Good morning and welcome to Johnson & Johnson’s Fourth Quarter 2017 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, you may disconnect at this time. [Operator Instructions] I would now like to turn the conference call over to Johnson & Johnson. You may begin.

Hello. I am Joe Walk, Vice President of Investor relations for Johnson & Johnson. Welcome to our company’s review of business results for the fourth quarter and full year of 2017. Joining me on today’s call are Alex Gorsky, Chairman of the Board of Directors and Chief Executive Officer and Dominic Caruso, Executive Vice President and Chief Financial Officer. Thank you for your interest in Johnson & Johnson. We are very pleased with our 2017 fourth quarter and full year results. Once again, the performance illustrates a track record of consistent growth exceeding financial expectations and making progress on our long-term strategies. As we guided this time last year, sales for the business accelerated in the second half of 2017, based largely on the strength of our Pharmaceutical segment and improving performance in Medical Devices. 2017 also marked a year in which we complemented our existing portfolio with significant acquisitions and many collaborative agreements. These are some of the factors that contributed not only to our superior total shareholder return for 2017, but the more than 225% returns since the end of 2011 exceeding major indices, as well as our competitor composite over that span. As we enter 2018, we are confident that our Pharmaceutical business will remain strong and anticipate our Consumer and Medical Device segments will continue to improve resulting in solid financial performance, while delivering innovations that will have an enduring impact on patients, caregivers, and consumers. 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, where you can find additional materials, including today's presentation and accompanying schedules. Please note that today’s presentation includes forward-looking statements. We encourage you to review this cautionary statement regarding…

Thank you, Joe, and thanks to all of you for joining us today. We are pleased to be here sharing the strong results we delivered for 2017. Not only did we exceed the financial performance metrics we set at the beginning of last year resulting in superior returns for our shareholders, but we also delivered on the commitments and responsibilities defined in our credo. Total shareholder return for 2017 was more than 24%, which is exceptional exceeding our competitor composite, as well as exceeding most major indices. And not only is that true for 2017, but I am proud to say that this is also been the case for the last three, five, ten, and 20 year periods. Our shareholder return for 2017 is indicative of the strength of our business, as well as the strategic focus and execution that our leaders and teams have delivered over the past several years. Our Pharmaceutical business has been an industry leader in all performance measures including R&D productivity and continues to deliver strong top-line growth while simultaneously increasing investments to further develop our incredibly strong pipeline of innovative new medicines. Our Medical Device business continues to refine and accelerate its pace of innovation, while also implementing novel commercial models to meet evolving marketplace demands. In our Consumer business, despite a global category slowdown in 2017, we maintained our 2016 share gains in many major categories and improved adjusted income before tax margins further, while also investing in our products via traditional platforms in newer digital vehicles. As you have heard me say before, while we are pleased with our recent performance, we are not satisfied. Going forward, we are committed to meeting the full potential of both the Medical Devices and Consumer businesses. Our track record of strong shareholder returns is also…

Thanks, Alex and good morning everyone. As you’ve heard from both Joe and Alex, we are very pleased with our 2017 performance. Our full year performance reflects the acceleration of sales growth in the second half of 2017 as we expected, largely driven by the organic growth in the Pharmaceutical segment. In addition, we are very pleased with the performance from all of our acquisitions including Actelion, and Medical Optics, which have been integrated seamlessly and are performing at or above our expectations. We ended the year at the top-end of our most recent guidance with sales at 6% operational growth for the year. With respect to adjusted earnings, we finished at the top-end of our EPS guidance range with EPS at $7.30 per share. Overall, both sales and EPS exceeded consensus estimates. Turning to the next slide, you can see our consolidated condensed statement of earnings for the full year 2017. Our guidance from October included an expectation that we would maintain to slightly decline our pretax operating margins on an adjusted basis. In looking at your models, it appears that they’ve reflected that expectation. During the fourth quarter, we significantly increased our investment in research and development, which essentially was offset by a higher level of divestiture gains in other income and lower tax rate as compared to your models as I will discuss in just a few minutes. Therefore, for the full year, you will see pretax operating margin at 25% versus 29.4% the prior year, but this is on a GAAP basis. Excluding the impact of special items, our pretax operating margin declined 140 basis points on an adjusted basis as compared to the prior year. Now let’s take a few moments to talk about certain items on the statement of earnings for the quarter. Our…

Thank you, Alex and Dominic. We will now move on to the Q&A portion of the webcast. Rob, can you please provide instructions for those on the line wishing to ask a question?

