What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-16 compared with 2023-02-16 · 904 added, 1067 removed, 1510 unchanged (57% of the section changed)

1 unchanged sentence

Index to audited Consolidated Financial Statements

Consolidated Balance Sheets

Consolidated Statements of Earnings

Consolidated Statements of Comprehensive Income

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Management’s Report on Internal Control Over Financial Reporting

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

At January 1, 2023 and January 2, 2022

Consolidated b alance s heets

Consolidated s tatements of e arnings

Consolidated s tatements of c omprehensive i ncome

Consolidated s tatements of e quity

Consolidated s tatements of c ash f lows

Notes to c onsolidated f inancial s tatements

Report of i ndependent r egistered p ublic a ccounting f irm (PCAOB ID 238 )

Management’s r eport on i nternal c ontrol o ver f inancial r eporting

2023 Annual Report

Johnson & Johnson and subsidiaries consolidated balance sheets

At December 31, 2023 and January 1, 2023

(Dollars in Millions Except Share and Per Share Amounts) (Note 1)

2 unchanged sentences

Marketable securities (Notes 1 and 2) 1,068 9,392

Accounts receivable trade, less allowances for doubtful accounts $ 203 (2021, $ 230 )

Accounts receivable trade, less allowances $ 166 (2022, $ 169 )

14,873 14,039

1 unchanged sentence

Prepaid expenses and other receivables 4,514 2,876

Current assets of discontinued operations (Note 21) — 5,830

Total current assets 53,495 55,294

4 unchanged sentences

Other assets 14,153 9,212

Noncurrent assets of discontinued operations (Note 21) — 21,407

Total assets $ 167,558 187,378

7 unchanged sentences

Accrued taxes on income (Note 8) 2,993 2,220

Current liabilities of discontinued operations (Note 21) — 3,590

Total current liabilities 46,282 55,802

4 unchanged sentences

Other liabilities 13,398 10,146

Noncurrent liabilities of discontinued operations (Note 21) — 2,901

Total liabilities 98,784 110,574

5 unchanged sentences

Accumulated other comprehensive income (loss) (Note 13) ( 12,527 ) ( 12,967 )

Retained earnings 128,345 123,060

118,498 113,122

Retained earnings and Additional-paid-in-capital 153,843 128,345

common stock held in treasury, at cost (Note 12) ( 712,765,000 shares and 506,246,000 shares)

3 unchanged sentences

See Notes to Consolidated Financial Statements

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Johnson & Johnson and subsidiaries consolidated statements of earnings

(Dollars and Shares in Millions Except Per Share Amounts) (Note 1)

5 unchanged sentences

Research and development expense 15,085 14,135 14,277

In-process research and development (Note 5) 783 900 181

In-process research and development impairments 313 783 900

Interest income ( 1,261 ) ( 490 ) ( 53 )

4 unchanged sentences

Provision for taxes on income (Note 8) 1,736 2,989 1,377

Net earnings $ 17,941 20,878 14,714

Net earnings from continuing operations 13,326 16,370 17,801

Net earnings from discontinued operations, net of tax (Note 21) 21,827 1,571 3,077

$ 35,153 17,941 20,878

Net earnings per share (Notes 1 and 15)

Basic $ 6.83 7.93 5.59

Diluted $ 6.73 7.81 5.51

Continuing operations - basic $ 5.26 6.23 6.76

Discontinued operations - basic $ 8.62 0.60 1.17

Total net earnings per share - basic $ 13.88 6.83 7.93

Continuing operations - diluted $ 5.20 6.14 6.66

Discontinued operations - diluted $ 8.52 0.59 1.15

Total net earnings per share - diluted $ 13.72 6.73 7.81

Average shares outstanding (Notes 1 and 15)

2 unchanged sentences

See Notes to Consolidated Financial Statements

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

2023 Annual Report

Johnson & Johnson and subsidiaries consolidated statements of comprehensive income

(Dollars in Millions) (Note 1)

9 unchanged sentences

Gain (loss), net of amortization ( 1,183 ) 1,854 4,318

Consumer settlement/ curtailment 23 — —

Effect of exchange rates ( 90 ) 111 106

9 unchanged sentences

$ 797 million, $ 460 million and $ 346 million;

$ 6 million and $ 1 million in 2022 and 2021, Employee Benefit Plans:

Employee Benefit Plans:

$ 289 million, $ 461 million and $ 1,198 million, Derivatives & Hedges:

1 unchanged sentence

See Notes to Consolidated Financial Statements

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

Amounts presented have not been recast to exclude discontinued operations

Johnson & Johnson and subsidiaries consolidated statements of equity

(Dollars in Millions) (Note 1)

Total Retained

Earnings Accumulated

Earnings and Additional paid-in capital Accumulated

Comprehensive

Income (Loss) Common Stock

Issued Amount Treasury

Balance, December 29, 2019 $ 59,471 110,659 ( 15,891 ) 3,120 ( 38,417 )

Amount Treasury

Balance, January 3, 2021 $ 63,278 113,890 ( 15,242 ) 3,120 ( 38,490 )

Net earnings 20,878 20,878

3 unchanged sentences

Repurchase of common stock ( 3,456 ) ( 3,456 )

Other ( 71 ) ( 71 )

Other comprehensive income (loss), net of tax 2,184 2,184

12 unchanged sentences

Repurchase of common stock ( 5,054 ) ( 5,054 )

Other ( 25 ) ( 25 )

Kenvue Separation /IPO (Note 21) ( 23,786 ) 2,451 5,181 ( 31,418 )

Other comprehensive income (loss), net of tax ( 4,741 ) ( 4,741 )

Balance, January 1, 2023 $ 76,804 128,345 ( 12,967 ) 3,120 ( 41,694 )

Balance, December 31, 2023 $ 68,774 153,843 ( 12,527 ) 3,120 ( 75,662 )

See Notes to Consolidated Financial Statements

JOHNSON & JOHNSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

2023 Annual Report

Johnson & Johnson and subsidiaries consolidated statements of cash flows

(Dollars in Millions) (Note 1)

6 unchanged sentences

Asset write-downs 1,295 1,216 989

Contingent consideration reversal — — ( 1,148 )

Charge for purchase of in-process research and development assets 483 — —

Gain on Kenvue separation ( 20,984 ) — —

Net gain on sale of assets/businesses ( 117 ) ( 380 ) ( 617 )

2 unchanged sentences

Changes in assets and liabilities, net of effects from acquisitions and divestitures:

(Increase)/Decrease in accounts receivable ( 1,290 ) ( 2,402 ) 774

Increase in accounts receivable ( 624 ) ( 1,290 ) ( 2,402 )

Increase in inventories ( 1,323 ) ( 2,527 ) ( 1,248 )

Increase in accounts payable and accrued liabilities 2,346 1,098 2,437

Decrease/(Increase) in other current and non-current assets 687 ( 1,964 ) ( 3,704 )

(Decrease)/Increase in other current and non-current liabilities ( 1,979 ) ( 1,061 ) 744

(Increase)/Decrease in other current and non-current assets ( 3,480 ) 687 ( 1,964 )

Increase/(Decrease) in other current and non-current liabilities 5,588 ( 1,979 ) ( 1,061 )

Net cash flows from operating activities 22,791 21,194 23,410

3 unchanged sentences

Acquisitions, net of cash acquired (Note 18) — ( 17,652 ) ( 60 )

Purchases of in-process research and development assets (Note 18) ( 470 ) — —

Purchases of investments ( 10,906 ) ( 32,384 ) ( 30,394 )

1 unchanged sentence

Credit support agreements activity, net ( 2,963 ) ( 249 ) 214

Other (primarily licenses and milestones) ( 229 ) ( 508 ) ( 521 )

Net cash used by investing activities ( 12,371 ) ( 8,683 ) ( 20,825 )

Other (including capitalized licenses and milestones) 12 ( 229 ) ( 508 )

Net cash from/(used) by investing activities 878 ( 12,371 ) ( 8,683 )

Cash flows from financing activities

7 unchanged sentences

Credit support agreements activity, net ( 219 ) ( 28 ) 281

2023 2022 2021

Proceeds of short and long-term debt, net of issuance cost, related to the debt that transferred to Kenvue at separation 8,047 — —

Proceeds from Kenvue initial public offering 4,241 — —

Cash transferred to Kenvue at separation ( 1,114 ) — —

Other ( 269 ) 93 114

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 112 ) ( 312 ) ( 178 )

(Decrease)/Increase in cash and cash equivalents ( 360 ) 502 ( 3,320 )

Increase/(Decrease) in cash and cash equivalents 7,732 ( 360 ) 502

Cash and cash equivalents from continuing operations, beginning of period 12,889 13,309 12,697

Cash and cash equivalents from discontinued operations, beginning of period 1,238 1,178 1,288

Cash and cash equivalents, beginning of year (Note 1) 14,127 14,487 13,985

Cash and cash equivalents from continuing operations, end of period 21,859 12,889 13,309

Cash and cash equivalents from discontinued operations, end of period — 1,238 1,178

Cash and cash equivalents, end of year (Note 1) $ 21,859 14,127 14,487

3 unchanged sentences

Interest, net of amount capitalized 1,766 933 941

Income taxes 5,223 4,768 4,619

Income taxes, inclusive of discontinued operations 8,574 5,223 4,768

Supplemental schedule of non-cash investing and financing activities

Treasury stock issued for employee compensation and stock option plans, net of cash proceeds/ employee withholding tax on stock awards $ 1,435 2,114 1,811

Conversion of debt — — 27

Fair value of assets acquired $ — 18,710 61

2 unchanged sentences

See Notes to Consolidated Financial Statements

Amounts presented have not been recast to exclude discontinued operations.

2023 Annual Report

Notes to Consolidated Financial Statements

8 unchanged sentences

The Company conducts business in virtually all countries of the world and its primary focus is on products related to human health and well-being.

The Company is organized into three business segments:

Consumer Health, Pharmaceutical and MedTech.

The Consumer Health segment includes a broad range of products used in the Baby Care, Oral Care, Skin Health/Beauty, Over-the-Counter pharmaceutical, Women’s Health and Wound Care markets.

These products are marketed to the general public and sold online (eCommerce) and to retail outlets and distributors throughout the world.

The Pharmaceutical segment is focused on the following therapeutic areas, including Immunology, Infectious diseases, Neuroscience, Oncology, Pulmonary Hypertension, and Cardiovascular and Metabolic diseases.

Kenvue IPO/separation and discontinued operations

On May 8, 2023, Kenvue, completed an initial public offering (the IPO) resulting in the issuance of 198,734,444 shares of its common stock, par value $ 0.01 per share (the “Kenvue Common Stock”), at an initial public offering of $ 22.00 per share for net proceeds of $ 4.2 billion.

The excess of the net proceeds from the IPO over the net book value of the Johnson & Johnson divested interest was $ 2.5 billion and was recorded to additional paid-in capital.

As of the closing of the IPO, Johnson & Johnson owned approximately 89.6 % of the total outstanding shares of Kenvue Common Stock and at July 2, 2023, the non-controlling interest of $ 1.3 billion associated with Kenvue was reflected in equity attributable to non-controlling interests in the consolidated balance sheet in the fiscal second quarter of 2023.

On August 23, 2023, Johnson & Johnson completed the disposition of an additional 80.1 % ownership of the shares of Kenvue through an exchange offer.

Following the exchange offer, the Company owns 9.5 % of the shares of Kenvue which are accounted for as an equity investment carried at fair value within continuing operations.

The historical results of the Consumer Health business (which previously represented the Consumer Health business segment) are reflected as discontinued operations in the Company’s Consolidated Financial Statements through the date of the exchange offer (see Note 21 for additional details).

Unless otherwise indicated, the information in the notes to the Consolidated Financial Statements refer only to Johnson & Johnson’s continuing operations.

Business segments

Following the completion of the exchange offer, the Company is organized into two business segments:

Innovative Medicine and MedTech.

The Innovative Medicine segment is focused on the following therapeutic areas, including Immunology, Infectious diseases, Neuroscience, Oncology, Pulmonary Hypertension, and Cardiovascular and Metabolic diseases.

Products in this segment are distributed directly to retailers, wholesalers, distributors, hospitals and healthcare professionals for prescription use.

The MedTech segment includes a broad portfolio of products used in the Orthopaedic, Surgery, Interventional Solutions (cardiovascular and neurovascular) and Vision fields.

The MedTech segment includes a broad portfolio of products used in the Orthopaedic, Surgery, Interventional Solutions and Vision fields.

These products are distributed to wholesalers, hospitals and retailers, and used principally in the professional fields by physicians, nurses, hospitals, eye care professionals and clinics.

In November 2021, the Company announced its intention to separate the Company’s Consumer Health business (Kenvue as the name for the planned New Consumer Health Company), with the intention to create a new, publicly traded company by the end of the fiscal year 2023.

New accounting standards

Recently adopted accounting standards

There were no new material accounting standards adopted in fiscal 2022.

Recently Issued Accounting Standards

Not Adopted as of January 1, 2023

Liabilities-Supplier Finance Programs (Topic 405-50) – Disclosure of Supplier Finance Program Obligations

This update requires that a buyer in a supplier finance program disclose additional information about the program to allow financial statement users to better understand the effect of the programs on an entity’s working capital, liquidity, and cash flows.

This update will be effective for the Company for fiscal years beginning after December 15, 2022, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023.

The Company adopted the standard as of the beginning of fiscal year 2023, which requires that a buyer in a supplier finance program disclose additional information about the program for financial statement users.

The Company has agreements for supplier finance programs with third-party financial institutions.

These programs provide participating suppliers the ability to finance payment obligations from the Company with the third-party financial institutions.

The Company is not a party to the arrangements between the suppliers and the third-party financial institutions.

The Company’s obligations to its suppliers, including amounts due, and scheduled payment dates (which have general payment terms of 90 days), are not affected by a participating supplier’s decision to participate in the program.

As of both December 31, 2023, and January 1, 2023, $ 0.7 billion were valid obligations under the program.

The obligations are presented as Accounts payable on the Consolidated Balance Sheets.

Recently issued accounting standards

Not adopted as of December 31, 2023

Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures

This update requires expanded annual and interim disclosures for significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.

This update will be effective for fiscal years beginning after December 15, 2023, and is to be applied retrospectively to all periods presented in the financial statements.

Early adoption is permitted.

The Company is currently assessing the impact of this update on its disclosures and will adopt this standard in the fiscal first quarter of 2023.

As this accounting standard only impacts disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

Income Taxes (Topic 740) - Improvements to Income Tax Disclosures

This update standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes and additional income tax-related disclosures.

This update is required to be effective for the Company for fiscal periods beginning after December 15, 2024.

As this accounting standard only impacts disclosures, it will not have a material impact on the Company’s Consolidated Financial Statements.

Cash equivalents

8 unchanged sentences

Investments classified as held to maturity investments are reported at amortized cost and realized gains or losses are reported in earnings.

Investments classified as available-for-sale debt securities are carried at estimated fair value with unrealized gains and

losses recorded as a component of accumulated other comprehensive income.

Available-for-sale securities available for current operations are classified as current assets otherwise, they are classified as long term.

Investments classified as available-for-sale debt securities are carried at estimated fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income.

Available-for-sale securities available for current operations are classified as current assets;

otherwise, they are classified as long term.

Management determines the appropriate classification of its investment in debt and equity securities at the time of purchase and re-evaluates such determination at each balance sheet date.

9 unchanged sentences

The Company reviews long-lived assets to assess recoverability using undiscounted cash flows.

When certain events or changes in operating or economic conditions occur, an impairment assessment may be performed on the recoverability of the carrying value of these assets.

When certain events or changes in operating or economic conditions occur, an impairment assessment may be performed on the recoverability of the

2023 Annual Report

carrying value of these assets.

If the asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value.

8 unchanged sentences

Rebates are estimated based on contractual terms, historical experience, patient outcomes, trend analysis and projected market conditions in the various markets served.

A significant portion of the liability related to rebates is from the sale of the Company's pharmaceutical products within the U.S., primarily t he Managed Care, Medicare and Medicaid programs, which amounted to $ 9.6 billion and $ 7.7 billion as of January 1, 2023 and January 2, 2022, respectively.

A significant portion of the liability related to rebates is from the sale of the Company's pharmaceutical products within the U.S., primarily the Managed Care, Medicare and Medicaid programs, which amounted to $ 11.5 billion and $ 9.6 billion as of December 31, 2023 and January 1, 2023, respectively.

The Company evaluates market conditions for products or groups of products primarily through the analysis of wholesaler and other third-party sell-through and market research data, as well as internally generated information.

7 unchanged sentences

Sales returns reserves are recorded at full sales value.

Sales returns in the Consumer Health and Pharmaceutical segments are almost exclusively not resalable.

Sales returns in the Innovative Medicine segments are almost exclusively not resalable.

Sales returns for certain franchises in the MedTech segment are typically resalable but are not material.

The Company infrequently exchanges products from inventory for returned products.

The sales returns reserve for the total Company has been approximately 1.0 % of annual net trade sales during each of the fiscal years 2022, 2021 and 2020.

Promotional programs, such as product listing allowances and cooperative advertising arrangements, are recorded in the same period as related sales.

Continuing promotional programs include coupons and volume-based sales incentive programs.

The redemption cost of consumer coupons is based on historical redemption experience by product and value.

The sales returns reserve for the total Company has been less than 1.0 % of annual net trade sales during each of the fiscal years 2023, 2022 and 2021.

Promotional programs, such as product listing allowances are recorded in the same period as related sales and include volume-based sales incentive programs.

Volume-based incentive programs are based on the estimated sales volumes for the incentive period and are recorded as products are sold.

These arrangements are evaluated to determine the appropriate amounts to be deferred or recorded as a reduction of revenue.

The Company also earns profit-share payments through collaborative arrangements for certain products, which are included in sales to customers.

Profit-share payments were less than 2.0 % of the total revenues in fiscal year 2022 and less than 3.0 % of the total revenues in fiscal years 2021 and 2020 and are included in sales to customers.

The Company also earns profit-share payments through collaborative arrangements of certain products, which are included in sales to customers.

Profit-share payments were less than 2.0 % of the total revenues in fiscal year 2023 and less than 3.0 % of the total revenues in the fiscal years 2022 and 2021 and are included in sales to customers.

See Note 17 to the Consolidated Financial Statements for further disaggregation of revenue.

7 unchanged sentences

The Company completed its annual impairment test for 2023 in the fiscal fourth quarter.

Future impairment tests will be performed annually in the fiscal fourth quarter, or sooner if warranted.

Future impairment

tests will be performed annually in the fiscal fourth quarter, or sooner if warranted.

Purchased in-process research and development is accounted for as an indefinite lived intangible asset until the underlying project is completed, at which point the intangible asset will be accounted for as a definite lived intangible asset.

5 unchanged sentences

GAAP, all derivative instruments are recorded on the balance sheet at fair value.

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability.

Fair value is the exit

price that would be received to sell an asset or paid to transfer a liability.

Fair value is a market-based measurement determined using assumptions that market participants would use in pricing an asset or liability.

21 unchanged sentences

The Company primarily has operating lease for space, vehicles, manufacturing equipment and data processing equipment.

The ROU asset pertaining to operating leases was $ 1.1 billion and $ 0.9 billion in fiscal years 2022 and 2021, respectively.

The lease liability was $ 1.3 billion and $ 1.0 billion in fiscal years 2022 and 2021, respectively.

The operating lease costs were $ 0.3 billion in fiscal years 2022, 2021 and 2020, respectively.

Cash paid for amounts included in the measurement of lease liabilities were $ 0.3 billion in fiscal years 2022, 2021 and 2020, respectively.

The ROU asset pertaining to leases from continuing operation was $ 1.0 billion in both fiscal years 2023 and 2022.

The lease liability from continuing operations was $ 1.1 billion in both fiscal years 2023 and 2022.

The operating lease costs from continuing operations were $ 0.2 billion in fiscal years 2023, 2022 and 2021.

Cash paid for amounts included in the measurement of lease liabilities from continuing operations were $ 0.2 billion in fiscal years 2023, 2022 and 2021.

Product liability

1 unchanged sentence

The accruals are adjusted periodically as additional information becomes available.

accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be reasonably estimated.

The Company accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be reasonably estimated.

To the extent adverse verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.

2023 Annual Report

The Company has self insurance through a wholly-owned captive insurance company.

26 unchanged sentences

GAAP accounting and tax reporting, recorded as deferred tax assets or liabilities.

The Company estimates deferred tax assets and liabilities based on enacted tax regulations and rates.

estimates deferred tax assets and liabilities based on enacted tax regulations and rates.

Future changes in tax laws and rates may affect recorded deferred tax assets and liabilities in the future.

7 unchanged sentences

This law included provisions for a comprehensive overhaul of the corporate income tax code, including a reduction of the statutory corporate tax rate from 35 % to 21 %, effective on January 1, 2018.

The TCJA included a provision for a tax on all previously

undistributed earnings of U.S.

