JnJ Q3 2011

I will now review the Medical Devices & Diagnostics segment results.

Worldwide Medical Devices & Diagnostics segment sales of $6.3 billion grew 1.7% operationally as compared to the same period in 2010. Currency had a positive impact of 4.4 points, resulting in a total sales increase of 6.1%.

Sales in the U.S. were down 0.7%, while sales outside the U.S. increased on an operational basis by 3.9%. Excluding drug-eluting stent, worldwide sales increased over 3% on an operational basis.....
During the quarter, Ethicon received a complete response letter from the U.S. Food and Drug Administration regarding its Biologics License Application or BLA for the Fibrin Pad. The Fibrin Pad is a novel product candidate that combines Ethicon to biomaterials and plasma-derived Biologics to aid in stopping bleeding during surgery. This BLA marks the first of multiple submissions and approvals the company will pursue to deliver this novel product to surgeons and their patients. We are not planning on conducting new clinical trials to support our response. Ethicon is taking a phased approach to the development of the Fibrin Pad, including building a state-of-the-art facility to scale up supply in order to meet anticipated demand.

Ethicon Endo-Surgery achieved operational growth of 3.4% in the third quarter of 2011, with the U.S. sales down 2.5% and sales outside the U.S. up 7.6% operationally. Growth was driven by increased market share for advanced sterilization products and outside the U.S., new product launches and the continued shift to minimally-invasive surgery drove double-digit growth for harmonic products and strong sales results for Endo products....

Steve Beuchaw - Morgan Stanley, Research Division

We'd always be happy to join you in any of those discussions. One other question. I just wanted to get your latest thoughts, Dominic, on where things are headed with the FDA approval processes, both the 5, 10-Ks in for novel technologies. On one hand it seems like we're seeing an acceleration of legislative activity aimed at making these processes simpler, but then on the other hand we see CMS and the FDA working harder to coordinate approval and reimbursement for new technologies. So at this stage, to what extent do you think these are good indicators of where things might go? Maybe 5, 10-Ks get more predictable, and new technologies get a little bit more scrutiny. Where do you see this going?

Dominic J. Caruso

Yes, it's a great question. Look, we would just be speculating if we gave you sort of any definitive kind of position on this. But it is true that there is a movement to try to differentiate, if you will, the products that should get 5, 10-K and rapid approval in the marketplace because of relatively low risk or they're obviously the predicate devices. It's something that should be comparable to the current device and differentiate those from the products that would require more sort of PMA and extensive clinical trials as the products become or those development innovations become more complex. I think a company like Johnson & Johnson having the expertise that we have across a broad portfolio of not only medical device products, but obviously our pharmaceutical business as well positions us very well to have those kinds of discussions and dialogue with the FDA of what's appropriate in evaluating the particular product in question. So I would just say you've made a good observation. I can't predict where it's going to come or how it's going to come out, but I believe that we're in a great position to have that dialogue with the FDA and help them arrive at a sensible solution for the industry.