outlook. We are incredibly proud of the relentless focus each of our J&J colleagues applies to really meet patient and consumer needs around the globe, resulting in a strong financial performance this quarter across the enterprise while simultaneously investing for a very strong future. I'm very confident in our outlook for the rest of 2021. You know, our business is performing even beyond the mathematical year-on-year comps, and I hope that's your takeaway today. So, thank you for your time, and bye for now.

Look we are incredibly proud of the relentless focus each of our J&J colleagues apply to them really meet patient and consumer needs around the globe, resulting in a strong financial performance this quarter across the enterprise, while simultaneously investing for a very strong future.

I'm very confident in our outlook for the rest of 2021, you know our business is performing even beyond the mathematical year on year comps and I hopefully that's your takeaway today. So thank you for your time and bye for now.

Thank you.

Operator: Thank you. This concludes today's Johnson & Johnson second quarter 2021 earnings conference call. You may now disconnect.

This concludes today's Johnson <unk> Johnson in the second quarter 'twenty 'twenty 1 earnings conference call you may now disconnect.