The TCJA included a provision for a tax on all previously undistributed earnings of U.S.

companies located in foreign jurisdictions.

3 unchanged sentences

The remaining balance at the end of the 2023 was approximately $ 4.5 billion, of which $ 2.5 billion is classified as noncurrent and reflected as “Long-term taxes payable” on the Company’s balance sheet.

The balance of this account is related to receivables from tax authorities not expected to be received in the next 12 months.

The TCJA also includes provisions for a tax on global intangible low-taxed income (GILTI).

28 unchanged sentences

Normally each fiscal year consists of 52 weeks, but every five or six years the fiscal year consists of 53 weeks, and therefore includes additional shipping days, as was the case in fiscal year 2020, and will be the case again in fiscal year 2026.

Reclassification

Certain prior period amounts have been reclassified to conform to current year presentation.

2023 Annual Report

Cash, cash equivalents and current marketable securities

At the end of the fiscal year 2022 and 2021, cash, cash equivalents and current marketable securities were comprised of:

At the end of the fiscal year 2023 and 2022, cash, cash equivalents and current marketable securities comprised:

(Dollars in Millions) 2023

Carrying Amount Unrecognized Loss Estimated Fair Value Cash & Cash Equivalents Current Marketable Securities

Amount Unrecognized

Loss Estimated

Fair Value Cash & Cash

Equivalents Current

Cash $ 3,340 — 3,340 3,340 —

Sovereign Securities (1)

522 — 522 174 348

Reverse repurchase agreements 4,377 — 4,377 4,377 —

7 unchanged sentences

Gov't Agencies 71 ( 1 ) 70 — 70

Other Sovereign Securities 5 — 5 1 4

Corporate and other debt securities 237 — 237 43 194

2 unchanged sentences

Total cash, cash equivalents and current marketable securities

$ 21,859 1,068

(Dollars in Millions) 2022

1 unchanged sentence

Cash $ 3,691 — 3,691 3,691 —

Sovereign Securities (1)

1,006 — 1,006 90 916

Reverse repurchase agreements 1,419 — 1,419 1,419 —

6 unchanged sentences

Gov't Securities $ 9,959 ( 28 ) 9,931 1,922 8,009

Gov't Agencies 210 ( 5 ) 205 — 205

Corporate and other debt securities 352 ( 1 ) 351 46 305

2 unchanged sentences

Total cash, cash equivalents and current marketable securities

$ 12,889 9,392

(1) Held to maturity investments are reported at amortized cost and realized gains or losses are reported in earnings.

1 unchanged sentence

Fair value of government securities and obligations and corporate debt securities were estimated using quoted broker prices and significant other observable inputs.

The contractual maturities of the available for sale debt securities at January 1, 2023 are as follows:

The contractual maturities of the available for sale debt securities at December 31, 2023 are as follows:

(Dollars in Millions) Cost Basis Fair Value

5 unchanged sentences

The Company has a policy of making investments only with commercial institutions that have at least an investment grade credit rating.

At the end of fiscal years 2022 and 2021, inventories were comprised of:

At the end of fiscal years 2023 and 2022, inventories comprised:

(Dollars in Millions) 2023 2022

18 unchanged sentences

The difference, if any, between the net asset value and the proceeds are recorded in earnings.

2023 Annual Report

Intangible assets and goodwill

5 unchanged sentences

Patents and trademarks — net $ 15,609 18,772

$ 21,746 18,484

Customer relationships and other intangibles — gross $ 20,322 19,764

7 unchanged sentences

Total intangible assets — net $ 34,175 38,489

(1) The change was primarily related to the intangible assets acquired with the acquisition of Abiomed, Inc.

which was partially offset by amortization expense of previously existing intangible assets and the result of currency translation effects.

(1) The majority is comprised of customer relationships

(3) The reduction was primarily related to an intangible asset impairment charge of approximately $ 0.8 billion recorded in the fiscal year 2022 related to an in-process research and development asset, bermekimab (JnJ-77474462), an investigational drug for the treatment of Atopic Dermatitis (AD) and Hidradenitis Suppurativa (HS) acquired with the acquisition of XBiotech, Inc.

in the fiscal year 2020.

Additional information regarding efficacy of the AD and HS indications became available which led the Company to the decision to terminate the development of bermekimab for AD and HS.

An additional reduction of $ 0.7 billion was driven by Monarch assets that reached commercialization and are now classified as having definite lives.

This was partially offset by approximately $ 1.1 billion of IPR&D acquired with Abiomed, Inc.

Goodwill as of January 1, 2023 and January 2, 2022, as allocated by segment of business, was as follows:

(Dollars in Millions) Consumer Health Pharmaceutical MedTech Total

Goodwill as of December 31, 2023 and January 1, 2023, as allocated by segment of business, was as follows:

(Dollars in Millions) Innovative

Medicine MedTech Total

Goodwill at January 2, 2022 $ 10,580 14,856 25,436

6 unchanged sentences

Currency translation/other 223 288 * 511

Goodwill at January 1, 2023 $ 9,184 10,184 25,863 45,231

The weighted average amortization period for patents and trademarks is 12 years.

The weighted average amortization period for customer relationships and other intangible assets is 21 years.

The amortization expense of amortizable assets included in Cost of products sold was $ 4.3 billion, $ 4.7 billion and $ 4.7 billion before tax, for the fiscal years ended January 1, 2023, January 2, 2022 and January 3, 2021, respectively.

Goodwill at December 31, 2023 $ 10,407 26,151 36,558

*Includes purchase price allocation adjustments for Abiomed

The weighted average amortization period for patents and trademarks is approximately 11 years.

The weighted average amortization period for customer relationships and other intangible assets is approximately 19 years.

The amortization expense of amortizable assets included in Cost of products sold was $ 4.5 billion, $ 3.9 billion and $ 4.2 billion before tax, for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

Intangible asset write-downs are included in Other (income) expense, net.

The estimated amortization expense for approved products, before tax, for the five succeeding years is approximately:

The estimated amortization expense related to intangible assets for approved products, before tax, for the five succeeding years is approximately:

(Dollars in Millions)

11 unchanged sentences

These forward foreign exchange contracts are not designated as hedges and therefore, changes in the fair values of these derivatives are recognized in earnings, thereby offsetting the current earnings effect of the related foreign currency assets and liabilities.

In the fiscal fourth quarter of 2022, the Company entered into forward starting interest rate swaps with notional amounts totaling $ 2.4 billion in contemplation of hedging interest rate risk associated with long-term financing for the Consumer Health segment separation.

These forward starting interest rate swaps are not designated as hedges and therefore, changes in the fair values of these derivatives are recognized in earnings.

At the end of the fiscal year 2022, the changes in fair value was not material and therefore not included in the table below.

The Company does not enter into derivative financial instruments for trading or speculative purposes, or that contain credit risk related contingent features.

The Company maintains credit support agreements (CSA) with certain derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements.

As of January 1, 2023, the total amount of cash collateral paid by the Company under the CSA amounted to $ 0.8 billion net, related to net investment and cash flow hedges.

As of December 31, 2023 and January 1, 2023, the total amount of cash collateral paid by the Company under the CSA amounted to $ 4.0 billion and $ 0.8 billion net respectively, related to net investment and cash flow hedges.

On an ongoing basis, the Company monitors counter-party credit ratings.

1 unchanged sentence

Refer to the table on significant financial assets and liabilities measured at fair value contained in this footnote for receivables and payables with these commercial institutions.

As of January 1, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ 43.3 billion, $ 36.2 billion and $ 12.4 billion, respectively.

As of December 31, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ 42.9 billion, $ 39.7 billion and $ 10.0 billion, respectively.

As of January 1, 2023, the Company had notional amounts outstanding for forward foreign exchange contracts, cross currency interest rate swaps and interest rate swaps of $ 41.5 billion, $ 36.2 billion and $ 10.0 billion, respectively.

11 unchanged sentences

The Company designated its Euro denominated notes issued in May 2016 with due dates ranging from 2022 to 2035 as a net investment hedge of the Company's investments in certain of its international subsidiaries that use the Euro as their functional currency in order to reduce the volatility caused by changes in exchange rates.

As of January 1, 2023, the balance of deferred net loss on derivatives included in accumulated other comprehensive income was $ 230 million after-tax.

As of December 31, 2023, the balance of deferred net loss on derivatives included in accumulated other comprehensive income was $ 377 million after-tax.

For additional information, see the Consolidated Statements of Comprehensive Income and Note 13.

3 unchanged sentences

Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative.

The following table is a summary of the activity related to derivatives and hedges for the fiscal years ended January 1, 2023 and January 2, 2022, net of tax:

January 1, 2023 January 2, 2022

2023 Annual Report

The following table is a summary of the activity related to derivatives and hedges for the fiscal years ended December 31, 2023 and January 1, 2023, net of tax:

December 31, 2023 January 1, 2023

(Dollars in Millions) Sales Cost of Products Sold R&D Expense Interest (Income) Expense Other (Income) Expense Sales Cost of Products Sold R&D Expense Interest (Income) Expense Other (Income) Expense

15 unchanged sentences

Amount of gain or (loss) recognized in AOCI $ — — — ( 156 ) — — — — 42 —

As of January 1, 2023 and January 2, 2022, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustment for fair value hedges

As of December 31, 2023 and January 1, 2023, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustment for fair value hedges

Line item in the Consolidated Balance Sheet in which the hedged item is included Carrying Amount of the Hedged Liability Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liability

(Dollars in Millions) January 1, 2023 January 2, 2022 January 1, 2023 January 2, 2022

(Dollars in Millions) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023

Long-term Debt $ 8,862 $ 8,665 $( 1,216 ) $( 1,435 )

The following table is the effect of derivatives not designated as hedging instrument for the fiscal years ended January 1, 2023 and January 2, 2022:

The following table is the effect of derivatives not designated as hedging instrument for the fiscal years ended December 31, 2023 and January 1, 2023:

(Dollars in Millions) Location of Gain /(Loss) Recognized in Income on Derivative Gain/(Loss)

1 unchanged sentence

Income on Derivative

Derivatives Not Designated as Hedging Instruments January 1, 2023 January 2, 2022

Derivatives Not Designated as Hedging Instruments December 31, 2023 January 1, 2023

Foreign Exchange Contracts Other (income) expense $( 60 ) 94

The following table is the effect of net investment hedges for the fiscal years ended January 1, 2023 and January 2, 2022:

The following table is the effect of net investment hedges for the fiscal years ended December 31, 2023 and January 1, 2023:

Recognized In

1 unchanged sentence

Accumulated OCI

(Dollars in Millions) January 1, 2023 January 2, 2022 January 1, 2023 January 2, 2022

(Dollars in Millions) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023

Debt $( 131 ) 197 Interest (income) expense — —

2 unchanged sentences

The Company measures equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The following table is a summary of the activity related to equity investments for the fiscal years ended January 1, 2023 and January 2, 2022:

January 2, 2022 January 1, 2023

The following table is a summary of the activity related to equity investments for the fiscal years ended December 31, 2023 and January 1, 2023:

January 1, 2023 December 31, 2023

(Dollars in Millions) Carrying Value Changes in Fair Value Reflected in Net Income (1)

3 unchanged sentences

Equity Investments without readily determinable value $ 613 1 82 696 696

2023 Annual Report

January 2, 2022 January 1, 2023

6 unchanged sentences

(2) Other includes impact of currency

For the fiscal years ended January 1, 2023 and January 2, 2022 for equity investments without readily determinable market values, $ 51 million and $ 28 million, respectively, of the changes in fair value reflected in net income were the result of impairments.

* Includes the 9.5 % remaining stake in Kenvue and the $ 0.4 billion unfavorable change in fair value of the investment between separation date and the end of the fiscal year.

For the fiscal years ended December 31, 2023 and January 1, 2023 for equity investments without readily determinable market values, $ 1 million and $ 51 million, respectively, of the changes in fair value reflected in net income were the result of impairments.

There were offsetting impacts of $ 27 million and $ 142 million, respectively, of changes in the fair value reflected in net income due to changes in observable prices and gains on the disposal of investments.

The impact in fiscal year 2021, was driven by the gain on disposal of the Grail investment.

In fiscal year 2022, the Company sold all of its equity investments in argenx SE for proceeds of $ 0.6 billion.

Fair value is the exit price that would be received to sell an asset or paid to transfer a liability.

11 unchanged sentences

Level 3 — Significant unobservable inputs.

The Company’s significant financial assets and liabilities measured at fair value as of the fiscal year ended January 1, 2023 and January 2, 2022 were as follows:

The Company’s significant financial assets and liabilities measured at fair value as of the fiscal year ended December 31, 2023 and January 1, 2023 were as follows:

(Dollars in Millions) Level 1 Level 2 Level 3 Total Total (1)

22 unchanged sentences

Total Gross Assets $ 1,591 2,201

Credit Support Agreement (CSA) ( 2,176 ) ( 1,285 )

Credit Support Agreements (CSA) ( 1,575 ) ( 2,176 )

Total Net Asset 16 25

Total Gross Liabilities 6,037 3,357

Credit Support Agreement (CSA) ( 3,023 ) ( 1,855 )

Credit Support Agreements (CSA) ( 5,604 ) ( 3,023 )

Total Net Liabilities $ 433 334

2023 Annual Report

Summarized information about changes in liabilities for contingent consideration is as follows:

3 unchanged sentences

Changes in estimated fair value 29 ( 194 ) ( 52 )

( 194 ) ( 52 ) ( 1,089 )

Additions (6)

Payments ( 11 ) ( 48 ) ( 99 )

Payments/Other ( 57 ) ( 11 ) ( 48 )

Ending Balance (5)

$ 1,092 1,120 533

(1) 2022 assets and liabilities are all classified as Level 2 with the exception of equity investments of $ 576 million, which are classified as Level 1 and contingent consideration of $ 1,120 million, classified as Level 3.

2 unchanged sentences

(4) Classified as cash equivalents and current marketable securities.

(5) Includes $ 1,116 million, $ 520 million and $ 594 million, classified as non-current other liabilities as of January 1, 2023, January 2, 2022 and January 3, 2021, respectively.

Includes $ 4 million, $ 13 million and $ 39 million classified as current liabilities as of January 1, 2023, January 2, 2022 and January 3, 2021, respectively.

(6) Ongoing fair value adjustment amounts are recorded primarily in Research and Development expense.

The Company recorded a contingent consideration reversal of $ 1,148 million in 2020 related to the timing of certain developmental milestones associated with the Auris Health acquisition.

The reversal of the contingent consideration was recorded in Other income and expense.

(5) Includes $ 1,092 million, $ 1,116 million and $ 520 million, classified as non-current other liabilities as of December 31, 2023, January 1, 2023 and January 2, 2022, respectively.

Includes $ 4 million and $ 13 million classified as current liabilities as of January 1, 2023 and January 2, 2022, respectively.

(6) In fiscal year 2022, the Company recorded $ 704 million of contingent consideration related to Abiomed.

1 unchanged sentence

The components of long-term debt are as follows:

(Dollars in Millions) 2022

Effective Rate %

0.250 % Notes due 2022 ( 1 B Euro 1.1311 ) (3)

$ — — % $ 1,131 (3)

2.25 % Notes due 2022

— — 1,000 2.31

(Dollars in Millions) 2023 Effective

% 2022 Effective

6.73 % Debentures due 2023

3.375 % Notes due 2023

$ — — % $ 250 6.73 %

3.375 % Notes due 2023

500 2.09 499 2.09

2.05 % Notes due 2023

0.650 % Notes due 2024

( 750 MM Euro 1.1090 ) (2) /( 750 MM Euro 1.0651 ) (3)

11 unchanged sentences

1,419 0.96 1,394 0.96

1.150 % Notes due 2028 ( 750 MM Euro 1.0651 ) (2) /( 750 MM Euro 1.1311 ) (3)

1.150 % Notes due 2028

( 750 MM Euro 1.1090 ) (2) /( 750 MM Euro 1.0651 ) (3)

2.90 % Notes due 2028

1,497 2.91 1,496 2.91

6.95 % Notes due 2029

298 7.14 298 7.14

1.30 % Notes due 2030

1 unchanged sentence

4.95 % Debentures due 2033

499 4.95 498 4.95

4.375 % Notes due 2033

854 4.24 854 4.24

1.650 % Notes due 2035 ( 1.5 B Euro 1.0651 ) (2) /( 1.5 B Euro 1.1311 ) (3)

1.650 % Notes due 2035

( 1.5 B Euro 1.1090 ) (2) /( 1.5 B Euro 1.0651 ) (3)

1.68 1,591 (3)

2 unchanged sentences

5.95 % Notes due 2037

994 5.99 993 5.99

3.625 % Notes due 2037

1 unchanged sentence

5.85 % Debentures due 2038

697 5.85 697 5.85

3.400 % Notes due 2038

1 unchanged sentence

4.50 % Debentures due 2040

541 4.63 540 4.63

2.10 % Notes due 2040

14 unchanged sentences

1,073 2.49 1,055 2.49

Other 69 — 7 —

Subtotal 27,350 (4)

2 unchanged sentences

(1) Weighted average effective rate.

(2) Translation rate at January 1, 2023.

2023 Annual Report

(2) Translation rate at December 31, 2023.

(3) Translation rate at January 1, 2023.

(4) The excess of the carrying value over the fair value of debt was $ 1.6 billion at the end of fiscal year 2022 and the excess of the fair value over the carrying value of debt was $ 3.2 billion at the end of fiscal year 2021.

(4) The excess of the carrying value over the fair value of debt was $ 1.0 billion and $ 1.6 billion at the end of fiscal year 2023 and fiscal year 2022, respectively.

Fair value of the long-term debt was estimated using market prices, which were corroborated by quoted broker prices and significant other observable inputs.

1 unchanged sentence

In September 2023, the Company secured a new 364-day Credit Facility of $ 10 billion, which expires on September 5, 2024.

In November 2022, the Company secured an additional 364-day Credit Facility of $ 10 billion, which expires on November 21, 2023.

The Company early terminated the additional 364-day revolving Credit Facility of $ 10 billion, which had an expiration of November 21, 2023.

Interest charged on borrowings under the credit line agreement is based on either the Term SOFR Reference Rate or other applicable market rates as allowed under the terms of the agreement, plus applicable margins.

2 unchanged sentences

Short-term borrowings and the current portion of long-term debt amounted to approximately $ 3.5 billion and $ 12.8 billion at the end of fiscal years 2023 and 2022, respectively.

The current portion of the long term debt was $ 1.6 billion and $ 2.1 billion in 2022 and 2021, respectively, and the remainder is commercial paper and local borrowing by international subsi diaries.

The current portion of the long term debt was $ 1.5 billion and $ 1.6 billion in 2023 and 2022, respectively, and the remainder is commercial paper and local borrowing by international subsidiaries.

The current debt balance as of December 31, 2023 includes $ 2.0 billion of commercial paper which has a weighted average interest rate of 5.37 % and a weighted average maturity of approximately two months .

The current debt balance as of January 1, 2023 includes $ 11.2 billion of commercial paper which has a weighted average interest rate of 4.23 % and a weighted average maturity of approximately two months .

23 unchanged sentences

( 8.1 ) ( 5.0 ) ( 19.1 )

Consumer health separation 2.2 — —

Tax Settlements ( 3.0 ) — —

taxes on international income (2)

3 unchanged sentences

All other 2.7 1.9 ( 0.8 )

1.9 ( 0.7 ) ( 0.3 )

Effective Rate 11.5 % 15.4 7.2

(1) For all periods presented the Company has subsidiaries operating in Puerto Rico under various tax incentives.

International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland and Puerto Rico, which is a favorable impact on the effective tax rate as compared with the U.S.

(1) International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S., particularly Ireland, Switzerland, Belgium and Puerto Rico, which is a favorable impact on the effective tax rate as compared with the U.S.

statutory rate.

The 2021 amounts include the reorganization of international subsidiaries;

the 2020 amounts include the impact of the new tax legislation enactment in Switzerland, both of which are further described below.

(2) Includes the impact of the GILTI tax, the Foreign-Derived Intangible Income deduction and other foreign income that is taxable under the U.S.

The 2022 amount includes the impact of certain provisions of the 2017 TCJA that became effective in fiscal 2022.

The 2021 amounts include the reorganization of international subsidiaries;

the 2020 amounts include the impact of the new tax legislation enactment in Switzerland, both of which are further described below.

(3) Certain prior year amounts have been reclassified to conform to current year presentation.

The fiscal year 2022 effective tax rate increased 9.1 % as compared to the fiscal year 2021 effective tax rate.

As part of the planned separation of the Company’s Consumer Health business, the Company has recognized approximately $ 0.5 billion in net incremental tax costs in fiscal year 2022, which increased the 2022 effective tax rate by approximately 2.2 %.

Additionally, the Company recorded certain non-recurring favorable tax items in fiscal year 2021 which resulted in an unfavorable impact to the Company’s fiscal 2022 effective tax rate when compared to the prior fiscal year.