[Operator Instructions] Your first question comes from the line of David Lewis with Morgan Stanley.

Good morning. Just a couple questions for me. Dominic, just thinking about revenue guidance, first for 2018, can you just give us a general sense of the pieces, based on your qualitative commentary, my sense is, Consumer is relatively flattish for 2017, Devices gets a little better and the Pharmaceutical business is something around the 6% range. So clear acceleration. I just want to understand sort of those mixed pieces and then within pharma, the can we expect that REMICADE and ZYTIGA, can you just give us expectations around those businesses for pharma and I have a quick one for Alex.

Sure, David. Well, as you know, we don’t provide specific segment sales guidance. But I think it’s fair to point out that we saw acceleration in the back half of 2018 across mostly the entire business and we expect that that will continue through 2018 and we have lots of new product launches, as you know and new product approvals in the pharma business which should help accelerate growth. With regards to REMICADE and ZYTIGA, again, we don’t give specific guidance on individual products either, but with REMICADE as you know, we saw far less of an impact in 2017 than we had expected. The product is now been on the market for over a year and we do have an additional biosimilar market entrant. So we would expect that the acceleration of that biosimilar impact to REMICADE, we will see more of that in 2018 than we saw in 2017. But I can’t give you a very specific number. And with respect to ZYTIGA, as I said in my opening comments about sales guidance, we do not expect to see generic competition for ZYTIGA in 2018.

Okay, very helpful. And then, just a quick strategic question for you. I know, it’s a bit of a cliché everyone expected increased M&A activity in life science post tax reforming yet and sort what we are seeing here in the last few days, how does tax reform kind of impacts your views from a corporate perspective on both the size and activity of M&A and the level of reinvestments back into the U.S. or broader reinvestments versus the money you would give back to shareholders? Thanks so much.

Thank you, David. Look, overall, what I would say is that, our strategy around M&A will likely stay quite consistent with what we’ve talked about before and it really starts with unmet medical need. Where do we see there to be significant opportunities to improve care for patients. What do we see is being value creating and what do we see is being something that we can execute with a high degree of effectiveness and efficiency. Regarding tax reform, what we said from the very beginning is that one of the major reasons in addition to lowering the rate is just frankly the flexibility that it provides us and we think it actually helps make us more competitive, particularly on an international level if we happen to be in a competitive situation with other companies, because now we have greater flexibility on how we can access that cash. So, we think, net-net, it’s a positive for us. As you heard Dominic mention earlier, regarding the more immediate tax reform impact, we think that the wise thing to do is to invest a good portion of that back into R&D. If you look over the past several years, the output, the productivity, particularly in our Pharmaceutical pipeline, but also in others of our investments in R&D, we think have been at the high-end and we think ultimately doing that, it will have the greatest impact on our business, will help us to get out to better serve underserved needs around the globe and that’s where we are heading in that direction.

Thank you, David. Next question Rob?

Your next question is from the line of Larry Biegelsen with Wells Fargo.

Good morning guys. Thanks for taking the questions. So, on ZYTIGA, your assumptions for 2018 were clear, but I guess, Dominic, my question for you is, if we do see generic ZYTIGA earlier in the year or in 2018, what’s your ability to offset that on the EPS line? And I have one follow-up question for Alex.

Well, as you know, Larry, we provide a range of guidance for both sales and earnings and obviously we’ll have to see what happens with ZYTIGA in the ultimate upcoming district court case and others. But we are pretty confident that the range we provided could absorb any impact from ZYTIGA.

That’s helpful. And then, Alex, 2017 seemed like a kind of a watershed year for robotics in the Medical Device space and they are starting to have some impact on your businesses in the orthopedic area and in the surgical area. So, how are you addressing this and how quickly can you launch your surgical robot in the U.S. and are you satisfied with that timeline given what we are seeing here? Thanks for taking the questions.

