Good morning and welcome to Johnson & Johnson's second quarter 2016 earnings conference call. All participants will be in a listen-only mode until the question-and-answer session of the conference. This call is being recorded. If anyone has any objections you may disconnect at this time. I would now like to turn the conference call over to Johnson & Johnson. You may begin,

Good morning and welcome. I'm Louise Mehrotra, Vice-President of Investor Relations for Johnson & Johnson, and it is my pleasure this morning to review our business results for the second quarter of 2016. Joining me on the call today is Alex Gorsky, Chairman of the Board of Directors, and Chief Executive Officer, and Dominic Caruso, our Chief Financial Officer. 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 & Johnson website at investor.jnj.com. I'll begin by briefly reviewing the second quarter for the corporation, and for our three business segments. Following my remarks, Alex will comment on the 2016 results to date, and provide a strategic outlook for the company. Next Dominic will provide some additional commentary on the business, review the income statement, and update guidance for 2016. We will then open the call to your questions. We expect the call to last approximately 90 minutes. Included with the press release that was issued earlier this morning is a schedule of sales for key products and/or businesses to facilitate updating your models. These schedules are available on the Johnson & Johnson website, as is the press release. Please note we will be using a presentation to complement today's commentary. The presentation is also available on our website. Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. The 10-K for the fiscal year 2015 and the company's subsequent filings identify certain factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made today. The company does not undertake to update any forward-looking statements as a result of new information or future…

Thanks, Alex, and good morning, everyone. Before I get into our results, I'd like to echo Alex's sentiments and personally thank Louise for her significant contributions to Johnson & Johnson and for her valued support and friendship during my time as Chief Financial Officer. Over the last 10 years, Louise and the entire IR team has transformed our Investor Relations function, significantly developing our reputation with the investment community which has been recognized with several awards and recognitions, including those from Institutional Investor and IR Magazine. And through surveys of money managers conducted by Barron's magazine, Johnson & Johnson has been ranked at or near the top of the most respected companies list for 10 of the last 12 years. In fact, I'm also pleased to report that Johnson & Johnson was recognized this year by Barron's magazine as the number one most respected company for 2016. As Alex noted, Louise's outstanding leadership and dedication to advancing our reputation will continue with her successor, Joe Wolk, who we are happy to have joining us on our call next quarter. We all wish Louise well, and we are certainly going to miss her. With that, I will now turn our discussion back to the quarter. We're very pleased with our second quarter results, as we continue to see improved performance across the enterprise. And as Alex said, we remain confident in the strength of our business. As we previously discussed, in 2015 our underlying operational sales growth which excludes the impact of acquisitions, divestitures, as well as hepatitis C sales and the few extra shipping days in 2015 was about 5.5%. On this same basis, we continued to deliver strong underlying operational sales growth of approximately 7.9% for the second quarter and our sales results are above analyst estimates. Our second…

Thank you, Dominic. Michelle, could you please give the instructions for the Q&A session?

Our first question comes from the line of Mike Weinstein with JPMorgan. Please proceed with your question.

Good morning, Mike.

Thank you and good morning, everybody. Dominic, just a couple items that we can hopefully get you to clarify. So number one is, what's the impact for the full-year EPS of ASU 2016-109 adoption? The tax rate coming down as it did suggests a range of anywhere from $0.04 to $0.12. Maybe you can help with that. And then second, can you just walk through the net impact of the Vogue acquisition and then the API business divestiture on sales and earnings? Thanks.

Sure, Mike. With respect to the early adoption, I mentioned earlier that the first quarter impact was $0.05, and that's the most significant impact we expect for the year because that's where the majority of stock-based compensation is issued to employees. The second quarter impact was lower than that, but was almost entirely offset by other tax items. And the rest of the year will depend on when employees exercise stock options, so very difficult to predict. So for now, we've included in our effective tax rate for the year only the first quarter impact, which after we adopted in the second quarter, we're letting the first quarter impact flow through for the remainder of the year. Second quarter impact has already been offset by other items. And remaining quarterly impacts we think will either likely be offset by other items or very difficult to predict because it's timing of when employees exercise options. With respect to...

So you're up – so your updated guidance, Dominic, doesn't assume any benefit in the second half of the year?

Right, that's right. Only the first quarter flow-through that we experienced. And as I said, that's the largest single quarter of any stock-based compensation tax benefit. Sales with respect to Vogue and the API business, Vogue for the full year is in a $350 million range, so we have about half a year of sales added to our guidance. And the API business was an annual business of about $250 million, and we'll have half a year of those sales no longer included in our guidance. So that's part of the increase in our overall growth in sales of about 0.5 point. The rest of it is due to the underlying strength we saw in the first six months.