The 2023 and 2022 amount includes the impact of certain provisions of the 2017 TCJA that became effective in fiscal 2022.

The 2023 amount includes the impact of certain foreign subsidiaries deferred tax remeasurements for legislative elections and the 2021 amounts include the reorganization of international subsidiaries further described below.

The fiscal year 2023 effective tax rate decreased 3.9 % as compared to the fiscal year 2022 effective tax rate as the Company recorded certain non-recurring favorable tax items in fiscal year 2023 when compared to the prior fiscal year.

In the fiscal fourth quarter of 2023, the Company settled the U.S.

Internal Revenue Service audit for tax years 2013 through 2016 which resulted in a favorable impact to the rate of 3.0 %.

This settlement was partially offset by the Company recording a $ 0.4 billion decrease in expected U.S.

foreign tax credits , an unfavorable effective rate impact of 2.6 % , which has been reflected as a current tax expense in U.S.

taxes on international income on the Company’s effective tax rate reconciliation.

In the fiscal year 2023, the Company had certain non-recurring impacts as a result of legislative tax elections made in certain international subsidiaries which resulted in a change in the Company’s tax basis in certain assets resulting in deferred tax re-measurements.

The net impact of these non-recurring items is a net benefit of 3.4 % to the Company’s annual effective tax rate, comprised of the following items:

• approximately $ 0.3 billion of tax benefit on local deferred tax assets to record the remeasurement of the increased tax basis, this benefit has been reflected as International operations on the Company’s effective tax rate reconciliation.

This benefit was offset by approximately $ 0.1 billion of U.S.

deferred tax expense on the GILTI deferred tax liability resulting from the remeasurement of these deferred tax assets.

This has been reflected in the “U.S.

tax on international income” on the Company’s effective tax rate reconciliation.

• approximately $ 0.3 billion of U.S.

deferred tax benefit on the GILTI deferred tax as a result of an international subsidiary making an election to change the treatment of a local deferred tax asset to a refundable tax credit.

This has been reflected in the U.S.

taxes on international income on the Company’s effective tax rate reconciliation.

The Company’s 2023 and 2022 tax rates benefited from certain provisions of the Tax Cuts and Jobs Act of 2017 that became effective in fiscal 2022.

The Company also had lower income in higher tax jurisdictions vs.

fiscal year 2022, primarily in the U.S.

where the Company recorded an approximately $ 7.0 billion charge related to talc matters in the United States at an effective tax rate of 21.1 % (for further information see Note 19 to the Consolidated Financial Statements).

The fiscal year 2022 effective tax rate increased 8.2 % as compared to the fiscal year 2021 effective tax rate as the Company recorded certain non-recurring favorable tax items in fiscal year 2021 which resulted in an unfavorable impact to the Company’s fiscal 2022 effective tax rate when compared to the prior fiscal year.

These items are described below.

The Company’s 2022 tax rate also benefited from certain provisions of the Tax Cuts and Jobs Act of 2017 that became effective in fiscal 2022, the impairment of bermekimab for AD and HS IPR&D (for further information see Note 5 of the 2022 10-K Consolidated Financial Statements) and changes in the fair value of securities in the Company’s investment portfolio, both recorded at the U.S.

The Company’s 2022 tax rate also benefited from the impairment of bermekimab for AD IPR&D and changes in the fair value of securities in the Company’s investment portfolio, both recorded at the U.S.

statutory rate.

The fiscal year 2021 tax rate decreased by 2.5 % compared to the fiscal year 2020 tax rate, which was primarily driven by the following items.

In fiscal year 2021, the Company reorganized the ownership structure of certain wholly-owned international subsidiaries.

2023 Annual Report

In the fiscal year 2021, the Company reorganized the ownership structure of certain wholly-owned international subsidiaries.

As part of this reorganization, the Company increased the tax basis of certain assets to fair value in accordance with applicable local regulations.

4 unchanged sentences

This expense has been reflected as U.S.

tax on international income” on the Company’s effective tax rate reconciliation.

taxes on international income on the Company’s effective tax rate reconciliation.

Also, in the fiscal fourth quarter of 2021, the Company recognized a loss on certain U.S.

affiliates related to the previously impaired book value of certain intangibles, which reduced the 2021 tax rate by approximately 1.3 % which is reflected as a “Tax benefits from loss on capital assets” on the effective tax rate reconciliation.

affiliates related to the previously impaired book value of certain intangibles, which reduced the 2021 effective tax rate by approximately 1.6 % which is reflected as a Tax benefits from loss on capital assets on the effective tax rate reconciliation.

Additionally other fiscal 2021 impacts to the rate were primarily driven by litigation and acquisition related items as follows:

1 unchanged sentence

• the Company recorded a partial IPR&D charge of $ 0.9 billion for the Ottava intangible asset (acquired with the Auris Health acquisition in 2019) at an effective rate of 22.4 %.

In fiscal year 2019, Switzerland enacted the Federal Act on Tax Reform and AHV Financing (TRAF) and became effective for fiscal year 2020.

The Federal transitional provisions of TRAF allow companies, under certain conditions, to adjust the tax basis in certain assets to fair value (i.e., “step-up”) to be depreciated and amortized resulting in an incremental Swiss tax deduction over the transitional period.

TRAF also provides for parameters which enable the Swiss cantons to establish localized tax rates and regulations for companies.

The new cantonal tax parameters include favorable tax benefits for patents and additional research and development tax deductions.

The cantonal transitional provisions of TRAF allowed companies to elect either 1) tax basis step-up similar to the Federal transition benefit or 2) alternative statutory tax rate for a period not to exceed 5 years.

The Company has operations located in various Swiss cantons.

During the fiscal year 2020, the final canton where the Company maintains significant operations enacted TRAF legislation.

Additionally, the Company received rulings from the Swiss Federal and cantonal tax authorities in the remaining jurisdictions where it has significant operations.

These rulings resulted in the Company revising its estimate on the tax basis adjustment (i.e., “step-up”) for its assets and as a result, the Company recorded additional deferred tax benefits in 2020.

The Company recognized a net benefit in the fiscal year 2020 for Swiss Tax Reform of approximately $ 0.4 billion or 2.6 % benefit to the Company’s annual effective tax rate, comprised of the following items:

• approximately $ 0.3 billion tax benefit relating to the remeasurement of Swiss deferred tax assets and liabilities for the change in the Federal and cantonal tax rates, where enactment occurred in the fiscal year 2020;

this benefit has been reflected as “International Operations” on the Company’s effective tax rate reconciliation.

• a $ 450 million deferred tax asset related to the estimated value of a Federal tax basis step-up of the Company’s Swiss subsidiaries’ assets as described above;

this benefit has been reflected as “International Operations” on the Company’s effective tax rate reconciliation.

• approximately $ 0.3 billion of U.S.

deferred tax expense relating to the GILTI deferred tax liability resulting from the remeasurement of the Swiss deferred tax assets and liabilities in the fiscal year 2020.

This benefit has been reflected as “U.S.

tax on international income” on the Company’s effective tax rate reconciliation.

The Company does not expect to receive future rulings regarding the transitional provisions of TRAF.

Also, in the fiscal year 2020, the Company recognized a capital loss on certain U.S.

affiliates related to the previously impaired book value of certain intangibles, which reduced the 2020 tax rate by approximately 1.2 % which is reflected as a “Tax benefits from loss on capital assets” on the effective tax rate reconciliation.

In addition, in the fiscal year 2020, the Company had lower income in higher tax jurisdictions, primarily driven by:

• the impact of the accrual of litigation costs related to talc for $ 4.0 billion which reduced the U.S.

earnings before taxes at an effective tax rate of 23.5 %;

• the accrual of additional legal costs, including an additional $ 1.0 billion associated with a revised agreement in principle to settle opioid litigation at an effective tax rate of 21.4 %

The Company also reduced the contingent consideration liability related to the Auris Health acquisition in 2019 and reversed some of its unrecognized tax benefits due to the completion of several years of tax examinations in certain jurisdictions during the fiscal year 2020.

Temporary differences and carryforwards at the end of fiscal years 2023 and 2022 were as follows:

5 unchanged sentences

Goodwill and intangibles ( 1,252 ) ( 1,737 )

( 2,659 ) (2)

R&D capitalized for tax 3,595 2,611

7 unchanged sentences

Total deferred income taxes $ 12,670 ( 6,584 ) 12,836 ( 7,880 )

(1) Certain prior year amounts have been reclassified to conform to current year presentation.

(2) Amount is inclusive of the $ 2.3 billion deferred tax asset established as part of the reorganized ownership structure of certain wholly-owned international subsidiaries, as previously described.

(3) Amount is inclusive of the $ 1.8 billion deferred tax liability due to the acquisition of Abiomed.

(4) Net of valuation allowances of $ 0.9 billion in both 2022 and 2021.

(1) In fiscal 2023, the Company changed the presentation of income taxes accrued on intercompany profits on inventory still owned by the Company as part of “Prepaid expenses and other” on the Consolidated Balance Sheet.

(2) Net of valuation allowances of $ 1.1 billion and $ 0.8 billion in 2023 and 2022.

The change in the valuation allowance from 2022 to 2023 was driven by approximately $ 0.1 billion from acquisition related activity and the remainder was due to normal operations during the fiscal year.

The Company has wholly-owned international subsidiaries that have cumulative net losses.

1 unchanged sentence

However, in certain jurisdictions, valuation allowances have been recorded against deferred tax assets for loss carryforwards that are not more likely than not to be realized.

The following table summarizes the activity related to unrecognized tax benefits:

The following table summarizes the activity related to unrecognized tax benefits for continuing operations:

(Dollars in Millions) 2023 2022 2021

6 unchanged sentences

End of year $ 2,485 3,716 3,210

The unrecognized tax benefits of $ 3.8 billion at January 1, 2023, if recognized, would affect the Company’s annual effective tax rate.

As of December 31, 2023 the Company had approximately $ 2.5 billion of unrecognized tax benefits.

The Company conducts business and files tax returns in numerous countries and currently has tax audits in progress with a number of tax authorities.

With respect to the United States, the IRS has completed its audit for the tax years through 2012 and is currently auditing tax years 2013 through 2016.

In the fiscal year 2020, the Company made its final payments for approximately $ 0.7 billion to the U.S.

Treasury related to the final settlement of 2010-2012 tax audit liability.

With respect to the United States the Internal Revenue Service has completed its audit for all tax years through 2016.

In other major jurisdictions where the Company conducts business, the years that remain open to tax audits go back to the year 2008.

16 unchanged sentences

Prepaid employee related obligations of $ 4,992 million and $ 4,581 million for 2023 and 2022, respectively, are included in Other assets on the Consolidated Balance Sheets.

2023 Annual Report

Pensions and other benefit plans

6 unchanged sentences

In January 2021, the Company announced that, effective on January 1, 2026, all eligible U.S.

non-union employees,

regardless of hire date, will earn benefits under the Retirement Value formula.

This amendment does not affect the benefits

accrued under the Final Average Pay formula for service before January 1, 2026.

non-union employees, regardless of hire date, will earn benefits under the Retirement Value formula.

This amendment does not affect the benefits accrued under the Final Average Pay formula for service before January 1, 2026.

International subsidiaries have plans under which funds are deposited with trustees, annuities are purchased under group contracts, or reserves are provided.

12 unchanged sentences

Net periodic benefit cost (credit) $( 676 ) ( 62 ) 607 487 533 502

The service cost component of net periodic benefit cost is presented in the same line items on the Consolidated Statement of Earnings where other employee compensation costs are reported, including Cost of products sold, Research and development expense, and Selling, marketing and administrative expenses.

All other components of net periodic benefit cost are presented as part of Other (income) expense, net on the Consolidated Statement of Earnings.

The service cost component of net periodic benefit cost is presented in the same line items on the Consolidated Statement of Earnings where other employee compensation costs are reported, including Cost of products sold, Research and development expense, Selling, marketing and administrative expenses, and Net earnings from discontinued operations, net of taxes if related to the separation of Kenvue.

All other components of net periodic benefit cost are presented as part of Other (income) expense, net on the Consolidated Statement of Earnings, with the exception of certain amounts for curtailments and settlements, which are reported in Net earnings from discontinued operations, net of taxes if related to the separation of Kenvue (as noted above).

Unrecognized gains and losses for the U.S.

29 unchanged sentences

Year the rate reaches the ultimate trend rate 2048 2047

*excludes ongoing negotiations regarding healthcare cost with service providers

The following table sets forth information related to the benefit obligation and the fair value of plan assets at fiscal year-end 2023 and 2022 for the Company’s defined benefit retirement plans and other post-retirement plans:

10 unchanged sentences

Divestitures & acquisitions (2)

( 352 ) — 1 —

Curtailments, settlements & restructuring ( 238 ) ( 7 ) ( 332 ) —

Benefits paid from plan (3)

( 2,122 ) ( 1,220 ) ( 702 ) ( 393 )

Effect of exchange rates 601 ( 797 ) 2 ( 9 )

Projected benefit obligation — end of year $ 31,744 29,390 4,108 4,192

2023 Annual Report

Change in Plan Assets

5 unchanged sentences

Divestitures & acquisitions (2)

( 509 ) — — —

Benefits paid from plan assets (3)

( 2,122 ) ( 1,220 ) ( 702 ) ( 393 )

Effect of exchange rates 626 ( 853 ) — —

9 unchanged sentences

Prior service cost (credit) ( 1,236 ) ( 1,417 ) ( 6 ) ( 7 )

( 1,417 ) ( 1,610 ) ( 7 ) ( 13 )

Unrecognized net transition obligation — — —

1 unchanged sentence

Accumulated Benefit Obligations — end of year $ 30,139 27,797

(1) The actuarial gain for retirement plans in 2022 and 2021 was primarily related to increases in discount rates.

(1) The actuarial (gains)/losses for retirement plans in 2023 and 2022 were primarily driven by changes in the discount rates.

(2) Primarily driven by the Kenvue separation.

(3) Includes approximately $ 800 million transferred to a group annuity contract issued by a third-party insurer for the U.S.

Salaried Pension Plan.

Retirement Plans Other Benefit Plans

50 unchanged sentences

The Company’s retirement plan asset allocation at the end of 2023 and 2022 and target allocations for 2024 are as follows:

2023 Annual Report

Plan Assets Target

41 unchanged sentences

Short-term investment funds

$ 12 26 829 13 — — — — 841 39

Government and agency securities — — 5,985 5,863 — — — — 5,985 5,863

4 unchanged sentences

Investments at fair value

$ 7,776 8,872 15,729 13,954 135 68 9,967 8,602 33,607 31,496

(1) The activity for the Level 3 assets is not significant for all years presented.

3 unchanged sentences

The Company has voluntary 401(k) savings plans designed to enhance the existing retirement programs covering eligible employees.

The Company matches a percentage of each employee’s contributions consistent with the provisions of the plan for which he/she is eligible.

The Company matches a percentage of each employee’s contributions consistent with the provisions of the plan for which the employee is eligible.

Total Company matching contributions to the plans were $ 263 million, $ 257 million and $ 239 million in fiscal years 2023, 2022 and 2021, respectively.

2023 Annual Report

Capital and treasury stock

2 unchanged sentences

(Amounts in Millions Except Treasury Stock Shares in Thousands) Shares Amount

Balance at December 29, 2019 487,336 $ 38,417

Balance at January 3, 2021 487,331 $ 38,490

Employee compensation and stock option plans ( 17,399 ) ( 2,847 )

6 unchanged sentences

Repurchase of common stock 31,085 5,079

Balance at January 1, 2023 506,246 $ 41,694

Kenvue share exchange (Note 21) 190,955 31,418

Balance at December 31, 2023 712,765 $ 75,662

Aggregate shares of common stock issued were approximately 3,119,843,000 shares at the end of fiscal years 2023, 2022 and 2021.

2 unchanged sentences

On September 14, 2022, the Company announced that its Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $ 5.0 billion of the Company's shares of common stock.

Share repurchases may be made at management’s discretion from time to time on the open market or through privately negotiated transactions.

The repurchase program has no time limit and may be suspended for periods or discontinued at any time.

Through January 1, 2023, approximately $ 2.5 billion has been repurchased under the program.

The repurchase program was completed during the fiscal first quarter of 2023.

Accumulated other comprehensive income (loss)

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(Dollars in Millions) Foreign

Currency Translation Gain/(Loss) On Securities Employee Benefit Plans Gain/

Derivatives & Hedges Total

Comprehensive Income (Loss)

December 29, 2019 $ ( 8,705 ) — ( 6,891 ) ( 295 ) ( 15,891 )

Net 2020 changes ( 233 ) 1 ( 66 ) 947 649

Translation Gain/

Securities Employee

Benefit Plans Gain/

& Hedges Total

Comprehensive

Income (Loss)

January 3, 2021 $( 8,938 ) 1 ( 6,957 ) 652 ( 15,242 )

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January 1, 2023 ( 11,813 ) ( 27 ) ( 897 ) ( 230 ) ( 12,967 )

Net 2023 changes ( 3,221 ) 26 ( 1,399 ) ( 147 ) ( 4,741 )

Kenvue Separation/IPO 4,885 296 * 5,181

December 31, 2023 $( 10,149 ) ( 1 ) ( 2,000 ) ( 377 ) ( 12,527 )

Amounts in accumulated other comprehensive income are presented net of the related tax impact.

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See Note 6 for additional details.

* Includes impact of curtailments and settlements in connection with separation from Kenvue.

International currency translation

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Net currency transaction gains and losses included in Other (income) expense were losses of $ 366 million, $ 286 million and $ 216 million in fiscal years 2023, 2022 and 2021, respectively.

2023 Annual Report

Earnings per share

The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal years ended January 1, 2023, January 2, 2022 and January 3, 2021:

The following is a reconciliation of basic net earnings per share to diluted net earnings per share for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022:

(In Millions Except Per Share Amounts) 2023 2022 2021

Basic net earnings per share $ 6.83 7.93 5.59

Basic net earnings per share from continuing operations $ 5.26 6.23 6.76

Basic net earnings per share from discontinued operations 8.62 0.60 1.17

Total net earnings per share - basic 13.88 6.83 7.93

Average shares outstanding — basic 2,533.5 2,625.2 2,632.1

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Adjusted average shares outstanding — diluted 2,560.4 2,663.9 2,674.0

Diluted net earnings per share $ 6.73 7.81 5.51

The diluted net earnings per share calculation for the fiscal years 2022 and 2021 included all shares related to stock options, as the exercise price of these options was less than the average market value of the Company's stock.

Diluted net earnings per share from continuing operations 5.20 6.14 6.66

Diluted net earnings per share from discontinuing operations 8.52 0.59 1.15

Total net earnings per share - diluted $ 13.72 6.73 7.81

The diluted net earnings per share calculation for fiscal year 2023 excluded 43 million shares related to stock options, as the exercise price of these options was greater than the average market value of the Company's stock.

Common stock, stock option plans and stock compensation agreements

At January 1, 2023, the Company had one stock-based compensation plan.

At December 31, 2023, the Company had one stock-based compensation plan.

The shares outstanding are for contracts under the Company's 2012 Long-Term Incentive Plan and the 2022 Long-Term Incentive Plan.

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Stock options expire 10 years from the date of grant and vest over service periods that range from 6 months to 4 years.

All options are granted at the average of the high and low prices of the Company’s Common Stock on the New York Stock Exchange on the date of grant.

Options granted under the 2012 Long-Term Incentive Plan were granted at the average of the high and low prices of the Company’s Common Stock on the New York Stock Exchange on the date of grant.

Options granted under the 2022 Long-Term incentive Plan were granted at the closing price of the Company’s Common Stock on the New York Stock Exchange on the date of gran t.

The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table.

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Expected dividend yield 2.90 % 2.70 % 2.50 %

A summary of option activity under the Plan as of January 1, 2023, January 2, 2022 and January 3, 2021, and changes during the years ending on those dates is presented below:

(Shares in Thousands) Outstanding Shares Weighted

Average Exercise Price Aggregate

A summary of option activity under the Plan as of December 31, 2023, is presented below:

(Shares in Thousands) Outstanding

Shares Weighted

Average Exercise

Price Aggregate

(Dollars in Millions)

Shares at December 29, 2019 111,637 $ 105.63 $ 4,478

Options granted 20,723 151.41

Options exercised ( 16,275 ) 86.05

Options canceled/forfeited ( 1,835 ) 137.62

Shares at January 1, 2023 118,672 $ 134.95 $ 4,949

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Options canceled/forfeited* ( 10,368 ) 155.62

Shares at January 2, 2022 117,361 125.36 5,364

Options granted 19,809 165.89

Options exercised ( 16,310 ) 100.15

Options canceled/forfeited ( 2,188 ) 160.56

Shares at January 1, 2023 118,672 $ 134.95 $ 4,949

Shares at December 31, 2023 112,238 $ 139.88 $ 2,239

The total intrinsic value of options exercised was $ 729 million, $ 1,228 million and $ 919 million in fiscal years 2023, 2022 and 2021, respectively.