Larry, as you know, several years ago, we entered into the agreement with Google and Verb and Verily in really creating our significant approach in robotics. What I would say is that, we are excited about that opportunity. In fact, just a few weeks ago, when we were out for the - there for the conference, I got a chance to visit, see the prototype. I would say overall that it’s on track and we are continuing to make refinements in it, but clearly, we think the area of robotics is going to have an impact on surgery and that’s why we want to make sure that we’ve got a system that is different from those that’s currently offered that we think takes it beyond simply assisting in the surgery to actually helping to improve the outcome of the surgery. Something that’s more modular, something that’s frankly is more economical and that’s our goal. So overall, the project remains on track with our timelines and we are excited about it.

Thanks for the question, Larry. Rob, next question please.

Your next question comes from Mike Weinstein with JP Morgan.

Yes, good morning guys. I am going to try and follow-up with a couple items on the 2018 guidance. So, the top-line 2.5% to 3.5% organic would be a little below what you reported this quarter and it’s one Dominic could you just spend a minute to shed a little light on the differential of how you see the 2018 top-line outlook versus what you saw this quarter and as well related to the second half of 2017? Second, the other income guidance of $1.7 billion to $2 billion of gains, that seems to imply an asset sale beyond what you’ve already disclosed to the street recognizing that the business that you comment on, that you haven’t executed on yet, is the residual diabetes business. So, is there something that you haven’t yet disclosed to the street that’s contemplated in that guidance? And then, I have a follow-up. Thanks.

Yes, let me take the second question first, Mike. We – as I mentioned in my comments, we are always constantly looking at our business and making the determination whether the business is sometimes better in someone else’s hands or we can get better value for our shareholders through a divestiture. So, we have considered other assets in that regard. We haven’t disclosed what those assets are for obvious reasons. And we’ll obviously continue to update our estimates as we move forward with those potential transactions. A very important point to point out though is that it’s also true that whatever gains we experience we will look to obviously redeploy them back in the business which has been our history now for several years and we think that’s the right way to approach these things. With respect to the operational guidance, excluding acquisitions and divestitures on a organic basis, we did about 2.4% for 2017 and I mentioned 2.5% to 3.5% for all of 2018. The fourth quarter of 2017 was higher than that as you pointed out and I think this just has to do with the ramp of products, particularly in the pharmaceutical business which are continuing to grow, but they are obviously continuing to grow now off of a higher base. So we took that into consideration in our estimate.

Okay, and just one follow-up here Dominic, the opportunity to have with tax reforms to – there is tow pieces to it, but you have immediately access to your previously trapped $16 billion in OUS cash. Are you assuming that you are going to use a portion of that cash to immediately pay down U.S. debt? And Dominic, now that you have access to your global cash flows going forward, are you thinking any differently about ongoing buybacks or your dividend relative to how you were prior? Thanks.

Well, Mike, one thing to point out is that, right, we have $16 billion of cash. Not all of it is readily repatriated back to the U.S. but not because of the U.S. tax code, but because of individual country-by-country restrictions. So, I would say that what we’ve already estimated is that, roughly in the neighborhood of $12 billion of that will come back immediately. We’ll immediately use that to fund U.S. operations. But as you have pointed out before a year reports, in the U.S. we have a shortfall of cash needs versus cash generation and that’s why we were borrowing in the past. So we’ll no longer need to borrow for U.S. purposes and then the balance of that we’ll immediately pay down debt. As far as any change to our capital allocation strategy, as a result of having more readily access to the cash, as Alex pointed out, I think our strategy remains the same. We have a very disciplined approach to this. It starts with investing in our business which we intend to increment, as I mentioned earlier and as Alex mentioned and then obviously the dividend after that remains our top priority and we think we’re already in a very healthy dividend at 50% of our cash flow being paid out to shareholders. So, we’ll evaluate our opportunities on a case-by-case basis and make the best decision that we think promotes the long-term growth and benefit for our shareholders.

Just one point of clarification, so it’s clear, we would pay down maturing debt this year, right. We looked at potentially other options, but there is a penalty associated with longer-term debt. Thanks for the question Mike. Next question please Rob?

Your next question comes from Joanne Wuensch with BMO.

Good morning and thank you for taking the question. Can we shift a little bit over to Medical Devices? Specifically, two questions, one big picture. You talked about 2017 being a transition year. How can we think about 2018? And then my second question really has to do with the orthopedic business. What’s really going on in the spine business and in your knee franchise? Thank you.