Okay. And then on the Pharma business, can I get you just to comment on a couple of items? So one, this is obviously a very important quarter for DARZALEX with the data we saw at ASCO and EHA. And just would love to get some high-level commentary on where you think that gets positioned going forward in multiple myeloma? And then, second, would you talk about the competitiveness of sirukumab, given the Phase three data we just saw at EULAR and your expectations there on filing, timing, and approval?

Sure. Let me say a few words on both and then, Alex, why don't you add a few and, Louise, also on the timing question. So DARZALEX, we're very pleased with the initial uptake of DARZALEX. The product is well received by the medical community. And the data, as you pointed out, continues to be very impressive. And we believe DARZALEX can be essentially backbone therapy for the treatment of multiple myeloma. So we expect that we'll get additional indications for DARZALEX. But it's already been quite well received by the investment community, having great results for patients and, as I said, likely to be backbone therapy, going forward. Sirukumab, also very positive data there. It's an important product in our autoimmune franchise. And, Alex, maybe you can comment a little bit more on that. And, Louise, on the timing of filing for sirukumab, I just don't have it handy, if you could give us that...

2016.

2016, so we'll file this year for sirukumab. Alex Gorsky - Chairman & Chief Executive Officer: Hey, Mike, Alex here. Look, we're excited about sirukumab on a number of fronts, first as an IL-6. We know in this category there's a lot of interpatient variability. And having another option for patients, and based upon the early data that we have seen in RA, some of that presented just recently at the EULAR conference, we're very encouraged by. We're going to be looking at it, obviously, in other areas. And I think what we're most enthusiastic about is, if you combine sirukumab along with the work that we're doing with guselkumab as well, the IL-23 being looked at in psoriasis, it's really going to help us build out an even stronger portfolio and platform in immunology as we go forward over the next several years.

Thanks, Alex.

Next question, please.

Our next question comes from the line of Larry Biegelsen with Wells Fargo. Please, proceed with your question.

Good morning, Larry. Alex Gorsky - Chairman & Chief Executive Officer: Hi, Larry.

Good morning. Thanks for taking the question. And, Louise, congratulations on your retirement. I know you'll be missed. So one for Dominic, financials to start off with and then just one market-related question. So Dominic, just on the guidance, two clarification questions. So the $0.10 raise at the lower end on operational EPS and the $0.05 on the high end, is $0.05 due to the accounting change and the rest due to the underlying strength in the business? And then, it appears there's a lot of moving parts on the sales guidance as well. That 5.5% in 2015 that you raised to 6% for 2016, by my math, it implies that you're expecting a similar growth in the second half of 2016 compared to the first half of 2016, if one adjusts for the extra week in the year-ago period. So is that directionally accurate? Thanks.

Sure, Larry. Well, with respect to EPS guidance, you mentioned two of the items, which obviously was tax as well as the stronger sales performance. But I just wanted to remind you that we also lowered our other income and expense guidance for the year. So one way to think about it is that other income and expense guidance is lower, the tax rate is also lower, those two generally offset. And the midpoint of the guidance is up about $0.07, when I do the midpoint versus the two ends, and the $0.07 is primarily due to the overall increase in sales guidance that we provided today. Your observations with respect to the back-half of the year, you're right that if we exclude the extra shipping days in 2015 from the analysis, the back-half of 2016 would be similar to what we saw for the first half.

Thanks. And then, just on the market. In the U.S., maybe, Alex, if you could comment a little bit, or Dominic, on what you're seeing on procedure volume in the U.S. in ortho and, more broadly, in med tech, that would be great. Thank you. Alex Gorsky - Chairman & Chief Executive Officer: Yeah. Thanks, Larry. Larry, we are seeing a pickup in terms of hospital admissions and surgical procedures. I think hospital admissions are up around 3%. We think the procedures are probably up around 3.5%. We continue to see some decrease overall in office physician visits, down 2%. And we think that that's just due to a more moderated utilization at the front-end due to increased co-pays and a number of other dynamics. But overall, if we look at the core growth rate in the medical hospital device area, we're encouraged by some of the recent trends that we're seeing.

Thanks for taking the questions, guys.

Next question, please.

Our next question comes from the line of Kristen Stewart with Deutsche Bank. Please proceed with your question.