The following table summarizes stock options outstanding and exercisable at January 1, 2023:

*includes 7,689 shares of options cancelled as a result of the conversion of Johnson & Johnson stock options held by Kenvue employees into Kenvue stock options

2023 Annual Report

The following table summarizes stock options outstanding and exercisable at December 31, 2023:

(Shares in Thousands) Outstanding Exercisable

Exercise Price Range Options Average Life (1)

Weighted Average Exercise Price Options Weighted Average Exercise Price

Exercise Price Options Weighted

Exercise Price

$ 90.44 - $ 101.87

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The number of shares actually earned at the end of the three-year period will vary, based only on actual performance, from 0 % to 200 % of the target number of performance share units granted.

A summary of the restricted share units and performance share units activity under the Plans as of January 1, 2023 is presented below:

(Shares in Thousands) Outstanding Restricted Share Units Outstanding Performance Share Units

A summary of the restricted share units and performance share units activity under the Plans as of December 31, 2023 is presented below:

(Shares in Thousands) Outstanding

Restricted Share Units Outstanding

Performance Share Units

Shares at January 1, 2023 13,616 2,357

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Canceled/forfeited/adjusted* ( 2,259 ) ( 363 )

Shares at January 1, 2023 13,616 2,357

Shares at December 31, 2023 12,938 2,037

*includes 1,421 shares of restricted share units and 264 shares of performance share units cancelled as a result of the conversion of Johnson & Johnson restricted share units and performance share units held by Kenvue employees into Kenvue restricted share units

The average fair value of the restricted share units granted was $ 152.63 , $ 153.67 and $ 152.62 in fiscal years 2023, 2022 and 2021, respectively, using the fair market value at the date of grant.

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The weighted average fair value of the performance share units granted was $ 145.17 , $ 170.46 and $ 179.35 in fiscal years 2023, 2022 and 2021, calculated using the weighted average fair market value for each of the component goals at the date of grant.

The fair values for the sales and earnings per share goals of each performance share unit were estimated on the date of grant using the fair market value of the shares at the time of the award discounted for dividends, which are not paid on the performance share units during the vesting period.

The fair values for the earnings per share goals of each performance share unit were estimated on the date of grant using the fair market value of the shares at the time of the award discounted for dividends, which are not paid on the performance share units during the vesting period.

The fair value for the relative total shareholder return goal of each performance share unit was estimated on the date of grant using the Monte Carlo valuation model.

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Segments of business and geographic areas

Following the separation of the Consumer Health business in the fiscal third quarter of 2023, the Company is now organized into two business segments:

Innovative Medicine (formerly referred to as Pharmaceutical) and MedTech.

The segment results have been recast for all periods to reflect the continuing operations of the Company.

Sales to Customers % Change

(Dollars in Millions) 2023 2022 2021 ’23 vs.

CONSUMER HEALTH (1)

$ 2,782 2,594 2,460 7.3 % 5.4

International 3,249 3,034 2,761 7.1 9.9

Worldwide 6,031 5,627 5,221 7.2 7.8

Skin Health/Beauty

2,337 2,400 2,350 ( 2.6 ) 2.1

International 2,015 2,141 2,100 ( 5.9 ) 1.9

Worldwide 4,352 4,541 4,450 ( 4.2 ) 2.0

635 637 683 ( 0.3 ) ( 6.7 )

International 871 1,008 958 ( 13.6 ) 5.1

Worldwide 1,505 1,645 1,641 ( 8.5 ) 0.2

357 378 376 ( 5.5 ) 0.5

International 1,104 1,188 1,141 ( 7.1 ) 4.1

Worldwide 1,461 1,566 1,517 ( 6.7 ) 3.2

Women's Health

13 13 13 1.7 ( 1.6 )

International 891 905 888 ( 1.5 ) 1.8

Worldwide 904 917 901 ( 1.5 ) 1.8

Wound Care/Other

475 495 480 ( 4.0 ) 3.1

International 224 243 240 ( 8.0 ) 1.7

Worldwide 700 739 720 ( 5.3 ) 2.6

TOTAL CONSUMER HEALTH

6,599 6,516 6,362 1.3 2.4

International 8,354 8,519 8,088 ( 1.9 ) 5.3

Worldwide 14,953 15,035 14,450 ( 0.5 ) 4.0

PHARMACEUTICAL (1)

INNOVATIVE MEDICINE (1)

$ 11,539 11,036 10,843 4.6 % 1.8

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Worldwide 1,117 2,179 2,385 ( 48.8 ) ( 8.6 )

2023 Annual Report

Sales to Customers % Change

(Dollars in Millions) 2023 2022 2021 ’23 vs.

EDURANT / rilpivirine

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Worldwide 4,115 4,140 4,022 ( 0.6 ) 3.0

RISPERDAL CONSTA

589 328 198 79.7 65.7

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Worldwide 17,661 15,983 14,548 10.5 9.9

Sales to Customers % Change

(Dollars in Millions) 2023 2022 2021 ’23 vs.

469 133 — * *

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Worldwide 2,387 1,881 1,291 26.9 45.7

1,051 1,390 1,747 ( 24.4 ) ( 20.4 )

International 2,214 2,394 2,622 ( 7.5 ) ( 8.7 )

Worldwide 3,264 3,784 4,369 ( 13.7 ) ( 13.4 )

ZYTIGA /abiraterone acetate

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Worldwide 1,582 1,322 1,237 19.7 6.9

OTHER PULMONARY HYPERTENSION

79 110 163 ( 28.6 ) ( 32.3 )

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Worldwide 260 313 395 ( 16.7 ) ( 20.8 )

2023 Annual Report

Sales to Customers % Change

(Dollars in Millions) 2023 2022 2021 ’23 vs.

Cardiovascular / Metabolism / Other

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Worldwide 2,365 2,473 2,438 ( 4.4 ) 1.4

INVOKANA/ INVOKAMET

541 569 754 ( 5.0 ) ( 24.5 )

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Worldwide 1,306 1,414 1,682 ( 7.6 ) ( 15.9 )

TOTAL INNOVATIVE MEDICINE

31,169 28,604 27,954 9.0 2.3

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Worldwide 54,759 52,563 51,680 4.2 1.7

TOTAL PHARMACEUTICAL

Interventional Solutions

3,633 2,169 1,836 67.5 18.2

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Worldwide 6,350 4,300 3,971 47.7 8.3

Interventional Solutions

ELECTROPHYSIOLOGY

2,458 2,036 1,730 20.7 17.7

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Worldwide 1,306 31 — * *

OTHER INTERVENTIONAL SOLUTIONS

109 102 106 6.7 ( 3.8 )

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Worldwide 1,560 1,514 1,480 3.0 2.3

Sales to Customers % Change

(Dollars in Millions) 2023 2022 2021 ’23 vs.

896 851 787 5.3 8.2

International 559 508 538 10.2 ( 5.7 )

Worldwide 1,456 1,359 1,325 7.1 2.6

1,949 1,882 1,819 3.6 3.5

International 1,030 989 1,066 4.1 ( 7.2 )

Worldwide 2,979 2,871 2,885 3.8 ( 0.5 )

SPINE, SPORTS & OTHER

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Worldwide 30,400 27,427 27,060 10.8 1.4

2023 Annual Report

Sales to Customers % Change

(Dollars in Millions) 2023 2022 2021 ’23 vs.

46,444 41,981 40,640 10.6 3.3

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Worldwide $ 85,159 79,990 78,740 6.5 % 1.6

*Certain prior year amounts have been reclassified to conform to current year presentation

*Percentage greater than 100% or not meaningful

(1) Approximately $ 0.4 billion in both the fiscal 2021 and 2020, of certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changes

(2) Inclusive of PROCRIT / EPREX which was previously disclosed separately

(3) Pr eviously referred to as Medical Devices

Income (Loss) Before Tax* Identifiable Assets

(1) Previously referred to as Pharmaceutical

(2) Inclusive of RISPERDAL CONSTA which was previously disclosed separately

(3) Inclusive of INVOKANA which was previously disclosed separately

(4) Acquired on December 22, 2022

Income Before Tax Identifiable Assets

(Dollars in Millions) 2023 (3)

Consumer Health $ 2,930 1,573 ( 852 ) $ 24,068 25,081

Pharmaceutical 15,901 17,969 15,250 58,436 64,376

Innovative Medicine $ 18,246 15,647 17,750 $ 58,324 58,436

MedTech 4,669 4,447 4,208 74,710 70,956

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7,853 735 2,780

Consumer Health separation costs 1,089 67

Discontinued operations — 27,237

General corporate (2)

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Worldwide total $ 15,062 19,359 19,178 $ 167,558 187,378

*Income before tax of approximately $ 0.2 billion and $ 0.2 billion in the fiscal years 2021 and 2020, respectively, has been reclassified as certain international OTC products, primarily in China, were reclassified from the Pharmaceutical segment to the Consumer Health segment based on operational changes

Additions to Property,

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(Dollars in Millions) 2023 2022 2021 2023 2022 2021

Consumer Health $ 323 331 248 $ 658 759 785

Pharmaceutical 1,374 1,198 863 3,687 4,029 4,006

Innovative Medicine $ 1,653 1,374 1,198 $ 3,847 3,687 4,029

MedTech 2,372 2,120 1,933 2,943 2,302 2,286

Segments total 4,025 3,494 3,131 6,790 5,989 6,315

Discontinued operations 162 303 314 383 641 739

General corporate 356 212 207 313 340 336

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Segments total 85,159 79,990 78,740 89,439 91,437

Discontinued operations — 27,237

General corporate 1,192 1,081

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Export sales are not significant.

In fiscal year 2022, the Company utilized three wholesalers distributing products for all three segments that represented approximately 16.5 %, 13.0 % and 12.0 % of the total consolidated revenues.

In fiscal year 2021, the Company had three wholesalers distributing products for all three segments that represented approximately 14.0 %, 11.0 % and 11.0 % of the total consolidated revenues.

In fiscal year 2023, the Company utilized three wholesalers distributing products for both segments that represented approximately 18.2 %, 15.1 % and 14.2 % of the total consolidated revenues.

In fiscal year 2022, the Company had three wholesalers distributing products for both segments that represented approximately 18.9 %, 15.0 % and 13.8 % of the total consolidated revenues.

In fiscal year 2021, the Company had three wholesalers distributing products for all three segments that represented approximately 16.6 %, 12.6 %, and 12.6 % of the total consolidated revenues.

(1) Amounts not allocated to segments include interest (income)/expense and general corporate (income)/expense.

Fiscal 2023 includes an approximately $ 7 billion charge related to talc matters (See Note 19, Legal proceedings, for additional details) and $ 0.4 billion related to the unfavorable change in the fair value of the retained stake in Kenvue.

(2) General corporate includes cash, cash equivalents and marketable securities.

(3) Consumer Health includes:

• Litigation expense of $ 0.2 billion

(3) Innovative Medicine includes:

• One-time COVID-19 Vaccine manufacturing exit related costs of $ 0.7 billion

• A restructuring related charge of $ 0.5 billion

Pharmaceutical includes:

• Unfavorable changes in the fair value of securities of $ 0.4 billion

• Favorable litigation related items of $ 0.1 billion

• Loss on divestiture $ 0.2 billion.

• An intangible asset impairment charge of approximately $ 0.2 billion related to market dynamics associated with a non-strategic asset (M710) acquired as part of the acquisition of Momenta Pharmaceuticals in 2020.

MedTech includes:

• Acquired in process research and development asset of $ 0.4 billion related to the Laminar acquisition in 2023

• A restructuring related charge of $ 0.3 billion

• Acquisition and integration related costs of $ 0.2 billion primarily related to the acquisition of Abiomed

• A Medical Device Regulation charge of $ 0.3 billion

• Income from litigation settlements of $ 0.1 billion

(4) Innovative Medicine includes:

• One-time COVID-19 Vaccine manufacturing exit related costs of $ 1.5 billion

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• Litigation expense of $ 0.1 billion

• Loss of $ 0.7 billion related to the change in the fair value of securities

• Unfavorable changes in the fair value of securities of $ 0.7 billion

• A restructuring related charge of $ 0.1 billion

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• A Medical Device Regulation charge of $ 0.3 billion

(4) Consumer Health includes:

• Litigation expense of $ 1.6 billion, primarily talc related costs

• A restructuring related charge of $ 0.1 billion

Pharmaceutical includes:

(5) Innovative Medicine includes:

• Litigation expense of $ 0.6 billion, primarily related to Risperdal Gynecomastia

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MedTech includes:

• A restructuring related charge of $ 0.3 billion

• An in-process research and development expense of $ 0.9 billion related to Ottava

• A Medical Device Regulation charge of $ 0.2 billion

• Litigation expense of $ 0.1 billion

(5) Consumer Health includes:

• Litigation expense of $ 3.9 billion, primarily talc related costs and certain settlements.

Pharmaceutical includes:

• Litigation expense of $ 0.8 billion, primarily related to the agreement in principle to settle opioid litigation

• A gain of $ 0.5 billion related to the change in the fair value of securities

• A restructuring related charge of $ 0.3 billion

MedTech includes:

• A contingent consideration reversal of $ 1.1 billion related to the timing of certain developmental milestones associated with the Auris Health acquisition.

• Litigation expense of $ 0.3 billion

• A restructuring related charge of $ 0.3 billion

• An in-process research and development expense of $ 0.2 billion

• A Medical Device Regulation charge of $ 0.2 billion

2023 Annual Report

• Litigation expense of $ 0.1 billion

(6) Long-lived assets include property, plant and equipment, net for fiscal years 2023, and 2022 of $ 19,898 and $ 17,982 , respectively, and intangible assets and goodwill, net for fiscal years 2023 and 2022 of $ 70,733 and $ 74,536 , respectively.

Acquisitions and divestitures

In the fiscal first quarter of 2024, the Company announced it has entered into a definitive agreement to acquire Ambrx Biopharma, Inc., or Ambrx (Nasdaq:

AMAM), a clinical-stage biopharmaceutical company with a proprietary synthetic biology technology platform to design and develop next-generation antibody drug conjugates (ADCs), in an all-cash merger transaction for a total equity value of approximately $ 2.0 billion, or $ 1.9 billion net of estimated cash acquired.

The Company will acquire all of the outstanding shares of Ambrx’s common stock for $ 28.00 per share through a merger of Ambrx with a subsidiary of the Company.

The closing of the transaction is expected to occur in the first half of 2024, subject to receipt of Ambrx shareholder approval, as well as clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

The Company expects that the transaction will be accounted for as a business combination and the results of operations will be included in the Innovative Medicine segment as of the acquisition date.

During the fiscal year 2023, the Company did not make any acquisitions that qualified as a business combination.

During the fiscal year 2023, there were asset acquisitions of in-process research and development of approximately $ 0.5 billion in cash, primarily consisting of the acquisition of Laminar Inc.

for $ 0.4 billion which was closed on November 30, 2023.

is a privately-held medical device company focused on eliminating the left atrial appendage (LAA) in patients with non-valvular atrial fibrillation (AFib).

During the fiscal year 2022, certain businesses were acquired for $ 17.7 billion in cash and $ 1.1 billion of liabilities assumed.

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$ 10.00 per share payable upon the first publication of a Class I recommendation for the use of Impella® products in high risk PCI or STEMI with or without cardiogenic shock within four years from their respective clinical endpoint publication dates, but in all cases no later than December 31, 2029.

The fair value of the acquisition was allocated to assets acquired of $ 19.9 billion (net of $ 0.3 billion cash acquired), primarily to goodwill for $ 10.9 billion, amortizable intangible assets for $ 6.6 billion, IPR&D for $ 1.1 billion, marketable

securities of $ 0.6 billion and liabilities assumed of $ 2.8 billion, which includes the fair value of the contingent consideration mentioned above for $ 0.7 billion and deferred taxes of $ 1.8 billion.

During the fiscal fourth quarter of 2023, the Company finalized the purchase price allocation.

In the fiscal 2023, there were purchase price allocation adjustments netting to approximately $ 0.2 billion with an offsetting increase to goodwill.

The fair value of the acquisition was allocated to assets acquired of $ 20.1 billion (net of $ 0.3 billion cash acquired), primarily to goodwill for $ 11.1 billion, amortizable intangible assets for $ 6.6 billion, IPR&D for $ 1.1 billion, marketable securities of $ 0.6 billion and

liabilities assumed of $ 3.0 billion, which includes the fair value of the contingent consideration mentioned above for $ 0.7 billion and deferred taxes of $ 2.0 billion.

The goodwill is primarily attributable to the commercial acceleration and expansion of the portfolio and is not expected to be deductible for tax purposes.

The contingent consideration was recorded in Other Liabilities on the Consolidated Balance Sheet.

As the acquisition occurred in December 2022, the Company is still finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed.

The allocation of the purchase price included in the current period balance sheet is based on the best estimate of management and is preliminary and subject to change.

To assist management in the allocation, the Company engaged valuation specialists to prepare appraisals.

The Company will finalize the amounts recognized as the information necessary to complete the analysis is obtained.

The Company expects to finalize these amounts as soon as possible but no later than one year from the acquisition date.

The contingent consideration was recorded in Other Liabilities and adjusted to fair value through the fiscal year end 2023 on the Consolidated Balance Sheet.

The amortizable intangible assets were primarily comprised of already in-market products of the Impella® platform with an average weighted life of 14 years.

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The discount rate applied was 9.5 %.

In 2023, the Company recorded acquisition related costs before tax of approximately $ 0.2 billion, which was primarily recorded in Other (income)/expense.

In 2022, the Company recorded acquisition related costs before tax of approximately $ 0.3 billion, which was recorded in Other (income)/expense.

During fiscal year 2021, the Company did not make any material acquisitions.

During fiscal year 2020, certain businesses were acquired for $ 7.3 billion in cash and $ 0.4 billion of liabilities assumed.

These acquisitions were accounted for using the acquisition method and, accordingly, results of operations have been included in the financial statements from their respective dates of acquisition.

The excess of purchase price over the estimated fair value of tangible assets acquired amounted to $ 7.5 billion and has been assigned to identifiable intangible assets, with any residual recorded to goodwill.

The fiscal year 2020 acquisitions primarily included:

all rights to the investigational compound bermekimab, which has multiple dermatological indications, along with certain employees from XBiotech Inc.

(XBiotech), Momenta Pharmaceuticals, Inc.

(Momenta), a company that discovers and develops novel therapies for immune-mediated diseases and the outstanding shares in Verb Surgical Inc., a company with significant robotics and data science capabilities.

During the fiscal first quarter of 2020, the Company completed the acquisition of all rights to the investigational compound bermekimab, which has multiple dermatological indications, along with certain employees from XBiotech Inc., for a purchase price of $ 0.8 billion.

The fair value of the acquisition was allocated primarily to non-amortizable intangible assets, primarily IPR&D, for $ 0.8 billion applying a probability of success factor that ranged from 20 % to 60 % to reflect inherent development, regulatory and commercial risk for the different indications.

The discount rate applied was approximately 16 %.

The transaction was accounted for as a business combination and included in the Pharmaceutical segment.

In fiscal 2022, the Company recorded an intangible asset impairment charge of approximately $ 0.8 billion related to this in-process research and development asset.

Additionally, in the fiscal first quarter of 2020, the Company completed the acquisition of all outstanding shares in Verb Surgical Inc., a company with significant robotics and data science capabilities, including those shares previously held by Verily.

The transaction was accounted for as a business combination and included in the MedTech segment.

The fair value of the acquisition was allocated primarily to non-amortizable intangible assets, primarily IPR&D, for $ 0.4 billion, goodwill for $ 0.2 billion, other assets of $ 0.2 billion and liabilities assumed of $ 0.3 billion.

The fair value of the Company's previously held equity investment in Verb Surgical Inc.

was $ 0.4 billion.

On October 1, 2020, the Company completed the acquisition of Momenta for a purchase price of approximately $ 6.1 billion, net of cash acquired.

The fair value of the acquisition was allocated primarily to non-amortizable intangible assets (IPR&D) of $ 6.0 billion, goodwill of $ 1.2 billion, other assets of $ 0.5 billion and liabilities of $ 1.6 billion.

The assets acquired are intended to address substantial unmet medical need in maternal-fetal disorders, neuro-inflammatory disorders, rheumatology, dermatology and autoimmune hematology.

Depending on the asset, probability of success factors ranging from 20 % to 77 % were used in the fair value calculation to reflect inherent development and regulatory risk of the IPR&D.

The discount rate applied was approximately 13 %.

The goodwill is primarily attributable to synergies expected to arise from the business acquisition and is not expected to be deductible for tax purposes.

The transaction was accounted for as a business combination and included in the Pharmaceutical segment.

During fiscal year 2021, the Company did not make any material acquisitions that qualified as a business combination.

In accordance with U.S.

GAAP standards related to business combinations, and goodwill and other intangible assets, supplemental pro forma information for fiscal years 2023, 2022 and 2021 is not provided, as the impact of the aforementioned acquisitions did not have a material effect on the Company’s results of operations.