Sure, Joanne, thank you very much for the questions. Why don’t I take both of those? Look, I think, big picture what we see going on in our Medical Device business is, 2017 was a year of transition and what we are pleased about is the fact that we saw an increase in the number of launches. In fact, I think we ended up having 16 launches, most of them in the back-end of the year. We saw improved execution. Given some of the reorganizations that had occurred earlier, and frankly we think that’s also what produced some of the improvement in results sequentially and if you look at fourth quarter or particularly in the hospital medical device division you saw performance of about 3.4%. Now, I think what’s also important to highlight is, this is a business where we’ve got businesses such as EP, which is growing at about 19%. We saw endo, mac growing at a very healthy rate as well around 14%. We saw areas such as energy and biosurgery growing at about 8% and of course we saw our Vision Care business growing at the core at about 6% with the contact lens, about 5% with the surgery business. So overall those businesses are actually performing quite well. Of course, offsetting that has been the performance of our diabetes business and some of our specialty surgery areas as Joe outlined earlier. So, overall, we remain very confident in these businesses, but clearly we’ve taken a lot of action regarding innovation, taken a lot of action regarding pruning the portfolio and we’ve taken some action as well to improve execution in the field. So we think overall it will result in an accelerated growth rate in 2018. If we dig down a little bit deeper regarding orthopedics what we would say is, the spine as we’ve had a delay in some of the product launches that we had in this area. If you recall back over the last several years this was the area likely most impacted by the integration along with Synthes that resulted in the most disruption. We’ve seen an overall slowdown in this marketplace due to reimbursement issues. So, clearly, we are focused on continuing to launch new innovation and work our way through some of the disruption that we saw earlier. We do have product launches planned for the back-end of this year including an interspace cage as well as some additional plates and screws, as well as visioning devices that we think will improve performance. So, again, we think there remains a lot of unmet medical need there in an area where we can clearly improve our performance. Regarding knees, we are in the midst now of launching the ATTUNE revision, which we think will be an important addition to the ATTUNE platform and we expect that will result in increased uptake in 2018.

Thanks for the question, Joanne. Rob, next question please?

Yes, your next question comes from Jeff Holford with Jefferies.

Hi, thanks for taking the questions. So, I know there was a bit of confusions on the Q4 EBT margins that came in. I wanted maybe Dominic you can just speak to that very quickly in terms of can we expect a more normal pattern of spend in 2018 in terms of how the margins will play out in 2018? I know you’ve guided to the 100 basis points pretax increase that’s helpful. But you are speaking to higher R&D. So how can we think about COGS and SG&A on more of an adjusted basis? And then I have a quick follow-up would just be, were there any one-offs that either ZYTIGA or IMBRUVICA, IMBRUVICA seem to seem to have been light, obviously ZYTIGA was very impressive in the quarter. Thank you.

Yes, sure, Jeff. Well, couple things. We had announced several years ago that we were embarking on a number of cost saving efficiency initiatives which we refer to as our enterprise standards and productivity and that particular program actually culminates or reaches its peak in 2018. So we are going to see much better cost - year-over-year improvement as a result of that program in 2018 versus 2017 or 2017 versus 2016. You remember that our Medical Device restructuring program was also going to achieve its peak savings by 2018. So they are positive developments in the 2018 margin. We will in fact increase our investment in R&D as both Alex and I mentioned, that’s a bit of a headwind on overall margin improvement, but we feel confident that at about a 100 basis point improvement which we’ll see that throughout 2018. As far as how it meters by quarter, that all depends because we – as I mentioned earlier – to an earlier question, we tend to redeploy the investee gains from various divestitures back into the business and make incremental investments quarterly. So, that sometimes they may not be ratably distributed throughout the whole year. And Joe, do you have a comment on the ZYTIGA question?

Sure. For ZYTIGA and IMBRUVICA, so with ZYTIGA, nothing unique in those results, Jeff. It’s really being driven by the LATITUDE data where we are seeing an increase not only in the market growth but then, obviously as I mentioned earlier, almost 5 points a share for ZYTIGA in terms of comparisons to the prior year. With respect to IMBRUVICA, that’s a good observation on your part. So we’ve been growing roughly 50% to 55% in the first three quarters. This quarter it was about 38%. But that’s all attributable to increased investment with us and our partner. Feeling good about the recent indications that we received and putting investment behind those. So if you normalize for that, you’d be up around 51%. Thanks for the question, Jeff. Next question, Rob?