Good morning. Thanks for taking the question. And I'll echo Louise, we'll definitely be missing you, but congratulations. I was wondering if you could just comment a little bit about just on the capital allocation side. Obviously we saw Vogue. Is that what we should be thinking going forward in terms of the type of acquisitions to look forward to smaller, more like a tuck-in for you guys in that range? Alex Gorsky - Chairman & Chief Executive Officer: Hi, Kristen. Thanks a lot for the question, and I couldn't agree with you more regarding Louise. But look, we were really happy that we were able to add Vogue to the J&J Consumer portfolio. As we've been talking about over the last several years, we felt that what was most important in the Consumer group was to actually ensure that we were able to get through the early stages of the remediation in a really high quality and effective way. And I think the team has done a great job at making it a little bit more broadly across that entire Consumer group. I think we see that in the core trends. And of course once we establish that, we continue to see Consumer as a great growth opportunity for the organization going forward. And, as Jorge and – as you saw when we did the Medical Device and Consumer Investor Relations Review now about a little over a month ago, I think they've got a really ambitious but also realistic plan for that, built on our existing brands. And we are really pleased to see performance, for example, LISTERINE up 7%, OTCs up 6%, analgesics within OTCs were up over 13%. And then in beauty, you saw about a 9% lift with really strong performance from NEUTROGENA and AVEENO. And when you take that and augment it, I think with thoughtful additions such as we saw over this last quarter, whether it was NeoStrata, whether it was HÍPOGLOS or with Vogue, we think that those are great additions to our existing portfolio and will likely be part of a continuous stream of additions to that part of the portfolio. And as we said for some time, whenever we're looking at inorganic growth opportunities, we look at, tuck-ins, we look at mid-size deals. We'll look at large deals. Of course, the tuck-in strategy, particularly in Pharma – actually in all of our segments, Medical Device and Consumer, are those that, where we feel that we can create the most value. But we do think that there's other opportunities to create value as well in, again, in mid and larger deals. But we're going to be very disciplined. We're going to be very decisive about how we do it, and ultimately try to better serve patients and consumers.

And just I guess on a broader note, I guess now that Consumer has turned the corner and has done well with the remediations, is that now a platform that, as you said, is more ready for acquisitions? I know Medical Devices is in the midst of their restructuring. Is that how we should think about it? And I have a follow-up for Dominic. Alex Gorsky - Chairman & Chief Executive Officer: Sure. Look, we believe that, mission one was really focusing on the core business as we said. And I do feel that Consumer like all of our businesses we're pleased. We're never completely satisfied. And they made a lot of progress on the core, and so we would expect, again, in a very thoughtful, disciplined way to continue to do additions when we think they're right. But we would look for the same thing in our other segments, as well. And by the way, we're pleased with the progress that we've seen in our Medical Device group over the last quarter as well. I mean, if we look at the restructuring, I think overall that team is on track. They're doing actions to strengthen their go-to-market model to accelerate their pace of innovation. They're prioritizing some additional platforms and geographies and all while streamlining some operations but really keeping very high quality standards. We think they're on track with a plan that they articulated earlier in the year and we're confident that as they move through this, they will be not only a stronger but a more innovative and a more efficient business.

And, Dominic, for the rebate from pharma, should we think about that as flowing through this quarter, or was that mainly reinvested? Because I know there was a higher rate of R&D this quarter?

Well, the way to think about it maybe, Kristen, is that it's a year-over-year change in about $140 million sales level. So obviously some of that drops through to bottom line, and you're right, we do also take the opportunity to invest. Investments in R&D really are related to progress in the pipeline regardless of whether these gross-to-net adjustments would be available. But another way to think about it is that we're now at a point where these actualizations of prior estimates, our current reserves are – a significant portion of them are current because data has been coming in recently. So I wouldn't expect similar type of adjustments going forward.

Okay, thanks very much, and again, Louise, congratulations.

Thank you. Next question, please.

Our next question comes from the line of Matt Miksic with UBS. Please proceed with your question.

Good morning, Matt. Alex Gorsky - Chairman & Chief Executive Officer: Hi, Matt.

Thanks to everybody for taking the questions. A lot of folks on the call. I'll try to keep it to one and one follow-up. Alex, while we've got you here, just one strategic question. And I don't know if this is consistent with what you're seeing or where you think things are going, but on Devices, what we've seen is a lot of these new innovations in structural heart in particular, some of the bundled payment initiatives seem to be driving more volumes to sort of higher volume centers, larger networks, potentially augmented by outpatient centers. It's early in some of these initiatives, but that seems to be directionally where things are headed. And first, love to get your sense as to whether you think that's where things are going as well? And if so, how J&J is positioned on the Device side to better support these kinds of trends. And then I had one follow-up. Alex Gorsky - Chairman & Chief Executive Officer: Sure, Matt. Thank you very much for the question. Over the past three years or four years, I think we've been pretty consistent in our thinking and in our projections about the likely increase in consolidation among providers and hospitals, particularly here in the United States, and just broader healthcare systems. And as systems feel continuing pricing pressure, we think that will manifest itself by them having consolidation. I think we've seen those trends. And I think they're clearly starting an effort to try and be as effective and as efficient as possible. So we do believe that that will be a longer secular trend that's going to continue. That's why we believe having a diverse and enough critical mass in our Medical Device portfolio is so important going forward. We see it in the way that expectations are changing among decision makers, including not only surgeons but also people in procurement and other C-suite executives and administrators in hospital systems. And we think as a result of that, we'll be very well-positioned. Particularly when you think about our Surgical franchise, our Orthopedics franchise. We've also been consistently saying that we're extremely pleased with the performance of our Cardiovascular unit, particularly our EP Group, Biosense Webster. I mean, once again this quarter they delivered over 18.5% growth with great innovation and great execution. But we also realize that that's an area where we'll continue to look for the right kind of additions, organically and inorganically, to ensure that we're properly positioned going forward.