During the fiscal year 2023, the Company executed divestitures resulting in approximately $ 0.2 billion in proceeds resulting in gains or losses that were not material.

At fiscal year end 2023, the Company held assets, primarily intangibles, on its Consolidated Balance Sheet that it expects to divest of approximately $ 0.3 billion primarily related to Acclarent and Ponvory.

During fiscal year 2022, the Company did not make any material divestitures.

During fiscal year 2021, in separate transactions, the Company divested two brands outside the U.S.

within the Pharmaceutical segment.

within the Innovative Medicine segment.

The Company recognized a pre-tax gain recorded in Other (income) expense, net, of approximately $ 0.6 billion.

During fiscal year 2020, the Company sold 11.8 million shares of Idorsia LTD (Idorsia), or its 8.3 % ownership in the company at that time.

The transaction resulted in gross proceeds of approximately CHF 337 million ($ 357 million) based on a sales price of CHF 28.55 /share and resulted in an immaterial net loss.

At the end of fiscal 2020, the Company had rights to approximately 38.7 million shares through a convertible loan with a principal amount of CHF 445 million (due June 2027).

During fiscal year 2021, the Company converted CHF 110 million ($ 120 million) of this loan into approximately 9.6 million shares of Idorsia which were reflected at fair value as of January 2, 2022.

During the fiscal third quarter of 2021, the Company's undrawn credit facility with Idorsia was terminated.

Legal proceedings

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and other legal proceedings that arise from time to time in the ordinary course of their business.

The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated.

As of January 1, 2023, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated.

The Company has accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25.

The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability

will be incurred, and the amount of the loss can be reasonably estimated.

As of December 31, 2023, the Company has determined that the liabilities associated with certain litigation matters are probable and can be reasonably estimated.

For these and other litigation and regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to estimate the possible loss or range of loss beyond the amounts accrued.

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However, the resolution of, or increase in accruals for, one or more of these matters in any reporting period may have a material adverse effect on the Company’s results of operations and cash flows for that period.

2023 Annual Report

Matters concerning talc

A significant number of personal injury claims alleging that talc causes cancer have been asserted against Johnson & Johnson Consumer Inc., its successor LTL Management LLC (now known as LLT Management LLC) and the Company arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder.

In talc cases that previously have gone to trial, the Company has obtained a number of defense verdicts, but there also have been verdicts against the Company, many of which have been reversed on appeal.

In June 2020, the Missouri Court of Appeals reversed in part and affirmed in part a July 2018 verdict of $ 4.7 billion in Ingham v.

Johnson & Johnson, et al., No.

ED 207476 (Mo.

App.), reducing the overall award to $ 2.1 billion.

An application for transfer of the case to the Missouri Supreme Court was subsequently denied and in June 2021, a petition for certiorari, seeking a review of the Ingham decision by the United States Supreme Court, was denied.

In June 2021, the Company paid the award, which, including interest, totaled approximately $ 2.5 billion.

The facts and circumstances, including the terms of the award, were unique to the Ingham decision and not representative of other claims brought against the Company.

The Company continues to believe that it has strong legal grounds to contest the other talc verdicts that it has appealed.

Notwithstanding the Company’s confidence in the safety of its talc products, in certain circumstances the Company has settled cases.

In October 2021, Johnson & Johnson Consumer Inc.

(Old JJCI) implemented a corporate restructuring (the 2021 Corporate Restructuring).

As a result of that restructuring, Old JJCI ceased to exist and three new entities were created:

(a) LTL Management LLC, a North Carolina limited liability company (LTL or Debtor);

(b) Royalty A&M LLC, a North Carolina limited liability company and a direct subsidiary of LTL (RAM);

and (c) the Debtor’s direct parent, Johnson & Johnson Consumer Inc., a New Jersey company (New JJCI).

The Debtor received certain of Old JJCI’s assets and became solely responsible for the talc-related liabilities of Old JJCI, including all liabilities related in any way to injury or damage, or alleged injury or damage, sustained or incurred in the purchase or use of, or exposure to, talc, including talc contained in any product, or to the risk of, or responsibility for, any such damage or injury, except for any liabilities for which the exclusive remedy is provided under a workers’ compensation statute or act (the Talc-Related Liabilities).

In October 2021, notwithstanding the Company’s confidence in the safety of its talc products, the Debtor filed a voluntary petition with the United States Bankruptcy Court for the Western District of North Carolina, Charlotte Division, seeking relief under chapter 11 of the Bankruptcy Code (the LTL Bankruptcy Case).

All litigation against LTL, Old JJCI, New JJCI, the Company, other of their corporate affiliates, identified retailers, insurance companies, and certain other parties (the Protected Parties) was stayed, although LTL did agree to lift the stay on a small number of appeals where appeal bonds had been filed.

The LTL Bankruptcy Case was transferred to the United States Bankruptcy Court for the District of New Jersey.

Claimants filed motions to dismiss the LTL Bankruptcy Case and, following a multiple day hearing, the New Jersey Bankruptcy Court denied those motions in March 2022.

The claimants subsequently filed notices of appeal as to the denial of the motions to dismiss the LTL Bankruptcy Case and the extension of the stay to the Protected Parties.

On January 30, 2023, the Third Circuit reversed the Bankruptcy Court’s ruling and remanded to the Bankruptcy Court to dismiss the LTL bankruptcy.

LTL filed a petition for rehearing of the Third Circuit’s decision, which was denied in March 2023.

LTL subsequently filed a motion in the Third Circuit to stay the mandate directing the New Jersey Bankruptcy Court to dismiss the LTL bankruptcy pending filing and disposition of a petition for writ of certiorari to the United States Supreme Court.

The Third Circuit denied the motion to stay the mandate and issued the mandate.

In April 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to all parties and returning the talc litigation to the tort system.

LTL re-filed in the United States Bankruptcy Court for the District of New Jersey seeking relief under chapter 11 of the Bankruptcy Code (the LTL 2 Bankruptcy Case).

As a result of the new filing, all talc claims against LTL were again automatically stayed pursuant to section 362 of the Bankruptcy Code.

Additionally, the New Jersey Bankruptcy Court issued a temporary restraining order staying all litigation as to LTL, Old JJCI, New JJCI, the Company, identified retailers, and certain other parties (the New Protected Parties).

Also in April 2023, the New Jersey Bankruptcy Court issued a decision that granted limited injunctive relief to the Company and the New Protected Parties (the LTL 2 Preliminary Injunction).

The LTL 2 Preliminary Injunction remained in force until late August 2023, following the Bankruptcy Court’s extension of the initial LTL 2 Preliminary Injunction in June 2023.

Under the LTL 2 Preliminary Injunction, except for in those cases filed in the federal court ovarian cancer multi-district litigation, discovery in all personal injury and wrongful death matters was permitted to proceed.

Furthermore, in April 2023, the Talc Claimants' Committee filed a motion to dismiss the LTL 2 Bankruptcy followed by similar motions from other claimants.

Hearings on the motions to dismiss occurred in June 2023.

On July 28, 2023, the court dismissed the LTL 2 Bankruptcy case and, the same day, the Company stated its intent to appeal the decision and to continue its efforts to obtain a resolution of the talc claims.

In September 2023, the Bankruptcy Court entered an order granting LTL leave to seek a direct appeal to the Third Circuit Court of Appeals.

In October 2023, the Third Circuit granted LTL’s petition for a direct appeal.

Briefing is ongoing.

Following the dismissal of LTL 2, new lawsuits were filed and cases across the country that had been stayed were reactivated.

The majority of the cases are pending in federal court, organized in a multi-district litigation (MDL) in the United States District Court for the District of New Jersey.

In the MDL, case-specific discovery is proceeding with an expectation that a trial will occur in early 2025.

Separately, discovery and pre-trial activity is underway in various individually filed and set cases around the country, with most activity for such cases centralized in New Jersey and California.

In the original bankruptcy case, the Company agreed to provide funding to LTL for the payment of amounts the New Jersey Bankruptcy Court determines are owed by LTL and the establishment of a $ 2 billion trust in furtherance of this purpose.

The Company established a reserve for approximately $ 2 billion in connection with the aforementioned trust.

During the bankruptcy proceedings LTL had been de-consolidated by the Company.

In the LTL 2 Bankruptcy Case, the Company had agreed to contribute an additional amount which, when added to the prior $ 2 billion, would be a total reserve of approximately $ 9 billion payable over 25 years (nominal value approximately $ 12 billion discounted at a rate of 4.41 %), to resolve all the current and future talc claims.

The approximate $ 9 billion reserve encompasses actual and contemplated settlements, of which approximately one-third is recorded as a current liability.

The recorded amount remains the Company’s best estimate of probable loss after the dismissal.

The parties have not yet reached a resolution of all talc matters and the Company is unable to estimate the possible loss or range of loss beyond the amount accrued.

A class action advancing claims relating to industrial talc was filed against the Company and others in New Jersey state court in May 2022 (the Edley Class Action).

The Edley Class Action asserts, among other things, that the Company fraudulently defended past asbestos personal injury lawsuits arising from exposure to industrial talc mined, milled, and manufactured before January 6, 1989 by the Company’s then wholly owned subsidiary, Windsor Minerals, Inc., which is currently a debtor in the Imerys Bankruptcy described hereafter.

The Company removed the Edley Class Action to federal court in the District of New Jersey.

In October 2022, the Company filed motions to dismiss and to deny certification of a class to pursue the Edley Class Action in the New Jersey District Court.

Argument on the motions was heard in November 2023.

Thereafter, the Company resolved this matter.

In February 2019, the Company’s talc supplier, Imerys Talc America, Inc.

and two of its affiliates, Imerys Talc Vermont, Inc.

and Imerys Talc Canada, Inc.

(collectively, Imerys) filed a voluntary petition for relief under chapter 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (Imerys Bankruptcy).

The Imerys Bankruptcy relates to Imerys’s potential liability for personal injury from exposure to talcum powder sold by Imerys.

In its bankruptcy, Imerys alleges it has claims against the Company for indemnification and rights to joint insurance proceeds.

In its bankruptcy, Imerys proposed a chapter 11 plan (the Imerys Plan) that contemplated all talc-related claims against it being channeled to a trust along with its alleged indemnification rights against the Company.

Following confirmation and consummation of the plan, the trust would pay talc claims pursuant to proposed trust distribution procedures (the TDP) and then seek indemnification from the Company.

In February 2021, Cyprus Mines Corporation (Cyprus), which had owned certain Imerys talc mines, filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code and filed its Disclosure Statement and Plan (the Cyprus Plan).

The Cyprus Plan contemplates a settlement with Imerys and talc claimants where Cyprus would make a monetary contribution to a trust established under the Imerys Plan in exchange for an injunction against talc claims asserted against it and certain affiliated parties.

The Imerys Plan proceeded to solicitation in early 2021.

However, the Imerys Plan did not receive the requisite number of votes to be confirmed after the Bankruptcy Court ruled certain votes cast in favor of the Imerys Plan should be disregarded.

Imerys subsequently canceled its confirmation hearing.

Imerys, the Imerys Tort Claimants’ Committee, and the Imerys Future Claimants’ Representative, along with Cyprus, the Cyprus Tort Claimants’ Committee, and the Cyprus Future Claimants’ Representative (collectively the Mediation Parties) have been engaged in mediation since shortly after the confirmation hearing was canceled in October 2021.

In September 2023, the Bankruptcy Court entered an order extending the term of the mediation among the Mediation Parties through the end of December 2023.

The Bankruptcy Court also authorized Imerys and Cyprus to proceed with mediation with certain of their insurers through the end of December 2023.

In September 2023, Imerys and Cyprus filed amended plans of reorganization.

The amended plans contemplate a similar construct as the prior Imerys and Cyprus Plans, including all talc claims against Imerys and Cyprus (and certain other protected parties) being channeled to a trust along with Imerys’s and Cyprus’s alleged indemnification rights against the Company.

In January 2024, Imerys and Cyprus filed revised TDP.

In February 2024, Imerys and Cyprus filed certain motions related to their Disclosure Statement.

In February 2018, a securities class action lawsuit was filed against the Company and certain named officers in the United States District Court for the District of New Jersey, alleging that the Company violated the federal securities laws by failing to disclose alleged asbestos contamination in body powders containing talc, primarily JOHNSON’S Baby Powder, and that purchasers of the Company’s shares suffered losses as a result.

In April 2019, the Company moved to dismiss the complaint.

2023 Annual Report

December 2019, the Court denied, in part, the motion to dismiss.

In April 2021, briefing on Plaintiff’s motion for class certification was completed.

The case was stayed in May 2022 pursuant to the LTL Bankruptcy Case and was reopened in May 2023.

In December 2023, the Court granted Plaintiff’s motion for class certification.

In January 2024, Defendants filed a petition with the Third Circuit under Federal Rule of Civil Procedure 23(f) for permission to appeal the Court’s order granting class certification.

Fact discovery is proceeding.

A lawsuit was brought against the Company in the Superior Court of California for the County of San Diego alleging violations of California’s Consumer Legal Remedies Act (CLRA) relating to JOHNSON’S Baby Powder.

In that lawsuit, the plaintiffs allege that the Company violated the CLRA by failing to provide required Proposition 65 warnings.

In July 2019, the Company filed a notice of removal to the United States District Court for the Southern District of California and plaintiffs filed a second amended complaint shortly thereafter.

In October 2019, the Company moved to dismiss the second amended complaint for failure to state a claim upon which relief may be granted.

In response to those motions, plaintiffs filed a third amended complaint.

In December 2019, the Company moved to dismiss the third amended complaint for failure to state a claim upon which relief may be granted.

In April 2020, the Court granted the motion to dismiss but granted leave to amend.

In May 2020, plaintiffs filed a Fourth Amended Complaint but indicated that they would be filing a motion for leave to file a fifth amended complaint.

Plaintiffs filed a Fifth Amended Complaint in August 2020.

The Company moved to dismiss the Fifth Amended Complaint for failure to state a claim upon which relief may be granted.

In January 2021, the Court issued an Order and opinion ruling in the Company’s favor and granting the motion to dismiss with prejudice.

In February 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit.

Plaintiffs filed their opening brief in July 2021.

The company filed its responsive brief in October 2021.

After the Notice of Suggestion of Bankruptcy was filed with the Ninth Circuit, a stay was imposed, and the Court held the reply deadline in abeyance.

In September 2023, the stay lifted.

With briefing complete, the Court is expected to either schedule oral argument or issue its decision at any time.

In June 2014, the Mississippi Attorney General filed a complaint in Chancery Court of The First Judicial District of Hinds County, Mississippi against the Company and Johnson & Johnson Consumer Companies, Inc.

(now known as Johnson & Johnson Consumer Inc.) (collectively, JJCI).

The complaint alleges that JJCI violated the Mississippi Consumer Protection Act by failing to disclose alleged health risks associated with female consumers’ use of talc contained in JOHNSON’S Baby Powder and JOHNSON’S Shower to Shower (a product divested in 2012) and seeks injunctive and monetary relief.

In February 2022, the trial court set the case for trial to begin in February 2023.

However, in October 2022, the LTL bankruptcy court issued an order staying the case.

In March 2023, the Third Circuit issued the mandate to dismiss the LTL Bankruptcy Case and in April 2023, the New Jersey Bankruptcy Court dismissed the LTL Bankruptcy Case, effectively lifting the stay as to this matter.

The State requested a new trial setting.

Later in April 2023, the trial court set a new trial date for April 2024.

The Company filed summary judgment and Daubert motions.

The State filed a limited Daubert motion.

The parties agreed to the Court's request for mediation.

A pretrial conference is set for February 2024 and trial is scheduled for April 2024.

However, the Company is actively engaged in resolution discussions concerning this matter.

In January 2020, the State of New Mexico filed a consumer protection case alleging that the Company deceptively marketed and sold its talcum powder products by making misrepresentations about the safety of the products and the presence of carcinogens, including asbestos.

In March 2022, the New Mexico court denied the Company’s motion to compel the State of New Mexico to engage in discovery of state agencies and denied the Company’s request for interlocutory appeal of that decision.

The Company then filed a Petition for Writ of Superintending Control and a Request for a Stay to the New Mexico Supreme Court on the issue of the State of New Mexico’s discovery obligations.

In April 2022, in view of the efforts to resolve talc-related claims in the LTL Bankruptcy Case, the Company and the State agreed to a 60-day stay of all matters except for the pending writ before the New Mexico Supreme Court, which expired in June 2022.

Thereafter, the Company moved to enjoin prosecution of the case in the LTL Bankruptcy Case.

In October 2022, the bankruptcy court issued an order staying the case.

In December 2022, the State filed an appeal to the Third Circuit concerning the stay order.

Separately, in September 2022, the New Mexico Supreme Court granted the Company's request for a stay pending further briefing on the scope of the State of New Mexico’s discovery obligations.

While the State notified the New Mexico Supreme Court of the lifted stay of litigation in April 2023, the Court has not taken any action since being notified of the lifting of the stay and it remains in effect.

Forty-two states and the District of Columbia (including Mississippi and New Mexico) have commenced a joint investigation into the Company’s marketing of its talcum powder products.

At this time, the multi-state group has not asserted any claims against the Company.

Five states have issued Civil Investigative Demands seeking documents and other information.

The Company has produced documents to Arizona, North Carolina, Texas, and Washington and entered into confidentiality agreements.

The Company has not received any follow up requests from those states.

In March 2022, each of the forty-two states agreed to mediation of their claims in the LTL Bankruptcy Case.

In July 2022, New Mexico and Mississippi indicated they would no longer voluntarily submit to further mediation in the LTL Bankruptcy and would proceed with their respective cases in state court.

In March 2023, the mediation was terminated.

In January 2024, the Company reached an agreement in principle with the multi-state group of state Attorneys General, subject to ongoing negotiation of non-monetary terms.

The unique procedural history and status of the New Mexico and Mississippi matters specifically have been discussed above.

In addition, the Company has received inquiries, subpoenas, and requests to produce documents regarding talc matters and the LTL Bankruptcy Case from various governmental authorities.

The Company has produced documents and responded to inquiries, and will continue to cooperate with government inquiries.

Matters concerning opioids

Beginning in 2014 and continuing to the present, the Company and Janssen Pharmaceuticals, Inc.

(JPI), along with other pharmaceutical companies, have been named in close to 3,500 lawsuits related to the marketing of opioids, including DURAGESIC, NUCYNTA and NUCYNTA ER.

The majority of the cases have been filed by state and local governments.

Similar lawsuits have also been filed by private plaintiffs and organizations, including but not limited to the following:

individual plaintiffs on behalf of children born with Neonatal Abstinence Syndrome (NAS);

and health insurers/payors.

To date, the Company and JPI have litigated two of the cases to judgment and have prevailed in both, either at trial or on appeal.

In October 2019, the Company announced a proposed agreement in principle with a negotiating committee of state Attorneys General to settle all remaining government opioid litigation claims nationwide.

Under the final national settlement agreement, which was announced in July 2021, the Company agreed to pay up to $ 5.0 billion to resolve all opioid lawsuits and future opioid claims by states, cities, counties, local school districts and other special districts, and tribal governments, contingent on sufficient participation by eligible government entities, and with credits back for entities that declined or were ineligible to participate.

In July 2021, the Company announced that the terms of the agreement to settle the state and subdivision claims had been finalized and approximately 60 % of the all-in settlement was paid by the end of fiscal 2023.

The expected payment schedule provides that approximately $ 0.7 billion of payments are to be paid by the end of fiscal 2024.

The agreement is not an admission of liability or wrongdoing, and it provides for the release of all opioid-related claims against the Company, JPI, and their affiliates (including the Company’s former subsidiaries Tasmanian Alkaloids Pty, Ltd.

and Noramco, Inc.).

As of January 2024, the Company and JPI have settled or otherwise resolved the opioid claims advanced by all government entity claimants except the City of Baltimore, a number of school districts and other claimants.

The Company and JPI continue to defend the cases brought by the remaining government entity litigants as well as the cases brought by private litigants, including NAS claimants, hospitals, and health insurers/payors.

Counting the private litigant cases, there are approximately 35 remaining opioid cases against the Company and JPI in various state courts, 430 remaining cases in the Ohio MDL, and 4 additional cases in other federal courts.

Some of these cases have been dismissed and are being appealed by the plaintiffs and certain others are scheduled for trial in 2024 or 2025.

In addition, the Province of British Columbia filed suit against the Company and its Canadian affiliate Janssen Inc., and many other industry members, in Canada, and is seeking to have that action certified as an opt in class action on behalf of other provincial/territorial and the federal governments in Canada.

Additional proposed class actions have been filed in Canada against the Company and Janssen Inc., and many other industry members, by and on behalf of people who used opioids (for personal injuries), municipalities and First Nations bands.

These actions allege a variety of claims related to opioid marketing practices, including false advertising, unfair competition, public nuisance, consumer fraud violations, deceptive acts and practices, false claims and unjust enrichment.