Your next question comes from Glenn Novarro with RBC.

Hi, good afternoon or good morning guys. Alex, a question for you. There has been a major debate on whether Amazon will start distributing drugs and/or distribute devices and supplies. Is this having any impact on how you guys are starting to think about how you distribute drugs and devices? I am just curious of your thoughts because we are getting a lot of questions from investors on these topics. Thanks.

Hey, Glenn, thank you for the question. And look, we are always considering what could be the impact of new entrants, new competitors or disruptions in any of our channels. To be clear, we are already a partner with Amazon, particularly in our Consumer segment where we sell directly through Amazon, as well as through the ecommerce channels with some of our major retailers that we work with as well as our own. We are watching closely in areas such as the Medical Device space and the Pharmaceutical space and we’ll respond accordingly. I think, ultimately it’s going to depend on their ability to meet all the regulatory requirements to make sure that customers are getting good transparency around pricing and service levels and we’ll respond accordingly.

Great. Next question please?

Your next question comes from Geoff Meacham with Barclays.

Hey guys. Good morning and thanks for the question. Just have a few – first one across the immunology category. IMS has pointed a pretty good growth and Derm for the aggregate J&J portfolio, but it looks GI have had a couple of tough quarters. Is this more of a mix issue and what is the path of gaining share back? And the second question for Alex, big picture, when you look at the Pharma segment, oncology has been consistently the fastest growing franchise, but when you think about organic R&D or external biz dev, is there a focus on shoring up underperforming therapeutic areas or do you guys look more holistically at investments in Pharma? Thanks.

So, Jeff, let me maybe address the first question with respect to immunology and our performance there. If you look at it, we are very pleased with the uptake for Crohn’s and STELARA. You compare to the fourth quarter of last year, we are up about 11 points. Now some of that has come at the expense of REMICADE but only about five points of that. So, overall, we are very pleased with our performance in the GI space for immunology.

Jeff, regarding the second one, look we are always looking for opportunities across all of our therapeutic areas, the six in Pharma but also all of our other major platforms in both Medical Devices as well as Consumer. For example, in 2017, we completed about 16 acquisitions. I think we did almost 60 different innovation deals and about over 20 investments from JJDC and again, that represents a very diverse cross section across all of our areas. And clearly, when we see a gap in our portfolio that’s not meeting customer needs, a good example of that is over the past several years in trauma with the extremity area or where we see new technology such as stroke that allows us to address an area where there is a lot of unmet medical need and a great new approach. So, yes, we are constantly looking across all those different platforms.

Thanks for the questions, Jeff. Next question please, Rob?

Your next question is from Jami Rubin from Goldman Sachs.

Thank you. I have a few. First, for you Dominic and Alex, now with tax reform finally approved and part of law, should we expect that your capital allocation activities or strategy will accelerate this year? You obviously have one of the strongest balance sheets in the industry. So, does this mean that we should expect activity from you guys to pick up? And along those lines, I am just curious your thoughts on some of the recent deals that have been announced, two major trades in the biotech area. It seems to be a disconnect between corporate acquirers views on value versus investors. And Alex, just want to get your sense on that. I think it was you or Dominic who said at a conference back in September that companies are going to wait for tax reform to do deals, but then, deals that was going to end up having to chase deals at much higher prices. So, I am just wondering what your views are on that. And then, secondly on ZYTIGA, I know you are going to defend that vigorously. But, Dominic, can you walk through the steps when would be the earliest that generics could enter the market? And then, lastly, Dominic, normally you provide a preliminary number for free cash flow in your year-end slides. I didn’t see at this time. Thanks very much.