That's great. Thank you. And then on another topic that we spent a lot of time on I guess over the past year and we're now a quarter away from what looks like the competitive launch in the U.S., biosimilar side on REMICADE. Without asking you to tip your hand, of course, – I'd love to get a sense as to, can you – are there steps you can take – given your portfolio and your relationship with these payers and networks, are there steps you can take to sort of stop – I don't know what the right word is – potentially offset some of the potential impact or get ahead of some of the potential impact through some of the contracts that you're talking with these folks about? And I think you know the question I'm asking, and I'm sure you're not going to get into a ton of detail. But any color would be helpful as to the extent your ability to contract around that event. Alex Gorsky - Chairman & Chief Executive Officer: Matt. Look, as we look at the landscape going forward, we fully predict that generics in biosimilars are going to be part of the competitive landscape. And look, we think that that is essential for the healthcare system. We think in the long run, it's actually a benefit for very innovative-focused companies because that's the only way you can relieve pressure over the long term. Of course, that's predicated upon the market and companies respecting intellectual property. It's very important to produce the right scientific information, so that we're guaranteeing patient safety and understanding the important clinical differences between some of these compounds, as they may or may not manifest themselves. And so we projected them. As we look at our strategic plan,…

Thanks, Alex.

Thank you. Next question, please?

Our next question comes from the line of Josh Jennings with Cowen and Company. Please proceed with your question.

Good morning, Josh. Joshua Jennings - Cowen & Co. LLC: Hi. Good morning. Good morning, and thanks for all the help over the years, Louise, and congratulations.

Thank you. Joshua Jennings - Cowen & Co. LLC: I wanted to ask a question to Dominic first. Just the operating margin performance again kind of beat our expectations. You reiterated your guidance for the year on the operating margin on expansion side of things. But I just wanted – there're multiple drivers of operating margin expansion, and there is – you had a program in place, I think you announced a couple of years ago, and just started to ramp last year of about $1 billion in cost savings by 2018 that was exclusive of the Medical Device restructuring plan. I just wanted to get a sense of the contribution to operating margin expansion this year, and if we're still in the very early innings and whether we should see stronger benefit from that cost savings plan as well as the Medical Device restructuring initiative in 2017 and 2018.

Josh, you're right. There are many factors that contribute. I mean, GP is one, so we continue to see good manufacturing efficiencies and cost improvements across the supply chain. That's a major initiative we've had ongoing for quite some time. So we saw some of that benefit this quarter, and we expect that we'll see it going forward as well. In the selling, marketing, administrative line, that's where you see the benefits of the program you're referring to where we anticipate about $1 billion of savings through 2018. That program is on track. We're seeing the savings. We're also making some investments. As the investments tail off, the savings will be more significant and more impactful in that line item going forward. So we're beginning to see the savings now. They're somewhat partially offset by some investments we need to make to continue the program, but in the future, those investments tail off and the savings ramp up, and they'll have more of an impact. And then also as you mentioned, the Medical Device restructuring is a whole another area that's unrelated to the two that I just mentioned earlier, and we expect to see continued improvements there, although that's a business where we want to also accelerate the pace of innovation with those savings. So some of those will be reinvested in the business. So it's across those three areas, and we're committed to the operating margin improvement that I mentioned earlier, greater than 200 basis points, and halfway through the year we feel very good about our ability to achieve that. Joshua Jennings - Cowen & Co. LLC: Excellent. I just wanted to ask a follow-up maybe for Alex and Louise. Just you commented on utilization levels in the U.S. and procedure volumes, and you experienced just a modest apples-to-apples in selling days from sequentially modest deceleration in knees and hips and spine in the Ortho segment. Is there anything specific to Q2 that you're seeing in the marketplace that you can comment on? Thanks for taking the questions. Alex Gorsky - Chairman & Chief Executive Officer: No, look, overall – and thank you for the question. Overall I think we saw solid growth in both knees and hips. I think we were at about 4.5% in knees, about 5%, 5.5% in hips. And we think that that's continued pickup from the ATTUNE launch, and the Corail Hip. So I would say that, consistent with what we're seeing in the broader market, consistent with what we're seeing in our business, we're seeing positive growth in that area.