An adverse judgment in any of these lawsuits could result in the imposition of large monetary penalties and significant damages including, punitive damages, cost of abatement, substantial fines, equitable remedies and other sanctions.

From June 2017 through December 2019, the Company’s Board of Directors received a series of shareholder demand letters alleging breaches of fiduciary duties related to the marketing of opioids.

The Board retained independent counsel to investigate the allegations in the demands, and in April 2020, independent counsel delivered a report to the Board recommending that the Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of related derivative litigation.

The Board unanimously adopted the recommendations of the independent counsel’s report.

In November 2019, one of the shareholders who sent a demand filed a derivative complaint against the Company as the nominal defendant and certain current and former directors and officers as defendants in the Superior Court of New Jersey.

The complaint alleges breaches of fiduciary duties related to the marketing of opioids, and that the Company has suffered damages as a result of those alleged breaches.

A series of additional derivative complaints making similar allegations against the same and similar defendants were filed in New Jersey state and federal courts in 2019 and 2020.

By 2022, all but two state court cases had been voluntarily dismissed.

In February 2022, the state court granted the Company’s motion to dismiss one of the two cases, and the shareholder that brought the second case filed a notice of dismissal.

The shareholder whose complaint was dismissed filed a motion for reconsideration.

In May 2022, the state court held oral argument on the motion for reconsideration and subsequently denied the motion.

The shareholder has appealed the state court’s dismissal order.

2023 Annual Report

Product liability

3 unchanged sentences

From time to time, even if it has substantial defenses, the Company considers isolated settlements based on a variety of circumstances.

The Company has established accruals for product liability claims and lawsuits in compliance with ASC 450-20 based on currently available information, which in some cases may be limited.

The Company accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be reasonably estimated.

2 unchanged sentences

Changes to the accruals may be required in the future as additional information becomes available.

The most significant of these cases include:

the DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System;

the PINNACLE Acetabular Cup System;

pelvic meshes;

The table below contains the most significant of these cases and provides the approximate number of plaintiffs in the United States with direct claims in pending lawsuits regarding injuries allegedly due to the relevant product or product category as of December 31, 2023:

Product or product category Number of plaintiffs

Body powders containing talc, primarily JOHNSON’S Baby Powder 59,140

DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System 160

PINNACLE Acetabular Cup System 920

Pelvic meshes 6,720

ETHICON PHYSIOMESH Flexible Composite Mesh 370

As of January 1, 2023, in the United States there were approximately 170 plaintiffs with direct claims in pending lawsuits regarding injuries allegedly due to the DePuy ASR XL Acetabular System and DePuy ASR Hip Resurfacing System;

1,400 with respect to the PINNACLE Acetabular Cup System;

9,000 with respect to pelvic meshes;

1,100 with respect to RISPERDAL;

40,300 with respect to body powders containing talc;

2,100 with respect to ETHICON PHYSIOMESH Flexible Composite Mesh;

2,000 with respect to ELMIRON;

and 170 with respect to TYLENOL.

RISPERDAL 200

ELMIRON 2,150

The number of pending lawsuits is expected to fluctuate as certain lawsuits are settled or dismissed and additional lawsuits are filed.

There may be additional claims that have not yet been filed.

DePuy ASR XL Acetabular System and ASR Hip Resurfacing System

In August 2010, DePuy Orthopaedics, Inc.

11 unchanged sentences

The Company has established accruals for the costs associated with the United States settlement program and ASR Hip-related product liability litigation.

DePuy PINNACLE Acetabular Cup System

Claims for personal injury have also been made against DePuy Orthopaedics, Inc.

1 unchanged sentence

Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.

Most cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Northern District of Texas (Texas MDL).

Most cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States

District Court for the Northern District of Texas (Texas MDL).

Beginning on June 1, 2022, the Judicial Panel on Multidistrict Litigation ceased transfer of new cases into the Texas MDL, and there are now cases pending in federal court outside the Texas MDL.

Litigation also has been filed in state courts and in countries outside of the United States.

Prior to 2019, several adverse verdicts had been rendered against DePuy, one of which was reversed on appeal and remanded for retrial.

During the first quarter of 2019, DePuy established a United States settlement program to resolve these cases.

1 unchanged sentence

The Company has established an accrual for product liability litigation associated with the PINNACLE Acetabular Cup System and the related settlement program.

Ethicon Pelvic Mesh

Claims for personal injury have been made against Ethicon, Inc.

7 unchanged sentences

In November 2019, the Federal Court of Australia issued a judgment regarding its findings with respect to liability in relation to the three Lead Applicants and generally in relation to the design, manufacture, pre and post-market assessments and testing, and supply and promotion of the devices in Australia used to treat stress urinary incontinence and pelvic organ prolapse.

In September 2022, after exhausting its appeals, the Company reached an in-principle agreement to resolve the two pelvic mesh class actions in Australia, pending Federal Court approval.

In November 2022, the application for approval of the settlement was filed, and a hearing on the settlement has been scheduled for the end of February 2023.

In September 2022, after exhausting its appeals, the Company reached an in-principle agreement to resolve the two pelvic mesh class actions in Australia and in March 2023 the Federal Court approved the settlement.

The class actions in Canada were discontinued in 2020 as a result of a settlement of a group of cases and an agreement to resolve the Israeli class action was reached in May 2021.

2 unchanged sentences

The Company has established accruals with respect to product liability litigation associated with Ethicon’s pelvic mesh products.

Ethicon Physiomesh

Following a June 2016 worldwide market withdrawal of Ethicon Physiomesh Flexible Composite Mesh (Physiomesh), claims for personal injury have been made against Ethicon, Inc.

2 unchanged sentences

A multi-county litigation (MCL) also has been formed in New Jersey state court and assigned to Atlantic County for cases pending in New Jersey.

In addition to the matters in the MDL and MCL, there are additional lawsuits pending in the United States District Court for the Southern District

of Ohio, which are part of the MDL for polypropylene mesh devices manufactured by C.R.

In addition to the matters in the MDL and MCL, there are additional lawsuits pending in the United States District Court for the Southern District of Ohio, which are part of the MDL for polypropylene mesh devices manufactured by C.R.

Bard, Inc., and lawsuits pending in two New Jersey MCLs formed for Proceed/Proceed Ventral Patch and Prolene Hernia systems, and lawsuits pending outside the United States.

3 unchanged sentences

Of the cases subject to the MSA, 3,390 have been dismissed with prejudice.

Ethicon has received releases from 3,584 plaintiffs, and releases continue to be submitted as part of the settlement process.

Post-settlement cases in the Physiomesh MDL and MCL are subject to docket control orders requiring early expert reports and discovery requirements.

As of January 2023, there are approximately 208 active cases subject to these orders which are being reviewed and evaluated.

In May 2023, Ethicon entered an additional settlement to resolve the claims of 292 Physiomesh claimants.

That settlement is proceeding, and releases are being returned.

As of December 31, 2023, there were 5 Physiomesh cases in the MDL and 3 in the New Jersey MCL which are not included in either settlement and which remain subject to the docket control orders.

Claims have also been filed against Ethicon and the Company alleging personal injuries arising from the PROCEED Mesh and PROCEED Ventral Patch hernia mesh products.

4 unchanged sentences

Cases involving this product have also been filed in other federal and state courts in the United States.

In October 2022, an agreement in principle, subject to various conditions, was reached to settle the majority of the pending cases involving Proceed, Proceed Ventral Patch, Prolene Hernia System and related multi-layered mesh products.

All litigation activities in the two New Jersey MCLs are stayed pending resolution of the proposed settlement.

All litigation activities in the two New Jersey MCLs are stayed pending effectuation of the proposed settlement.

Future cases that are filed in the New Jersey MCLs will be subject to docket control orders requiring early expert reports and discovery requirements.

2023 Annual Report

The Company has established accruals with respect to product liability litigation associated with Ethicon Physiomesh Flexible Composite Mesh, PROCEED Mesh and PROCEED Ventral Patch, and PROLENE Polypropylene Hernia System products.

Innovative Medicine

Claims for personal injury have been made against Janssen Pharmaceuticals, Inc.

6 unchanged sentences

The costs associated with this and other settlements are reflected in the Company’s accruals.

Claims for personal injury arising out of the use of XARELTO, an oral anticoagulant, have been made against Janssen Pharmaceuticals, Inc.

and JPI’s collaboration partner for XARELTO, Bayer Healthcare AG, and certain of its affiliates.

Cases filed in federal courts in the United States have been organized as a multi-district litigation in the United States District Court for the Eastern District of Louisiana.

In addition, cases were filed in state courts across the United States.

Many of these cases were consolidated into a state mass tort litigation in Philadelphia, Pennsylvania and in a coordinated proceeding in Los Angeles, California.

Class action lawsuits also have been filed in Canada.

In March 2019, JPI and the Company announced an agreement in principle to settle the XARELTO cases in the United States;

the settlement agreement was executed in May 2019, the settlement became final in December 2019, and the settlement was funded in January 2020.

This resolved the majority of cases pending in the United States.

The Company has established accruals for its costs associated with the United States settlement program and XARELTO related product liability litigation.

A significant number of personal injury claims alleging that talc causes cancer were made against Johnson & Johnson Consumer Inc.

and the Company arising out of the use of body powders containing talc, primarily JOHNSON’S Baby Powder.

The number of these personal injury lawsuits, filed in state and federal courts in the United States as well as outside of the United States, continued to increase.

In June 2020, the Missouri Court of Appeals reversed in part and affirmed in part a July 2018 verdict of $ 4.7 billion in Ingham v.

Johnson & Johnson, et al., No.

ED 207476 (Mo.

App.), reducing the overall award to $ 2.1 billion.

An application for transfer of the case to the Missouri Supreme Court

was subsequently denied and in June 2021, a petition for certiorari, seeking a review of the Ingham decision by the United States Supreme Court, was denied.

In June 2021, the Company paid the award, which, including interest, totaled approximately $ 2.5 billion.

The facts and circumstances, including the terms of the award, were unique to the Ingham decision and not representative of other claims brought against the Company.

The Company continues to believe that it has strong legal grounds to contest the other talc verdicts that it has appealed.

Notwithstanding the Company’s confidence in the safety of its talc products, in certain circumstances the Company has settled cases.

In October 2021, Johnson & Johnson Consumer Inc.

(Old JJCI) implemented a corporate restructuring (the 2021 Corporate Restructuring).

As a result of that restructuring, Old JJCI ceased to exist and three new entities were created:

(a) LTL Management LLC, a North Carolina limited liability company (LTL or Debtor);

(b) Royalty A&M LLC, a North Carolina limited liability company and a direct subsidiary of LTL (RAM);

and (c) the Debtor’s direct parent, Johnson & Johnson Consumer Inc., a New Jersey company (New JJCI).

As a result of the LTL Bankruptcy Case, the North Carolina Bankruptcy Court entered a temporary restraining order staying all litigation against LTL and Old JJCI.

On November 15, 2021, the North Carolina Bankruptcy Court confirmed the scope of the stay, issuing a Preliminary Injunction (PI) prohibiting and enjoining the commencement and prosecution of talc-related claims against LTL, Old JJCI, New JJCI, the Company, other of their corporate affiliates, identified retailers, insurance companies, and certain other parties (the Protected Parties).

The LTL Bankruptcy Case was transferred to the United States Bankruptcy Court for the District of New Jersey in November 2021, and that court extended the PI through the end of February 2022.

Claimants filed motions to dismiss the LTL Bankruptcy Case and, following a multiple day hearing, the New Jersey Bankruptcy Court denied those motions by order issued in March 2022.

The New Jersey Bankruptcy Court simultaneously issued another order extending the stay as to the Protected Parties.

The claimants subsequently filed notices of appeal as to the denial of the motions to dismiss and the extension of the stay.

In May 2022, the Third Circuit Court of Appeals granted the petitions to appeal.

The briefing and oral argument on the appeal were completed in September 2022.

On January 30, 2023, the Third Circuit reversed the Bankruptcy Court’s ruling and remanded to the Bankruptcy Court to dismiss the LTL bankruptcy.

LTL filed a petition for rehearing on the decision.

While the New Jersey Bankruptcy Court’s order effectively stays all of the Company’s talc-related personal injury litigation, LTL has agreed to lift the stay on a small number of appeals where appeal bonds have been filed.

The Company has agreed to provide funding to LTL for the payment of amounts the New Jersey Bankruptcy Court determines are owed by LTL and the establishment of a $ 2 billion trust in furtherance of this purpose.

The Company has established a reserve for approximately $ 2 billion in connection with the aforementioned trust.

After and as a result of the filing of the LTL Bankruptcy Case, the Company de-consolidated LTL, which is a related party.

The impact of the de-consolidation is not material to the Company.

The parties have not yet reached a resolution of all talc matters in the LTL Bankruptcy Case, and the Company is unable to estimate the possible loss or range of loss beyond the amount accrued.

A class action advancing claims relating to industrial talc was filed against the Company and others in New Jersey state court in May 2022 (the Edley Class Action).

The Company removed the Edley Class Action to federal court in the District of New Jersey.

In July 2022, Imerys filed a motion in the Imerys Bankruptcy to stay the Edley Class Action, which was denied in August 2022.

In October 2022, the Company filed motions to dismiss and to deny certification of a class to pursue the Edley Class Action in the New Jersey District Court.

In February 2019, the Company’s talc supplier, Imerys Talc America, Inc.

and two of its affiliates, Imerys Talc Vermont, Inc.

and Imerys Talc Canada, Inc.

(collectively, Imerys) filed a voluntary petition under chapter 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (Imerys Bankruptcy).

The Imerys Bankruptcy relates to Imerys’s potential liability for personal injury from exposure to talcum powder sold by Imerys.

In its bankruptcy, Imerys alleges it has claims against the Company for indemnification and rights to joint insurance proceeds.

In May 2020, Imerys, its parent Imerys S.A., the Tort Claimants’ Committee (TCC), and the Future Claimants’ Representative (FCR) (collectively, the Plan Proponents) filed their Plan of Reorganization (the Plan) and the Disclosure Statement related

The Plan Proponents have since filed numerous amendments to the Plan and Disclosure Statement.

A hearing on the Plan Proponent’s Disclosure Statement was held in January 2021, and the Court entered an order approving the Disclosure Statement, allowing Imerys to proceed with soliciting votes on the Plan.

In March 2021, the Company voted to reject the Plan and opted out of the consensual releases in the Plan.

In April 2021, the Plan Proponents announced the Plan had received the requisite number of accepting votes to confirm the Plan.

The Company challenged certain improprieties with respect to portions of the vote and sought to disqualify those votes.

In October 2021, the Bankruptcy Court issued a ruling deeming thousands of votes as withdrawn.

In October 2021, Imerys cancelled the confirmation hearing on the Plan.

Imerys, the TCC, the FCR, certain of Imerys’s insurers, and certain parties in the Cyprus Mines chapter 11 case (described below) (collectively the Mediation Parties) agreed to engage in mediation.

The most recent term of the mediation ended on December 31, 2022.

In July 2021, Imerys commenced an adversary proceeding against the Company in the Imerys Bankruptcy (the Imerys Adversary Proceeding).

The Imerys Adversary Proceeding sought, among other things, certain declarations with respect to the indemnification obligations allegedly owed by the Company to Imerys.

The TCC and FCR simultaneously filed a motion for temporary restraining order and preliminary injunction seeking to enjoin the Company from undergoing a corporate restructuring that would separate the Company’s talc liabilities from its other assets.

The Bankruptcy Court denied the motion.

The Company thereafter filed a motion to dismiss the adversary proceeding.

The Bankruptcy Court has not yet decided the motion to dismiss.

In October 2021, the Company filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Imerys Adversary Proceeding.

In June 2020, Cyprus Mines Corporation and its parent, Cyprus Amax Minerals Company (CAMC) (together, Cyprus), which had owned certain Imerys talc mines, filed an adversary proceeding against the Company and Imerys in the Imerys Bankruptcy seeking a declaration of indemnity rights under certain contractual agreements (the Cyprus Adversary Proceeding).

The Company denies such indemnification is owed, and filed a motion to dismiss the adversary complaint.

In February 2021, Cyprus filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code and filed its Disclosure Statement and Plan (the Cyprus Plan).

Cyprus has not yet sought approval of its Disclosure Statement and Plan.

Cyprus, along with the TCC and FCR appointed in the Cyprus chapter 11 case, have agreed to participate in the mediation with the Mediation Parties.

In June 2022, Cyprus commenced an Adversary Proceeding in its chapter 11 case seeking an order enforcing the automatic stay by enjoining parties from commencing or continuing “talc-related claims” against CAMC.

In June 2022, the court entered a preliminary injunction order enjoining claimants from pursuing talc-related claims against CAMC through January 2023.

In February 2021, several of the Company’s insurers involved in coverage litigation in New Jersey State Court (the Coverage Action) filed a motion in the Imerys Bankruptcy Court proceeding seeking a determination that the automatic stay does not apply to the Coverage Action and, in the alternative, seeking relief from the automatic stay to allow them to continue to litigate their claims in the Coverage Action.

In March 2021, the Company filed a limited response and reservation of rights with respect to the motion.

The Court entered an agreed order modifying the stay to allow the litigation in the Coverage Action to continue.

In October 2021, LTL filed a Notice of Bankruptcy Filing and Stay of Proceedings clarifying that the automatic stay arising upon the filing of the LTL Bankruptcy Case should apply to the Coverage Action.

In March 2022, the New Jersey Bankruptcy Court ruled that the LTL automatic stay applied to the Coverage Action.

Plaintiff is seeking damages.

In April 2019, the Company moved to dismiss the complaint and briefing on the motion was complete as of August 2019.

In December 2019, the Court denied, in part, the motion to dismiss.

In March 2020, the Company answered the complaint.

In April 2021, briefing on Plaintiff’s motion for class certification was completed.

In July 2021, the Company filed a notice of supplemental authority in opposition to Plaintiff’s motion for class certification, and Plaintiff filed a response.

In December 2021, the Company filed a motion to supplement the class certification record, and in January 2022, Plaintiff responded.

In March 2022, LTL asked the New Jersey Bankruptcy Court to stay the securities class action.

In April 2022, Defendants filed a second motion to supplement the class certification record.

In May 2022, the New Jersey Bankruptcy Court entered an order staying the securities class action.

Plaintiff has appealed the Bankruptcy Court’s order.

In that lawsuit, the plaintiffs allege that the Company violated the CLRA by failing to provide required Proposition 65 warnings.

In July 2019, the Company filed a notice of removal to the United States District Court for the Southern District of California and plaintiffs filed a second amended complaint shortly thereafter.

In October 2019, the Company moved to dismiss the second amended complaint for failure to state a claim upon which relief may be granted.

In response to those motions, plaintiffs filed a third amended complaint.

In December 2019, the Company moved to dismiss the third amended complaint for failure to state a claim upon which relief may be granted.

In April 2020, the Court granted the motion to dismiss but granted leave to amend.

In May 2020, plaintiffs filed a Fourth Amended Complaint but indicated that they would be filing a motion for leave to file a fifth amended complaint.

Plaintiffs filed a Fifth Amended Complaint in August 2020.

The Company moved to dismiss the Fifth Amended Complaint for failure to state a claim upon which relief may be granted.

In January 2021, the Court issued an Order and opinion ruling in the Company’s favor and granting the motion to dismiss with prejudice.

In February 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit.

Plaintiffs filed their opening brief in July 2021.

The company filed its responsive brief in October 2021.

In October 2021, Notice of Suggestion of Bankruptcy was filed with the Ninth Circuit.

A bankruptcy stay was imposed in December 2021, and the Court held the reply deadline in abeyance.

In February 2022, the Bankruptcy Court issued an order extending the stay.

The appeal continues to be held in abeyance, with the Company being required to file periodic status updates.

In addition, the Company has received inquiries, subpoenas, and requests to produce documents regarding talc matters and the LTL Bankruptcy Case from various governmental authorities.

The Company has produced documents and responded to inquiries, and will continue to cooperate with government inquiries.

Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen Pharmaceuticals, Inc.

and the Company, arising out of the use of INVOKANA, a prescription medication indicated to improve glycemic control in adults with Type 2 diabetes.

In December 2016, lawsuits filed in federal courts in the United States were organized as a multi-district litigation in the United States District Court for the District of New Jersey.

Cases have also been filed in state courts.

Class action lawsuits have been filed in Canada.

Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.

The Company has settled or otherwise resolved many of the cases and claims in the United States and the costs associated with these settlements are reflected in the Company’s accruals.

Claims for personal injury have been made against a number of Johnson & Johnson companies, including Janssen Pharmaceuticals, Inc.

and the Company, arising out of the use of ELMIRON, a prescription medication indicated for the relief of bladder pain or discomfort associated with interstitial cystitis.

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In December 2020, lawsuits filed in federal courts in the United States, including putative class action cases seeking medical monitoring, were organized as a multi-district litigation in the United States District Court for the District of New Jersey.

All cases in the multi-district litigation are in active discussions regarding resolution, and as a result, all activity is stayed.