Okay. Hi, Jami, good morning. So, just a couple thoughts on capital allocation and recent deals and Alex will comment on that as well. So with respect to capital allocation, both Alex and I have described this approach very consistently for years and we do have a certain capital allocation priority that we go through with dividends at the top after we’ve appropriately invested in our business and value-creating M&A is the second priority. Now, value-creating M&A depends on what value you paid for the asset and whether you are going to generate cash flows in excess of that value which includes a premium and if that deal is not value-creating for our shareholders, we are not interested in pursuing it. Even though you’ve seen more activity in the early part of this year, I just want to remind you that we were extremely active last year doing in excess of $35 billion of acquisitions last year. Obviously in advance of corporate tax reform. With respect to ZYTIGA, one way to think about this is that, the current 30 months stay under the Hatch-Waxman Law expires in October of 2018 and the recent IPR ruling against the ZYTIGA patent does not in any way impact that 30 month stay, meaning that the 30 month stay is not lifted. It’s still in existence. Of course, during that time period, we will go into district court and have hearings on the patent and should we succeed with those hearings then, of course the 30 month stay wouldn’t have any difference, because the patent extends beyond this year or into 2027. Also with respect to free cash flow, Jami, and I’ll turn it over to Alex for any other comments on recent deals, we don’t typically provide a free cash flow estimate in our guidance. Although I can tell you that we had very strong free cash flow in 2017 at $17.8 billion, and typically our free cash flow growth approximates our earnings growth because our businesses do a great job of managing their receivables, payables and capital deployment. So, a good rule of thumb is, free cash flow generally grows at the same rate as our earnings growth. Alex?

Hey, Jami. Thank you very much for the question. Look, I would pick up where Dominic left off which you look over the past year, we did make over $35 billion worth of investment ahead of this which we felt was the right thing to do. We do that really based upon unmet medical need, either franchise or as a technology complementary to something that we have – that we are already doing or is it an area where we feel that, our R&D clinical regulatory development skills or commercial reimbursement skills frankly can make a difference and ultimately is this value creating. We said quite consistently over the past few years and I think we’ve acted in a way that we would prefer earlier stage investments and we think across all of our different categories, we demonstrated that whether it’s the next ZYTIGA or IMBRUVICA or the next NEUTROGENA or the next Biosense Webster when we can get a great new technology or innovation or science that we can then ramp up through clinical development or regulatory skills and then launch and create billion dollar platforms and major breakthroughs for patients, that’s our preferred model. And look, we – at the same time, we do watch competitiveness and what’s going on in different categories which we’ll continue to do this year. But we feel confident in the strength of our pipeline as we talked about. Again, whether it’s in Pharma, with the very high number of line extensions or products we expect to launch over the next several years or our Medical Device space or in Consumer. We think we’ve got a nice balanced approach between internal and external R&D at about 50% each of them gets in. Ultimately, we’ve also got the flexibility to move depending on what opportunities present themselves, because frankly of the way that we’ve been able to manage our balance sheet, because of our overall strong position, should an opportunity present itself, we can – we always have the purgative to engage at that point in time. So, thanks a lot and I expect that’s the way we will navigate our way through 2018 and beyond.

Next question please, Rob?

Your next question comes from Bob Hopkins with Bank of America Merrill Lynch.

Hi, thanks and good morning and thanks for taking the questions. Just two quick ones for me. One on Consumer and one on Devices. I’ll just lay them out there to make it easy. So, first on Consumer, just a pretty straightforward question, some of the issues impacting that business in 2017 were market-related. So I guess my question is, will those market issues be cleared up in 2018 and could be the combination of better market growth and changes in Baby Care and other initiatives already get back to historical growth rates for Consumer in 2018. That’s my Consumer question. The Device question I wanted to ask is that, 2017 is a year where there is a bunch of strategic moves made both in terms of divestitures and M&A and Alex you were starting 2018 you are once again emphasizing portfolio management in Devices as a core strategy. And I am just curious, is that emphasis on portfolio management, are you referencing there the decision you’ll make this year on diabetes or is there the potential for other kind of portfolio management moves in Devices in 2018? Thank you very much.