And for the O-U.S. business, there was about an additional 1.5 days of selling days in the second quarter. And in the first quarter we had additional selling days in the U.S. business, as a reminder on that one. Next question, please?

Our next question comes from the line of Joanne Wuensch with BMO Capital markets. Please proceed with our question.

Good morning, Joanne.

Thank you very much for taking the question. I appreciate the commentary on the volumes, but I was curious if you can give us commentary on pricing, and also with the April 1 implementation of the bundled payment program in the United States, if you're seeing any impact from that.

Okay. So we talk about pricing on a Johnson & Johnson basis, and overall pricing is modest in the quarter.

I would say, Joanne, that we haven't seen the impact yet in the particular new mechanism that you just described. As Louise pointed out, pricing overall for the quarter, year-over-year growth due to pricing is very, very modest in our results.

And I can provide some further color on hips and knees in the U.S. price mix, if you'd like.

That would be wonderful, thank you so much.

So the second quarter for the hips was about 2.2% negative price mix together, and this is U.S. only. And for knees it was about 2.6% negative. And that's similar trends to what we've seen consistently over time.

Thank you. And then my second question had to do more with Vision Care. We saw a real difference between what was happening in the U.S. and what's OUS sales, and you commented on rebates. Is that the replacement program for UPP that we're seeing in that U.S. impact? Thanks for taking the questions.

So it's a customer reward program that we have implemented. And what we have booked in the second quarter is the year to date because it was implemented in the second quarter but it applies to the full year sales. So in the U.S., if you normalize it for the half that applied to the first half, the U.S. is up about 6% on a like basis. Alex Gorsky - Chairman & Chief Executive Officer: Look, we continue to be very pleased with what we're seeing in the turnaround in our Vision Care business as well. If we look at the early demand signals that we're seeing, it continues to give us confidence that we're gaining share. We continue to launch into beauty, astigmatism, reusables, along with a number of other new launches and line extensions. And frankly, the team is also really executing well. So we're encouraged by the opportunity that we see in Vision Care as we move through the rest of 2016.

Thank you.

Thank you so much.

And next question, please.

Our next question comes from the line of Glenn Novarro with RBC Capital Markets. Please proceed with your question.

Good morning, Glenn.

Hi, good morning. Good morning. And, Louise, I echo the sentiments, so best of luck in the future. My question is for Alex and for Dominic. And I asked a similar question on the last quarterly call because I continue to be surprised that J&J is not doing more with its cash, particularly on the M&A front. You've done both, but we haven't seen much in the way of meaningful acquisitions on devices and on pharma. And so my question is, the targets that you're having discussions with today, do they still have very unrealistic valuation expectations, and is that the reason why we haven't seen deals in devices and pharma? And then as a follow-up, you still have a bulk of your cash sitting outside the United States. Is that another reason why we haven't seen any meaningful acquisitions? Thank you.

Sure, Glenn. Consistent with what we said last time when you asked a very similar question, as you know, we're very disciplined in our approach to acquisitions. And although we're actively involved in considering them, valuations come into play, and willingness of the other party to do an acquisition at certain valuations come into play. So that's regardless of how much money we have available to spend. So we don't really look at that as the main driver of how we're going to do acquisitions. We look at what value we're going to create for shareholders by doing the acquisition at the right value, so we can improve returns for our shareholders. There are some expectations that are still not, in our opinion, normalized for appropriate valuations in the market, so that's a factor, and that will take time and we're patient with that. And then we'll see how the market evolves over time, or as we learn more about the acquisition candidates and their progress in various areas. And then finally, whether or not the cash is trapped overseas or not is not at all an impediment to our ability to do any acquisitions. We'll either obviously try to find a way to do it in a tax-efficient basis as we've done with other acquisitions and utilize that cash as much as possible, only if it's tax efficient. But then obviously we can continue to borrow, and we have the ability to borrow to do the acquisitions that we think are value-creating for our shareholders. So we wouldn't let that hold us back. Should the acquisition be value-creating, we'd exercise our ability to borrow and do that acquisition.

And just as a follow-up – oh, go ahead, Alex. Did you want to add something? Alex Gorsky - Chairman & Chief Executive Officer: Yes, Glenn. I guess what I would also say is look, I think that the M&A approach that we talked about in the past is a balanced one. If you look over the last 20 years, I think we've done about 124 deals. I think there's been about 13 or so that have been over $1 billion. The majority of these have been smaller. And frankly if you look at our Pharmaceutical performance, whether it's the partnerships that we have on a compound like IMBRUVICA, DARZALEX, or others, I think the strategy has worked really well, and it's something that we'll continue to pursue. I think we have a lot of examples of that in Medical Devices and also Consumer. There's nothing that we would like more than to take a several hundred million dollar platform like Vogue and create the next multibillion-dollar platform as we see in things like NEUTROGENA and others. So all that being said, if/when we see larger opportunities present an opportunity to really create longer-term shareholder value, those are things we'd certainly be interested in, but we'll be particularly thoughtful about those.