In addition, cases have been filed in various state courts of New Jersey, which have been coordinated in a multi-county litigation in Bergen County, as well as the Court of Common Pleas in Philadelphia, which have been coordinated and granted mass tort designation.

No activity has taken place in the New Jersey state court litigation;

however, three bellwether trials have been set in Philadelphia for March, April and May 2024.

In addition, three class action lawsuits have been filed in Canada.

1 unchanged sentence

The Company has established accruals for defense and indemnity costs associated with ELMIRON related product liability litigation.

Claims for personal injury have been made against Johnson and Johnson Consumer Inc.

(JJCI), arising out of the use of TYLENOL, an over-the-counter pain medication, alleging that prenatal exposure to acetaminophen is associated with the development of autism spectrum disorder and/or attention-deficit/hyperactivity disorder.

In October 2022, lawsuits filed in federal courts in the United States were organized as a multi-district litigation in the United States District Court for the Southern District of New York.

In addition, lawsuits have been filed in Canada.

Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.

The Company has established accruals for defense costs associated with TYLENOL related product liability litigation.

Intellectual property

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Although these subsidiaries believe that they have substantial defenses to these challenges and allegations with respect to all significant patents, there can be no assurance as to the outcome of these matters.

A loss in any of these cases could adversely affect the ability of these subsidiaries to sell their products, result in loss of sales due to loss of market exclusivity,

require the payment of past damages and future royalties, and may result in a non-cash impairment charge for any associated intangible asset.

Significant matters are described below.

In August 2018, Intuitive Surgical, Inc.

and Intuitive Surgical Operations, Inc.

(collectively, Intuitive) filed a patent infringement suit against Auris Health, Inc.

(Auris) in United States District Court for the District of Delaware.

In the suit, Intuitive alleges willful infringement of U.S.

6,522,906 (’906);

6,800,056 (’056);

8,142,447 (’447);

and 9,452,276 (’276) based on Auris’ MONARCH Platform.

Auris filed IPR Petitions with the U.S.

Patent and Trademark Office (USPTO) regarding the ’056, ’447, ’276 and ’906 patents.

In December 2019, the USPTO denied review of the ’056 patent.

In February and March 2020, the USPTO instituted review of the ’447, and ’906 patents and denied review of the ’276 patent.

In March 2021, the USPTO ruled that the challenged claims of the ’447 and ’906 patents are not invalid.

Auris appealed, and in April 2022, the United States Court of Appeals for the Federal Circuit vacated the decision that the ’447 patent was not invalid and remanded the decision to the USPTO for further review.

In May 2022, the United States Court of Appeals for the Federal Circuit confirmed the ruling that claim 53 of the ’906 patent was not invalid, vacated the decision that the remaining claims of the ’906 patent were not invalid and remanded the decision to the USPTO for further review.

Auris filed a request for reexamination of the ’276 patent in November 2021, and in January 2022, the USPTO granted the reexamination request.

Trial is scheduled to begin in September 2023.

In August 2019, RSB Spine LLC (RSB Spine) filed a patent infringement suit against DePuy Synthes, Inc.

in the United States District Court for the District of Delaware.

In October 2019, RSB Spine amended the complaint to change the named defendants to DePuy Synthes Sales, Inc.

and DePuy Synthes Products, Inc.

In the suit, RSB Spine alleges willful infringement of U.S.

6,984,234 (’234) and 9,713,537 (’537) by one or more of the following products:

ZERO-P-VA Spacer, ZERO-P Spacer, ZERO-P NATURAL Plate, SYNFIX LR Spacer and SYNFIX Evolution System.

RSB Spine seeks monetary damages and injunctive relief.

In November 2019, the suit was consolidated for pre-trial purposes with other patent infringement suits brought by RSB Spine in the United States District Court for the District of Delaware against Life Spine, Inc., Medacta USA, Inc., and Precision Spine, Inc.

In June 2022, DePuy filed potentially dispositive summary judgment motions that the ’234 patent is invalid as anticipated and the ’537 patent is not infringed.

In November 2022, the Court granted DePuy’s summary judgment motion that the ’234 patent is invalid as anticipated and denied DePuy’s motion that the ’537 patent is not infringed.

In December 2022, the Court conducted a jury trial on the ’537 patent where the jury found that the ’537 patent was not literally infringed, but that DePuy infringed under the doctrine of equivalents (DOE).

The jury awarded RSB $12 million in damages subject to post-trial motions and appeals.

In October 2020, Rasmussen Instruments, LLC (Rasmussen) filed a patent infringement suit against DePuy Synthes Products, Inc., DePuy Synthes Sales, Inc.

and Medical Device Business Services, Inc.

(collectively, DePuy) in the United States District Court for the District of Massachusetts.

Rasmussen alleges that DePuy willfully infringes U.S.

9,492,180 (’180) and 10,517,583 (’583) by making and selling the Attune Balanced Sizer.

In April 2021, Rasmussen sought permission to amend its infringement contentions to allege that DePuy also willfully infringes the ’583 patent by making and selling the Attune Balancing Blocks.

Rasmussen seeks treble damages for willful infringement.

Trial concluded in March 2022, with the jury returning a verdict in favor of Rasmussen, finding willful infringement of the ’180 patent, and awarding damages in the amount of $ 20 million.

DePuy challenged the verdict in its post-trial motions.

In July 2022, a hearing was held on the post-trial motions.

Pharmaceutical

Litigation Against Filers of Abbreviated New Drug Applications (ANDAs)

The following summarizes lawsuits the Company’s subsidiaries have brought against generic companies that have filed ANDAs with the U.S.

FDA or undertaken similar regulatory processes outside of the United States, seeking to market generic forms of products sold by various subsidiaries of the Company prior to expiration of the applicable patents covering those products.

These ANDAs typically include allegations of non-infringement and invalidity of the applicable patents.

The Inter Partes Review (IPR) process with the USPTO, created under the 2011 America Invents Act, is also being used at times by generic companies in conjunction with ANDAs and lawsuits, to challenge the applicable patents.

In the event the Company’s subsidiaries are not successful in an action, or the automatic statutory stay of the ANDAs expires before the United States District Court rulings are obtained, the generic companies involved would have the ability, upon approval of the U.S.

FDA, to introduce generic versions of their products to the market, resulting in the potential for substantial market share and revenue losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset.

In addition, from time to time, the Company’s subsidiaries may settle these types of actions and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents.

Beginning in January 2019, Janssen Inc., Janssen Oncology, Inc., and BTG International Ltd.

(collectively, Janssen) initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations in Canada against Apotex Inc.

(Apotex), Pharmascience Inc.

(Pharmascience) and Dr.

Reddy’s Laboratories Ltd.

Reddy’s Laboratories, Inc.

(collectively, DRL) in response to those parties’ filing of Abbreviated New Drug Submissions (ANDS) seeking approval to market generic versions of ZYTIGA before the expiration of the Canadian Patent No.

2,661,422 (’422).

The trial in these actions concluded in November 2020, and the Court issued a decision holding the ’422 patent invalid in January 2021.

In February 2021, Janssen appealed the decision.

The appeal hearing took place in September 2022.

In November 2022, Janssen's appeal was dismissed.

In April 2021, July 2021 and April 2022, respectively, Apotex, DRL and Pharmascience initiated Statements of Claim under Section 8 of the Patented Medicines (Notice of Compliance) Regulations against Janssen seeking damages in respect of those parties generic Zytiga tablets.

Trials against Apotex and DRL are scheduled for June 2023.

A trial date for the Pharmascience action has not been set.

A loss in any of these cases could adversely affect the ability of these subsidiaries to sell their products, result in loss of sales due to loss of market exclusivity, require the payment of past damages and future royalties, and may result in a non- cash impairment charge for any associated intangible asset.

Innovative Medicine - litigation against filers of abbreviated new drug applications (ANDAs)

The Company’s subsidiaries have brought lawsuits against generic companies that have filed ANDAs with the U.S.

FDA (or similar lawsuits outside of the United States) seeking to market generic versions of products sold by various subsidiaries of the Company prior to expiration of the applicable patents covering those products.

These lawsuits typically include allegations of non-infringement and/or invalidity of patents listed in FDA’s publication “Approved Drug Products with Therapeutic Equivalence Evaluations” (commonly known as the Orange Book).

In each of these lawsuits, the Company’s subsidiaries are seeking an order enjoining the defendant from marketing a generic version of a product before the expiration of the relevant patents (Orange Book Listed Patents).

In the event the Company’s subsidiaries are not successful in an action, or any automatic statutory stay expires before the court rulings are obtained, the generic companies involved would have the ability, upon regulatory approval, to introduce generic versions of their products to the market, resulting in the potential for substantial market share and revenue losses for the applicable products, and which may result in a non-cash impairment charge in any associated intangible asset.

In addition, from time to time, the Company’s subsidiaries may settle these types of actions

and such settlements can involve the introduction of generic versions of the products at issue to the market prior to the expiration of the relevant patents.

The Inter Partes Review (IPR) process with the United States Patent and Trademark Office (USPTO), created under the 2011 America Invents Act, is also being used at times by generic companies in conjunction with ANDAs and lawsuits to challenge the applicable patents.

Beginning in March 2021, Janssen Pharmaceuticals, Inc.;

(JPI) and Bayer Pharma AG and Bayer AG (collectively, Bayer) filed patent infringement lawsuits in the United States District Court for the District of Delaware against a number of generic companies who filed ANDAs seeking approval to market generic versions of XARELTO (2.5 mg) before expiration of U.S.

10,828,310 (’310).

The following generic drug companies are named defendants:

Bayer Pharma AG;

and Bayer Intellectual Property GmbH filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of XARELTO before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Reddy’s Laboratories, Inc.;

Reddy’s Laboratories, Ltd.;

Lupin Limited and Lupin Pharmaceuticals, Inc.;

Lupin Limited;

Lupin Pharmaceuticals, Inc.;

Taro Pharmaceutical Industries Ltd.;

and Taro Pharmaceuticals U.S.A., Inc.;

and Teva Pharmaceuticals USA, Inc.

In October 2021, the court consolidated the Delaware lawsuits for all purposes, including trial.

Trial for the consolidated Delaware lawsuits is scheduled to begin in May 2023.

In July 2021, JPI and Bayer filed a patent infringement lawsuit in the United States District Court for the Northern District of West Virginia against Mylan Pharmaceuticals Inc.

and Mylan Inc.

(collectively, Mylan) which filed an ANDA seeking approval to market a generic version of XARELTO (2.5 mg) before expiration of the ’310 patent.

In August 2021, JPI and Bayer filed a motion before the United States Judicial Panel on Multidistrict Litigation (the MDL panel) to transfer this lawsuit to the United States District Court for the District of Delaware for coordinated and consolidated pretrial proceedings.

In December 2021, the MDL panel granted the motion.

In August 2022, after receiving a second notice letter from Mylan regarding the same ANDA, JPI and Bayer filed a second patent infringement lawsuit in the United States District Court for the Northern District of West Virginia against Mylan.

In September 2022, Mylan moved to dismiss the second lawsuit.

In September 2022, the MDL panel transferred the second lawsuit to the District of Delaware.

No trial date has been set for these two lawsuits.

In October 2022, Mylan voluntarily withdrew its motion to dismiss.

In each of these lawsuits, JPI and Bayer are seeking an order enjoining defendants from marketing their generic version of XARELTO (2.5 mg) before the expiration of the ’310 patent.

In January 2023, the court issued an order staying the lawsuits until after a final written decision is issued in the Inter Partes Review proceedings on the ’310 patent.

In February 2022, Mylan Pharmaceuticals Inc.

filed a Petition for Inter Partes Review (IPR) with the United States Patent and Trademark Office (USPTO), seeking to invalidate the ’310 patent.

In August 2022, the Patent Trial and Appeal Board (PTAB) issued a decision instituting IPR.

In September 2022, InvaGen Pharmaceuticals, Inc.

filed a Petition for IPR with the USPTO seeking to invalidate the ’310 patent.

Also in September 2022, Teva Pharmaceuticals USA, Inc.

filed a Petition for IPR with the USPTO seeking to invalidate the ’310 patent.

In October 2022, the PTAB issued decisions instituting IPR in both proceedings and joining them with the earlier IPR proceeding filed by Mylan Pharmaceuticals Inc.

In September 2022, JPI, Bayer, and Bayer Intellectual Property GmbH (BIP) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against USV Private Limited (USV), who filed an ANDA seeking approval to market generic versions of XARELTO (2.5 mg, 10 mg, 15 mg, and 20 mg) before the expiration of the '310 patent and U.S.

9,539,218 (’218).

JPI, Bayer, and BIP are seeking an order enjoining USV from marketing its generic version of XARELTO (2.5 mg) before the expiration of the ’310 patent, and its generic versions of XARELTO (10 mg, 15 mg, and 20 mg) before the expiration of the ’218 patent.

In November 2022, the MDL panel transferred this lawsuit to the United States District Court for the District of Delaware.

In September 2022, JPI, Bayer AG, and BIP initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mankind Pharma Limited (Mankind), who filed an ANDA seeking approval to market generic versions of XARELTO (10 mg, 15 mg, and 20 mg) before the expiration of the ’218 patent.

JPI, Bayer AG, and BIP are seeking an order enjoining Mankind from marketing its generic versions of XARELTO before the expiration of the ’218 patent.

In November 2022, JPI, Bayer, and BIP initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Epic Pharma, LLC (Epic), who filed an ANDA seeking approval to market generic versions of XARELTO (2.5 mg, 10 mg, 15 mg, and 20 mg) before the expiration of the ’310 patent and the ’218 patent.

JPI, Bayer, and BIP are seeking an order enjoining Epic from marketing its generic version of XARELTO (2.5 mg) before the expiration of the ’310 patent, and its generic versions of XARELTO (10 mg, 15 mg, and 20 mg) before the expiration of the ’218 patent.

In December 2022, JPI and Bayer initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Apotex Inc.

and Apotex Corp.

(collectively, Apotex), who filed an ANDA seeking approval to market generic versions of XARELTO (2.5 mg) before the expiration of the ’310 patent.

JPI and Bayer are seeking an order enjoining Apotex from marketing its generic version of XARELTO (2.5 mg) before the expiration of the ’310 patent.

In May 2020, Janssen Inc.

(Janssen) and Actelion Pharmaceuticals Ltd (Actelion) initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz Canada Inc.

(Sandoz) in Canada in response to Sandoz’s filing of an ANDS seeking approval to market a generic version of OPSUMIT 10 mg, before the expiration of Canadian Patent No.

2,659,770 (’770).

Sandoz stipulated to infringement of the ’770 patent.

Trial against Sandoz on the issue of validity concluded in February 2022, and in May 2022, the Court issued a decision in favor of Janssen and Actelion.

In June 2022, Sandoz appealed the decision.

In May 2020, Janssen and Actelion initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex Inc.

(Apotex) in Canada in response to Apotex’s filing of an ANDS seeking approval to market a generic version of OPSUMIT 10 mg, before the expiration of the ’770 patent.

Apotex stipulated to validity of the ’770 patent.

Trial against Apotex on the issue of infringement concluded in March 2022, and in May 2022, the Court issued a decision in favor of Janssen and Actelion.

In June 2022, Apotex appealed the decision.

In January 2023, Janssen and Actelion initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Generic Medical Partners Inc.

(GMP) in Canada in response to GMP’s filing of an ANDS seeking approval to market a generic version of OPSUMIT 10 mg, before the expiration of Canadian Patent Nos.

Taro Pharmaceuticals U.S.A., Inc.;

Teva Pharmaceuticals USA, Inc.;

Mylan Pharmaceuticals Inc.;

Mankind Pharma Limited;

Apotex Corp.;

Auson Pharmaceuticals Inc.;

Macleods Pharmaceuticals Ltd;

Macleods Pharma USA, Inc.;

Indoco Remedies Limited;

FPP Holding Company LLC;

Umedica Laboratories Pvt.

Aurobindo Pharma Limited;

Aurobindo Pharma USA, Inc.;

Cipla USA Inc.;

and InvaGen Pharmaceuticals, Inc.

The following U.S.

patents are included in one or more cases:

9,539,218 and 10,828,310.

In each of these Canadian actions, Janssen and Actelion are seeking an order enjoining the defendants from marketing their generic versions of OPSUMIT before the expiration of the relevant patents.

In January 2023, Actelion Pharmaceuticals Ltd and Actelion Pharmaceuticals US, Inc.

(collectively, Actelion) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Sun Pharmaceutical Industries Limited and Sun Pharmaceutical Industries, Inc.

(collectively, Sun) who filed an ANDA seeking approval to market a generic version of OPSUMIT before the expiration of U.S.

10,828,310 was also under consideration by the USPTO in an IPR proceeding.

In July 2023, the USPTO issued a final written decision finding the claims of the patent invalid.

In September 2023, Bayer Pharma AG filed an appeal to the U.S.

Court of Appeals for the Federal Circuit.

Beginning in January 2023 Actelion Pharmaceuticals Ltd and Actelion Pharmaceuticals US, Inc.

filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of OPSUMIT before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Sun Pharmaceutical Industries Limited;

Sun Pharmaceutical Industries, Inc.;

MSN Laboratories Private Limited;

MSN Pharmaceuticals Inc.;

and Mylan Pharmaceuticals Inc.

The following U.S.

patents are included in one or more cases:

and 10,946,015.

Actelion is seeking an order enjoining Sun from marketing their generic versions of OPSUMIT before the expiration of the ’781 and ’015 patents.

In November 2023, the Company entered into a confidential settlement agreement with MSN Laboratories Private Limited and MSN Pharmaceuticals Inc.

In December 2023, the Company entered into a confidential settlement agreement with Sun Pharmaceutical Industries Limited and Sun Pharmaceuticals Industries, Inc.

INVEGA SUSTENNA

In January 2018, Janssen Pharmaceutica NV and Janssen Pharmaceuticals, Inc.

(collectively, Janssen) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Teva Pharmaceuticals USA, Inc.

(Teva), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of U.S.

9,439,906 (’906).

Trial concluded in October 2020.

In October 2021, the court issued a decision in Janssen’s favor.

Teva has appealed the decision.

In August 2019, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan Laboratories Limited (Mylan), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent.

Pursuant to an agreement by the parties, judgment in favor of Janssen was entered in December 2021.

Mylan appealed.

In December 2019, Janssen initiated a patent infringement lawsuit in the United States District Courts for the Districts of New Jersey and Delaware against Pharmascience Inc., Mallinckrodt PLC and Specgx LLC (collectively, Pharmascience), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent.

In November 2021, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Tolmar, Inc., Tolmar Therapeutics, Inc., Tolmar Pharmaceuticals, Inc.

and Tolmar Holding, Inc.

(collectively, Tolmar), which filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent.

A trial is scheduled to begin in October 2023.

In February 2022, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Accord Healthcare, Inc., Accord Healthcare, Ltd.

and Intas Pharmaceuticals, Ltd.

(collectively, Accord), who filed an ANDA seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’906 patent.

In each of these U.S.

lawsuits, Janssen is seeking an order enjoining the defendant from marketing a generic version of INVEGA SUSTENNA before the expiration of the relevant patents.

In February 2018, Janssen Inc.

and Janssen Pharmaceutica NV (collectively, Janssen Canada) initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Teva Canada Limited (Teva Canada) in response to Teva’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of Canadian Patent Nos.

2,309,629 (’629) and 2,655,335 (’335).

Janssen subsequently discontinued the portion of the lawsuit relating to the ’629 patent.

In May 2020, the Canadian Federal Court issued a Public Judgment and Reasons declaring that Teva Canada’s generic version of INVEGA SUSTENNA, if approved, would infringe certain claims of the ’335 patent and that the claims of the ’335 patent are not invalid.

Teva Canada appealed.

In November 2020, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Pharmascience Inc.

in response to Pharmascience Inc.’s filing of an ANDS seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’335 patent.

A summary trial on the issue of infringement took place in November 2021.

In January 2022, the Court issued a decision in favor of Janssen on the issue of infringement.

Pharmascience filed an appeal.

In March 2022, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Pharmascience in response to Pharmascience’s filing of an ANDS seeking approval to market a generic version of an additional strength of INVEGA SUSTENNA before the expiration of the ’335 patent.

The action has been consolidated with the November 2020 action for trial, which took place in July 2022.

In August 2022, the Court issued a decision finding the claims of the’335 patent are not invalid.

Pharmascience appealed.

In January 2021, Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex Inc.

(Apotex) in response to Apotex’s filing of an ANDS (original ANDS) seeking approval to market a generic version of INVEGA SUSTENNA before the expiration of the ’335 patent.

A summary trial on the issue of infringement took place in December 2021.

In January 2022, the Court issued a decision in favor of Janssen on the issue of infringement.

Apotex appealed.

In June 2022, Janssen Canada initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Apotex in response to Apotex’s Notice of Allegation of invalidity with respect to the original ANDS and in response to Apotex’s filing of an ANDS seeking approval to market a generic version of an additional strength of INVEGA SUSTENNA before the expiration of the ’335 patent.