Yes, thank you, Bob. Let me start. I would say, yes, we do expect our Consumer business to grow at a faster rate in 2018 than we saw in 2017 and you are correct in that we think some of the market forces, i.e. the shift to ecommerce, shift in some cases to more natural brands, digital types of brands have been more secular in nature and affected all of the large FMCG companies. That being said, we are not just sitting back. We are making aggressive moves in areas such as ecommerce investments in that shift. As I’ve mentioned before, we are taking the innovation model of a company like Vogue which has continued to do very well as part of Johnson & Johnson and we are trying to export that to other areas in our Consumer innovation to be faster, more agile, even more flexible. And so, we think that combination combined within some cases just improved execution, particularly in areas like our Baby line that’s going to be going through a major relaunch through the course of 2018 is going to result in improved performance. And by the way, we still have some core areas such as NEUTROGENA, AVEENO, LISTERINE, OTC that we remain very confident in. These are great brands with great science behind them that have also got great consumer loyalty as well as attention. Now if I switch now to Devices, I believe we’ve been pretty consistent saying that portfolio management can and should be and has been an integral part of our strategy and so for 2018, yes, part of that, we’ve mentioned that we are actively looking at strategic options for diabetes. But there are also other areas where they have not met our criterion in terms of us feeling as though we’ve got the right competitive position, the right technology going forward or it’s not complementary to one of our existing platforms that it’s not that it’s a bad business or a bad technology, but perhaps it’s better in such a way that in someone else’s hands that we would continue that in 2018 as well.

And Bob, one thing to hopefully not to read into too much, because we have the question in light of the perspective of Devices. When we did this portfolio management, it’s across all three of our major businesses and so, we have plans in 2018 for all three of the businesses where assets are being evaluated and we may make decisions with respect to those assets. So it’s not limited to Devices.

Thanks for the questions, Bob. Next question please, Rob?

Next question is from the line of Vamil Divan from Credit Suisse.

Hi, great. Thanks for taking my questions. So, one just on REMICADE in the U.S. I think you mentioned most of the impacts just on the price side as opposed to volume. But could you just give us a sense exactly how much of the sort of overall market volume is still with the brand and how much is going to either the biosimilars? And second, maybe just a pipeline one that haven't really talked much about on Esketamine. I think that’s an important data point for you guys. So can you just give us a sense of when we should expect that data? And then, obviously there is some unusual features that product in terms of the administration of safety it maybe a scheduled product. What do you think, just maybe frame your expectations on what would be sort of considered good data as we await the results?

Okay, so, Vamil, with respect to REMICADE in the U.S. specifically, I would say that the volume is still up around the high 90%. So, all of the change that you saw in the quarter of about 9% down was associated with price declines. With respect to data for Esketamine, so there is a couple of different presentations. There is, as you know, four five trials with respect to that program. I would say, the first long-term safety data to be released is likely going to be the 3002 study. That’s also considered important for short-term efficacy as well as the safety. We would expect that possibly at several events in the second quarter of this year. Thanks for the question. Next question please, Rob and I think this is probably going to be our last one.

Your next question is from Danielle Antalffy from Leerink Partners.

Hey, good morning guys. Thanks so much for squeezing me and I appreciate it. Just a quick question following up on ZYTIGA, Dominic totally understand you aren’t assuming any generic competition, appreciate your answer that you think that you can offset that, but I was wondering if you could give a little bit more color there, where you think you are being – I don’t want to say overly conservative, but more conservative where you could see upside to potentially offset some of – some headwinds that maybe aren’t being considered in the guidance?

Yes, thanks, Danielle. Well, what I said to the answer the question earlier was that, obviously we have to wait and see what happens with the district court decision which happens later this quarter. But in the end, should ZYTIGA generics come to market, which of course, we are not expecting we intend to defend the patent vigorously. I said that our range of sales and earnings guidance should be sufficiently wide to absorb that impact. I think we are going to look at upside in all of our businesses going forward. But I think the range we’ve provided should be sufficient to offset any impact of a negative ZYTIGA decision.

Thank you, Danielle, and thanks to everyone for the questions posed today and your continued interest in our company. Apologies to those who we couldn’t get to due to time, but don’t hesitate to reach out to the investor relations team as needed. I will now turn the call back to Alex for some closing remarks.

Okay, thank you everyone for joining us this morning. We are proud to share our results for 2017, our strong results and we’ve been more excited about the lining up with you and discussing the prospects for 2018 which we are very excited about as well. So, thanks for your continued belief and support and commitment to Johnson & Johnson. We look forward to updating you as we move our way through the year, in particular at the May meeting we will be reviewing our Medical Device and Consumer businesses. And, again, thank you very much and we’ll look forward to continued updates over the course of the year.

Thank you. This concludes today’s Johnson & Johnson’s fourth quarter 2017 earnings conference call. You may now disconnect.