And just one quickly on REMICADE. I know Matt had asked a question on REMICADE, but you remain very confident that a biosimilar won't be launched in 2016. Has anything changed that you can reveal to us on the litigation front that gives you more confidence? Thank you.

Glenn, what we said is that our guidance does not assume any biosimilar launch in 2016. There are ongoing developments in the litigation. There's a hearing scheduled for August related to the 471 patents. We'll have to see what the results of that hearing are, so we don't know that yet. There was also a ruling issued in relation to another biosimilar, not our biosimilar, which made it very clear when the 180-day waiting period applies. And for us, that 180-day waiting period extends to October 6. So obviously, there cannot be any launch before that date. And then as we've mentioned, we're continuously and vigorously defending our patent and will continue to do that. So whether or not a biosimilar launch happens is uncertain. But we have not included it in our guidance estimates. But as you know, our guidance of course is a range and between certain ranges of 3% to 4% in overall growth. So we feel confident about that in any event.

Thank you.

Next question, please?

Our next question comes from the line of David Lewis with Morgan Stanley. Please proceed with your question.

Good morning, David. David Ryan Lewis - Morgan Stanley & Co. LLC: Good morning and congrats, Louise. Once again. I echo others' sentiments. Just two quick questions, I know we're near the end. So, Dominic, I'm trying to reconcile revenue guidance just on the margin. So if I take the upside in the quarter plus the net impact of M&A, Vogue minus the API business, I get guidance should have come up $700 million, it's coming up around $300 million. Is that difference in the back half of the year largely an expectation for lower or minimal gross-to-net adjustments in the back half versus the first half?

Certainly as I mentioned earlier, the gross-to-net adjustments that we saw in the first half have now resulted in our overall estimates for these amounts as being largely current, greater than 90% current. So therefore, we wouldn't expect to have the same level of those kinds of adjustments going forward, David. That's right. David Ryan Lewis - Morgan Stanley & Co. LLC: Okay, that's helpful, and maybe two questions on Consumer, one for Alex and one for Dominic. Dominic, just to start with you on margins, I think we left the Analyst Day feeling that Consumer margin outlook was probably conservative. But if I look at the reported results in the quarter, you're well ahead of expectations in pursuing that pure base 20% Consumer margin. So how do we think about that? Is that simply one-time in nature, or is it much more likely now you reasonably exceed your targets either in time or magnitude here in Consumer? And then a quick follow-up for Alex in Consumer.

Sure. As you know, we were committed to this. And as Jorge Mesquita said in the Business Review Day, he was personally committed to making it happen, and we're very pleased to see that they're off to a great start. Whether they exceed the overall benchmark level in a shorter amount of time, we'll wait to see because obviously we want to see them invest behind brands and keep the momentum up in the business as well. But they're obviously off to a great start. We were confident that they would be able to do it and they've done a great job and we're confident they'll continue to do a great job in improving margins. David Ryan Lewis - Morgan Stanley & Co. LLC: Okay. Alex, I think many investors have felt that Consumer was sort of kept in the closet here the last several years and clearly the last six months. The company's working hard to sort of show the Consumer franchise to a greater extent both margins and growth. My question's more on growth. If I ex-out Venezuela in the quarter, Consumer did about 5% growth. I felt like the messaging from Jorge and others was that this business could be sort of an upper single-digit grower with obviously expanding margins. What is your sense on that 5% number ex-Venezuela? I mean, do you feel confident here that Consumer is stable and can improve from these levels? Thank you. Alex Gorsky - Chairman & Chief Executive Officer: David, thank you very much. And again let me reiterate. We're really pleased with the performance that we continue to see in the Consumer group. And literally from quarter to quarter, it continues to improve in not only its core performance but market share and a number of other areas. We feel like the majority of the platforms right now we're actually gaining share. At the same time, we realize we've got some areas such as baby, such as China, where we need to do a better job and the team is focusing on that in addition to the margin improvement that Dominic was talking about earlier. But overall, our goal is to grow faster than the market. We think we currently are. It's something that we want to do and accelerate as we go forward. And I'm very confident that Jorge and his team have got the strategies and are now executing in a manner that's going to allow them to do just that.

Thank you. David Ryan Lewis - Morgan Stanley & Co. LLC: Okay, thank you very much.

Next question, please.

Our next question comes from the line of Danielle Antalffy with Leerink Partners. Please proceed with your question.

Good morning, Danielle.

Hi, Danielle. Alex Gorsky - Chairman & Chief Executive Officer: Hi, Danielle.

Good morning. Thanks so much for taking the question. Louise, we're really going to miss you. Question for you, Alex, just higher level. Sorry to do this, but following up on the M&A commentary, some of your competitors have been acquiring scale, most recently, Abbott and St. Jude. And I know J&J is already in a competitively advantageous position given your current product lines, but cardiovascular is an area where you're specifically under-scaled relative to some of those other competitors, and I was just wondering if you could comment on whether you think it's important to build scale within cardiology to continue to be a major competitor in med tech, or if you think there's other areas where J&J is already positioned and will continue to focus on? I'm just trying to think about the different subsectors within med tech, where you'll focus most. Alex Gorsky - Chairman & Chief Executive Officer: Thanks, Danielle. Look, consistent with what we said previously, we do think that there's an opportunity for expansion in cardiovascular. And for us, really it started several years ago when we made the decision to exit the stent business. We did the divestment of Cordis, which I think the team executed really well. And we think now the greater focus that we have, what you're seeing as a result of that, frankly, is better growth not only in our cardiovascular business, the Biosense Webster, but across the greater medical – Hospital Medical Device business that we have. But we know that going forward, other areas in cardiovascular ranging from valves to structural heart to others could definitely be opportunities. But we're going to continue to see how the technology evolves, how the markets evolve. And fortunately, I think we're positioned in a way that gives us a lot of different opportunities. At the same time, I would say that there are other areas in Medical Devices that we remain interested in. We talked about the vision care area. It's one where we have a very strong contact lens platform, but we think that there's opportunities, be it back of the eye, surgery and other spaces, that business could be augmented. And we'll continue to look for other thoughtful plays in orthopedics as well as in general surgery that offer growth opportunities and help us better address areas of unmet medical need as well.

Thank you.

Okay, great. That's so helpful.

Next question, please.

Our next question comes from the line of Jami Rubin with Goldman Sachs. Please proceed with your question.

Good morning, Jami. Jami Rubin - Goldman Sachs & Co.: Thank you very much for the question. And, Louise, I'm really going to miss talking to you. You've been extremely helpful over the years. Dominic, I'm sorry to belabor the gross to net adjustment, but I'm unclear as to how it occurred and what it means. And I think more importantly, these are all categories, REMICADE, STELARA, SIMPONI, ZYTIGA, which are crowded categories. And can you comment on what's happening with respect to gross to net, the gap between gross to net and how it's changed over the last year or two? If it has changed at all, are you able to take the same sort of list price that you had before without having to pay a higher rebate? If you could just kind of comment on that generally. And then also my follow-up question relates to INVOKANA. Sales again were continuing to be very strong. You're showing nice improvements in market share. What are your expectations for the whole SGLT2 class? I'm sure you've paid attention to the FDA panel meeting on Jardiance and whether or not Jardiance will get a superior label with respect to CV mortality reduction. And if it does get that label update, what that might mean to INVOKANA going forward? Thanks very much.

Sure. Jami, let me take the first question on gross to net, and then Alex will cover the SGLT2 commentary. So you asked how does it occur and what's going on with list price versus net price and those sorts of things. So just to put it in perspective, this is not unusual in our industry, as you know. Everyone in the pharmaceutical industry is estimating what the rebates might be, and then of course we'll actualize them once actual data is submitted. Recently, that actual data has been more timely, and in that more timely data from the payers, we're able to see trends, so we're able to not only actualize prior period amounts, but we're also able to estimate better, what the ultimate gross to net variation will be going forward. With respect to list price net of rebates, as you probably know, we've said this before, we price – we think we price our products responsibly and our overall list price increases have been relatively below, substantially below, the average industry. But in the end, the net price that's achieved is far from the gross price increase that happens. So rebates continue to be an increasing part of the business, and the overall realization of gross price to net price, that delta is expanding, I would say, over time. And therefore, as I said, now we're much more current with our ability to predict these estimates, and that's what's going on. And as I mentioned, we don't expect to see significant adjustments to this magnitude. Jami Rubin - Goldman Sachs & Co.: So you're saying the gap is going to continue to grow but you overestimated the growth of that gap and that, therefore, is the adjustment, but big picture you expect the gap to grow?

That's right. Jami Rubin - Goldman Sachs & Co.: Okay. Alex Gorsky - Chairman & Chief Executive Officer: And, Jami, regarding INVOKANA and the class, look first of all, we are pleased with the performance, the continued performance of INVOKANA in the market. I mean, it remains the number one SGLT2 in the U.S., both in new and total scripts. I think we've got between 9 million and 10 million prescriptions that have already gone out since launch. That being said, we still think that there is a good opportunity for growth in INVOKANA. It's got a very strong clinical profile that's well documented, strong access across managed care, and look we're confident that given the experience that HCPs have had with it, combined with its profile, it's going to continue to grow. Regarding the broader issues around class, look we think that it's really good news, frankly, for Type 2 patients given some of the news that's coming out about CV benefits and really regardless of the eventual decision by the FDA regarding potential claims for other agents, we're looking forward to seeing the results of our CANVAS program that'll be coming out in about a year. And we'll have to see if these ongoing CV outcome trials validate some of the current perceptions of KOLs regarding the cardiovascular effects of SGLT2 inhibitors across the drug class. We'll see. But overall, we think it's good news for patients. Jami Rubin - Goldman Sachs & Co.: Thank you.

Thank you. And we'll take two more questions and then have some closing remarks from Alex. Next question, please.

Our next question comes from the line of Vamil Divan with Credit Suisse. Please proceed with your question. Vamil K. Divan - Credit Suisse Securities (USA) LLC (Broker): Great, thanks so much for taking the questions. Congrats again to you, Louise. Just following up on Jami's question on the gross to net commentary, just I don't think you touched on this, but specifically on immunology it seems like a lot of those products, in particular, saw that benefit. Is there anything that you're seeing in that specific market? And maybe causing the difference there to be greater than what you see in the other therapeutic areas? And then one other unrelated just on IMBRUVICA, came in a little bit lighter than what we were expecting, obviously a lot of good data and a lot of growth ahead. But maybe if you could just comment on the trends you're seeing there? And also, I guess it's been about a year now since a new partner on that product with Pharmacyclics and AbbVie. Just the dynamics in that partnership and how you see that relative to what you're seeing previously with Pharmaceuticals.

Let me take – Vamil, there's nothing substantially different between biologics and others, other than the biologics products tend to have a longer delay in terms of receiving the information. So therefore, there may be more adjustments related to those products in any particular period. But other than that, there's no other significant trend that we're seeing that's any different than what we see overall in the market. Alex Gorsky - Chairman & Chief Executive Officer: And look, regarding IMBRUVICA, we're very pleased with the continued launch uptake that we see with it. It continues to be strong, good increase versus last year. And look, IMBRUVICA is also maintaining really good total patient market leadership in CLL, line two plus, mantle cell lymphoma as well as WM in the U.S. We've had additional approvals of line indications done in other markets as well. So we continue to be pleased with the performance and look forward to getting out additional information and additional indications on the compound.

Yeah, and just on the quarter, there's additional – we have a patient assistance program and there's a little bit of a bump in that. So that's probably the trend difference that you see. Last question, please.

Our final question comes from the line of Jayson Bedford with Raymond James. Please proceed with our question.

Good morning, Jayson. Jayson T. Bedford - Raymond James & Associates, Inc.: Good morning. Hi, Louise. Thanks for squeezing me in here. I'll be quick. Just to clarify and kind of follow up on an earlier question, U.S. Med Device growth in the quarter decelerated from first quarter levels. International growth accelerated. There was quite a big difference in growth in these two geographies. It sounds like this is more a function of selling days with no real change in the operating environment. Is that a fair characterization?

So in the OUS, we have an additional 1.5 selling days on average. That contributes to the OUS growth about 220 basis points. But on top of that, we're seeing strong market growth in China. We have some strong markets in Russia, Australia in the hip. We're seeing nice growth in the Corail, also seeing some nice growth in ATTUNE. So it's a combination of both the selling days, but if you strip out the 220 basis points for selling days O-U.S., you're really seeing really nice strong growth in both hips and knees O-U.S.

Jayson, one thing I would add to that is when we're talking about the Medical Device business, obviously there's some dynamics in diabetes and some dynamics that we've talked about earlier with Vision Care with customer loyalty program. So if you look at the hospital-based medical device business and you exclude the impact of acquisitions and divestitures, that growth did accelerate. So second quarter growth at about 4.7% and first quarter growth at about 4.2%. So on the base Hospital Medical Device business, overall we're seeing accelerated growth.

Thank you. We'll have some final remarks from Alex. Alex Gorsky - Chairman & Chief Executive Officer: Okay, thank you very much, everyone, for joining us this morning. And as I noted earlier, look, we're really pleased with the continued momentum as evidenced by our increased guidance for both sales and earnings for the full year 2016. Look, I really believe that some of the clear strategic choices that we've been making, a really strong focus on execution, combined with an incredibly-talented group of leaders that I'm honored and humbled to be able to work with every day at Johnson & Johnson are enabling us to really deliver extraordinary achievements and results that we've just been able to share with you and to really build on the success of Johnson & Johnson going forward. So thank you for your time this morning. I look forward to updating you on the progress throughout the year and I hope everybody has a great day. Thank you.

Thank you. This concludes today's Johnson & Johnson Second Quarter 2016 Earnings Conference Call. You may now disconnect.