A trial is scheduled to begin in March 2024.

In each of these Canadian lawsuits, Janssen Canada is seeking an order enjoining the defendant from marketing a generic version of INVEGA SUSTENNA before the expiration of the relevant patents.

Beginning in January 2018, Janssen Pharmaceutica NV and Janssen Pharmaceuticals, Inc.

filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of INVEGA SUSTENNA before expiration of the Orange Book Listed Patent.

The following entities are named defendants:

Teva Pharmaceuticals USA, Inc.;

Mylan Laboratories Limited;

Pharmascience Inc.;

Mallinckrodt PLC;

Tolmar, Inc.;

and Accord Healthcare, Inc.

The following U.S.

patent is included in one or more cases:

Beginning in February 2018, Janssen Inc.

and Janssen Pharmaceutica NV initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against generic manufacturers who have filed ANDSs seeking approval to market generic versions of INVEGA SUSTENNA before expiration of the listed patent.

The following entities are named defendants:

Pharmascience Inc.

and Apotex Inc.

The following Canadian patent is included in one or more cases:

INVEGA TRINZA

In September 2020, Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica NV, and Janssen Research & Development, LLC (collectively, Janssen) initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan Laboratories Limited, Mylan Pharmaceuticals Inc., and Mylan Institutional LLC (collectively, Mylan).

Mylan filed an ANDA seeking approval to market generic versions of INVEGA TRINZA (546 mg) before expiration of U.S.

10,143,693 (’693) relating to INVEGA TRINZA (546 mg).

In August 2021, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan.

Mylan filed an ANDA seeking approval to market generic versions of INVEGA TRINZA (819 mg) before expiration of the ’693 patent.

In October 2021, Janssen initiated a patent infringement lawsuit in the United States District Court for the District of New Jersey against Mylan.

Mylan filed an ANDA seeking approval to market generic versions of INVEGA TRINZA (273 mg and 410 mg) before expiration of the ’693 patent.

In January 2022, the court consolidated the three cases into the case filed in September 2020.

In each of these consolidated cases, Janssen is seeking an order enjoining Mylan from marketing its generic versions of INVEGA TRINZA before expiration of the ’693 patent.

Trial was conducted in November and December 2022, and post-trial briefing is proceeding.

Closing arguments will be held in March 2023.

In March 2019, Pharmacyclics LLC (Pharmacyclics) and Janssen Biotech, Inc.

(JBI) filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Alvogen Pine Brook LLC and Natco Pharma Ltd.

(collectively, Alvogen), which filed an ANDA seeking approval to market generic versions of IMBRUVICA tablets, asserting infringement of U.S.

Beginning in September 2020, Janssen Pharmaceuticals, Inc., Janssen Pharmaceutica NV, and Janssen Research & Development, LLC filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of INVEGA TRINZA before expiration of the Orange Book Listed Patent.

The following entities are named defendants:

Mylan Laboratories Limited;

Mylan Pharmaceuticals Inc.;

and Mylan Institutional LLC.

The following U.S.

patent is included in one or more cases:

In May 2023, the District Court issued a decision finding that Mylan’s proposed generic product infringes the asserted patent and that the patent is not invalid.

Mylan has appealed the verdict.

Beginning in November 2021, Janssen Products, L.P., Janssen Sciences Ireland Unlimited Company, Gilead Sciences, Inc.

and Gilead Sciences Ireland UC filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of SYMTUZA before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Lupin Limited;

Lupin Pharmaceuticals, Inc.;

MSN Laboratories

2023 Annual Report

Private Ltd.;

MSN Life Sciences Private Ltd.;

MSN Pharmaceuticals Inc.;

and Apotex Corp.

The following U.S.

patents are included in one or more cases:

10,039,718 and 10,786,518.

In June 2019, Pharmacyclics and JBI amended their complaint against Alvogen to further allege infringement of U.S.

Trial against Alvogen took place in October 2020.

In August 2021, the District Court issued a decision in favor of Pharmacyclics and Janssen finding the asserted claims against Alvogen to be infringed and not invalid.

In November 2022, the United States Court of Appeals for the Federal Circuit affirmed the District Court’s decision.

In September 2021, Pharmacyclics and Janssen Inc.

(Janssen Canada) initiated Statements of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Natco Pharma (Canada) Inc.

(Natco) in response to Natco’s filing of two ANDSs seeking approval to market generic versions of IMBRUVICA capsules before the expiration of Canadian Patent Nos.

2,663,116 (’116);

2,928,721 (’721);

2,800,913 (’913);

3,007,787 (’787);

3,007,788 (’788);

2,875,986 (’986);

Beginning in May 2022, Aragon Pharmaceuticals, Inc., Janssen Biotech, Inc.

(collectively, Janssen), Sloan Kettering Institute for Cancer Research (SKI) and The Regents of the University of California filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of ERLEADA before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Lupin Limited;

Lupin Pharmaceuticals, Inc.;

Zydus Worldwide DMCC;

Zydus Pharmaceuticals (USA), Inc.;

Zydus Lifesciences Limited;

Eugia Pharma Specialities Limited;

Aurobindo Pharma USA, Inc.;

Auromedics Pharma LLC;

Hetero Labs Limited Unit V;

and Hetero USA, Inc.

The following U.S.

patents are included in one or more cases:

10,052,314 (which reissued as RE49,353);

and RE49,353.

In December 2023, Janssen and SKI voluntarily dismissed their case against Lupin Limited and Lupin Pharmaceuticals, Inc.

Beginning in November 2022, Actelion Pharmaceuticals US Inc., Actelion Pharmaceuticals Ltd and Nippon Shinyaku Co., Ltd.

filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of UPTRAVI intravenous before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Alembic Pharmaceuticals Limited, Alembic Pharmaceuticals Inc.;

Lupin Pharmaceuticals, Inc.;

Cipla Limited;

Cipla USA Inc.;

MSN Laboratories Private Ltd.;

and MSN Pharmaceuticals Inc.

The following U.S.

patents are included in one or more cases:

8,791,122 and 9,284,280.

In this lawsuit, Pharmacyclics and Janssen Canada are seeking an order enjoining Natco from marketing its generic version of IMBRUVICA before the expiration of the relevant patents.

Trial is scheduled to begin in July 2023.

In October 2022, Pharmacyclics and Janssen Canada initiated a second Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Natco in response to Natco’s filing of an ANDS seeking approval to market a generic version of IMBRUVICA capsules before the expiration of the ’116, ’721, ’913, ’787, and ’788 patents and Canadian Patent No.

In this lawsuit, Pharmacyclics and Janssen Canada are seeking an order enjoining Natco from marketing its generic version of IMBRUVICA capsules before the expiration of the relevant patents.

Trial in this second action is scheduled to begin in August 2024.

In February 2023, Pharmacyclics and Janssen Canada initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz Canada Inc.

(Sandoz) in response to Sandoz’s filing of an ANDS seeking approval to market a generic version of IMBRUVICA capsules before the expiration of the ’116, ’913, ’787, and ’788 patents.

Also in February 2023, Pharmacyclics and Janssen initiated a Statement of Claim under Section 8.2 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz asserting the ’721 and ’256 patents, which are also listed in Health Canada’s Patent Register for IMBRUVICA.

In these lawsuits, Pharmacyclics and Janssen Canada are seeking an order enjoining Sandoz from marketing its generic version of IMBRUVICA capsules before the expiration of the relevant patents.

A trial date for these actions has not been set.

In November 2021, Janssen Products, L.P.

and Janssen Sciences Ireland Unlimited Company (collectively, Janssen) and Gilead Sciences, Inc.

and Gilead Sciences Ireland UC (collectively, Gilead) initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Lupin Limited, Lupin Pharmaceuticals, Inc., MSN Laboratories Private Ltd., MSN Life Sciences Private Ltd., and MSN Pharmaceuticals Inc.

(collectively, Lupin), which filed an ANDA seeking approval to market a generic version of SYMTUZA before the expiration of U.S.

In November 2023, the Company entered into a confidential settlement agreement with Alembic Pharmaceuticals Limited and Alembic Pharmaceuticals Inc.

Beginning in May 2023, Janssen Pharmaceuticals, Inc.

and Janssen Pharmaceutica NV filed patent infringement lawsuits in United States district courts against generic manufacturers who have filed ANDAs seeking approval to market generic versions of SPRAVATO before expiration of certain Orange Book Listed Patents.

The following entities are named defendants:

Hikma Pharmaceuticals Inc.

Hikma Pharmaceuticals PLC;

and Alkem Laboratories Ltd.

The following U.S.

patents are included in one or more cases:

and 11,446,260.

The trial is scheduled to begin in October 2023.

In October 2022, Janssen Products, L.P.

and Janssen Sciences Ireland Unlimited Company (collectively, Janssen) and Gilead Sciences, Inc.

and Gilead Sciences Ireland UC (collectively, Gilead) initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Apotex Inc.

and Apotex Corp.

(collectively, Apotex), which filed an ANDA seeking approval to market a generic version of SYMTUZA before the expiration of the ’718 and ’518 patents.

In each of these U.S.

lawsuits, Janssen is seeking an order enjoining the defendant from marketing a generic version of SYMTUZA before the expiration of the relevant patents.

In May 2022, Aragon Pharmaceuticals, Inc.

and Janssen Biotech, Inc.

(collectively, Janssen) and Sloan Kettering Institute for Cancer Research (SKI) initiated patent infringement lawsuits in United States District Court for the Districts of New Jersey and Delaware against Lupin Limited and Lupin Pharmaceuticals, Inc.

(collectively, Lupin), which filed an ANDA seeking approval to market a generic version of ERLEADA before the expiration of U.S.

In November 2023, Biocon Biologics Inc.

filed a Petition for Inter Partes Review with the USPTO seeking review of U.S.

10,961,307 related to methods of treating ulcerative colitis with ustekinumab.

In March 2016, Abiomed, Inc.

(Abiomed) filed a declaratory judgment action against Maquet Cardiovascular LLC (Maquet) in U.S.

District Court for the District of Massachusetts seeking a declaration that the Impella does not infringe certain Maquet patents, currently U.S.

7,022,100 (’100);

In August 2022, Janssen and SKI filed a first amended complaint against Lupin adding U.S.

9,884,054 (’054), 10,052,314 (’314), 10,702,508 (’508) and 10,849,888 (’888) to the suit.

Janssen and SKI are seeking an order enjoining Lupin from marketing its generic version of ERLEADA before the expiration of the ’663, ’054, ’314, ’508, and ’888 patents.

In August 2022, Janssen and SKI voluntarily dismissed the Delaware complaint.

The New Jersey action is proceeding.

In May 2022, Janssen and SKI initiated a patent infringement lawsuit in United States District Court for the District of New Jersey against Zydus Worldwide DMCC, Zydus Pharmaceuticals (USA), Inc., and Zydus Lifesciences Limited (collectively, Zydus), which filed an ANDA seeking approval to market a generic version of ERLEADA before the expiration of the ’663, ’054, ’314, ’508, and ’888 patents.

Janssen and SKI are seeking an order enjoining Zydus from marketing its generic version of ERLEADA before the expiration of the ’663, ’054, ’314, ’508, and ’888 patents.

In May 2022, Janssen, The Regents of the University of California (UC), and SKI initiated patent infringement lawsuits in United States District Court for the Districts of New Jersey and Delaware against Sandoz Inc.

(Sandoz), which filed an ANDA seeking approval to market a generic version of ERLEADA before the expiration of the ’663 patent and U.S.

and 9,597,437.

In August 2022, Janssen, UC, and SKI filed a first amended complaint against Sandoz adding the ’054, ’314, ’508, and ’888 patents to the suit.

In August 2022, Janssen, UC, and SKI voluntarily dismissed the Delaware complaint.

In December 2022, Janssen, UC, and SKI filed a second amended complaint against Sandoz withdrawing the ’054, ’314, ’508, and ’888 patents from the suit without prejudice.

Janssen, UC, and SKI are seeking an order enjoining Sandoz from marketing its generic version of ERLEADA before the expiration of the ’663, ’507, ’689, ’159, and ’261 patents.

The New Jersey action is proceeding.

In May 2022, Janssen, UC, and SKI initiated patent infringement lawsuits in United States District Court for the Districts of New Jersey and Delaware against Eugia Pharma Specialities Limited, Aurobindo Pharma USA, Inc., and Auromedics Pharma LLC (collectively, Eugia), which filed an ANDA seeking approval to market a generic version of ERLEADA before the expiration of the ’663, ’507, ’689, ’159 and ’261 patents.

In September 2022, Janssen, UC, and SKI filed a first amended complaint against Eugia adding U.S.

9,884,054 (’054), 10,052,314 (’314), 10,702,508 (’508) and 10,849,888 (’888) to the suit.

In September 2022, Janssen, UC, and SKI voluntarily dismissed the Delaware complaint.

Janssen, UC, and SKI are seeking an order enjoining Eugia from marketing its generic version of ERLEADA before the expiration of the ’663,’507, ’689, ’159, ’261, ’054, ’314, ’508, and ’888 patents.

The New Jersey action is proceeding.

In May 2022, Janssen, UC, and SKI initiated patent infringement lawsuits in United States District Court for the Districts of New Jersey and Delaware against Hetero Labs Limited Unit V and Hetero USA, Inc.

(collectively, Hetero), which filed an ANDA seeking approval to market a generic version of ERLEADA before the expiration of the ’663, ’507,’054, ’314,’508, and ’888 patents.

Janssen, UC, and SKI are seeking an order enjoining Hetero from marketing its generic version of ERLEADA before the expiration of the ’663, ’507, ’054, ’314, ’508 and ’888 patents.

In August 2022, Janssen, UC, and SKI voluntarily dismissed the Delaware complaint.

The New Jersey action is proceeding.

In August 2022, Actelion Pharmaceuticals Ltd, and Janssen Inc.

(collectively, Janssen) and Nippon Shinyaku Co.

(Nippon Shinyaku) initiated a Statement of Claim under Section 6 of the Patented Medicines (Notice of Compliance) Regulations against Sandoz Canada Inc.

in response to Sandoz’s filing of an ANDS seeking approval to market generic versions of UPTRAVI tablets before the expiration of Canadian Patent Nos.

2,731,370 and 2,764,475.

In this lawsuit, Janssen and Nippon Shinyaku are seeking an order enjoining Sandoz from marketing its generic version of UPTRAVI before the expiration of the relevant patents.

A trial is scheduled to begin in May 2024.

In November 2022, Actelion Pharmaceuticals US Inc.

and Actelion Pharmaceuticals Ltd (collectively, Actelion) and Nippon Shinyaku Co., Ltd.

(Nippon Shinyaku) initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Alembic Pharmaceuticals Limited and Alembic Pharmaceuticals Inc.

(collectively, Alembic) who filed an

ANDA seeking approval to market generic versions of UPTRAVI injection for intravenous use before expiration of U.S.

8,791,122 (’122) and 9,284,280 (’280) relating to UPTRAVI.

In this lawsuit, Actelion and Nippon Shinyaku are seeking an order enjoining Alembic from marketing a generic version of UPTRAVI before the expiration of the relevant patents.

A trial date has not been set.

In February 2023, Actelion and Nippon Shinyaku initiated a patent infringement lawsuit in the United States District Court for the District of Delaware against Lupin Ltd.

and Lupin Pharmaceuticals, Inc.

(collectively, Lupin) who filed an ANDA seeking approval to market generic versions of UPTRAVI injection for intravenous use before expiration of the ’122 and ’280 patents relating to UPTRAVI.

In this lawsuit, Actelion and Nippon Shinyaku are seeking an order enjoining Lupin from marketing a generic version of UPTRAVI before the expiration of the relevant patents.

A trial date has not been set.

Other Litigation

In November 2021, Janssen Pharmaceutica N.V.

(Janssen) provided to Alkermes Pharma Ireland Limited, Elan Pharma International Limited, and Elan Drug Delivery, Inc.

three-months’ notice of termination of a License Agreement by and among Elan Pharmaceutical Research Corp., d/b/a Nanosystems, Elan Pharma International Limited and Janssen, executed in March, 1999.

In November 2021, Janssen also provided to Alkermes Pharma Ireland Limited three-months’ notice of termination of a License Agreement between Elan Pharma International Limited and Janssen executed in July 2003.

In April 2022, in response to these notices, Alkermes Pharma Ireland Limited (Alkermes) initiated arbitration in the International Institute for Conflict Prevention and Resolution.

The parties exchanged opening briefs in July 2022 and responsive briefs in September 2022.

In December 2022, the Arbitration Tribunal issued an Interim Decision finding that Janssen may terminate the agreements, but it may not continue to sell products developed during the term of the agreements without continuing to pay royalties to Alkermes.

Maquet counterclaimed for infringement of each of those patents.

After claim construction, Maquet alleged infringement of only the ’100 patent.

In September 2021, the court granted Abiomed’s motion for summary judgment of non-infringement of the ’100 patent, and in September 2023, the district court entered final judgment in favor of Abiomed on all patents-in-suit.

Maquet appealed.

Government proceedings

Like other companies in the pharmaceutical, consumer health and medical devices industries, the Company and certain of its subsidiaries are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which they operate.

Like other companies in the pharmaceutical and medical technologies industries, the Company and certain of its subsidiaries are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which they operate.

Such regulation has been the basis of government investigations and litigations.

1 unchanged sentence

It is possible that criminal charges and substantial fines and/or civil penalties or damages could result from government investigations or litigation.

Average Wholesale Price (AWP) Litigation

The Company and several of its pharmaceutical subsidiaries (the J&J AWP Defendants), along with numerous other pharmaceutical companies, were named as defendants in a series of lawsuits in state and federal courts involving allegations that the pricing and marketing of certain pharmaceutical products amounted to fraudulent and otherwise actionable conduct because, among other things, the companies allegedly reported an inflated Average Wholesale Price (AWP) for the drugs at issue.

Payors alleged that they used those AWPs in calculating provider reimbursement levels.

The plaintiffs in these cases included three classes of private persons or entities that paid for any portion of the purchase of the drugs at issue based on AWP, and state government entities that made Medicaid payments for the drugs at issue based on AWP.

Many of these cases, both federal actions and state actions removed to federal court, were consolidated for pre-trial purposes in a multi-district litigation in the United States District Court for the District of Massachusetts, where all claims against the J&J AWP Defendants were ultimately dismissed.

The J&J AWP Defendants also prevailed in a case brought by the Commonwealth of Pennsylvania.

Other AWP cases have been resolved through court order or settlement.

The case brought by Illinois was settled after trial.

In New Jersey, a putative class action based upon AWP allegations is pending against Centocor, Inc.

and Ortho Biotech Inc.

(both now Janssen Biotech, Inc.), the Company and ALZA Corporation.

All other cases have been resolved.

Opioid Litigation

Beginning in 2014 and continuing to the present, the Company and Janssen Pharmaceuticals, Inc.

(JPI), along with other pharmaceutical companies, have been named in close to 3,500 lawsuits related to the marketing of opioids, including DURAGESIC, NUCYNTA and NUCYNTA ER.

The suits also raise allegations related to previously owned active pharmaceutical ingredient supplier subsidiaries, Tasmanian Alkaloids Pty, Ltd.

and Noramco, Inc.

(both subsidiaries were divested in 2016).

The majority of the cases have been filed by state and local governments.

Similar lawsuits have also been filed by private plaintiffs and organizations, including but not limited to the following:

individual plaintiffs on behalf of children born with Neonatal Abstinence Syndrome;

and health insurers/payors.

To date, complaints against pharmaceutical manufacturers, including the Company and JPI, have been filed by the state Attorneys General in Arkansas, Florida, Idaho, Illinois, Kentucky, Louisiana, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, South Dakota, Texas, Washington and West Virginia.

Complaints against the manufacturers also have been filed in state or federal court by city, county and local government agencies in every state but Alaska.

The Government of Puerto Rico filed suit in Superior Court of San Juan.

The Company, JPI and other pharmaceutical companies had also received subpoenas or requests for information related to opioids marketing practices from the following state Attorneys General:

Alaska, Indiana, Montana, New Hampshire, South Carolina, Tennessee, Texas and Washington.

In September 2017, the Company and JPI were contacted by the Texas and Colorado Attorney General’s Offices on behalf of approximately 38 states regarding a multi-state Attorney General investigation.

In 2019, the trial in the matter filed by the Oklahoma Attorney General resulted in a judgment against the Company and JPI in the amount of $ 465 million.

The Company and JPI appealed the judgment, and in November 2021, the Oklahoma Supreme Court reversed the trial court’s judgment and directed entry of judgment for Defendants.

In October 2019 the Company and JPI announced a settlement of the first case set for trial in the MDL with two counties in Ohio.

In April 2021, three California counties and the City of Oakland commenced a trial in California state court against the Company and JPI, and other affiliates, as well as three other pharmaceutical manufacturers.

The trial concluded in October 2021, and in December 2021, the Court entered a final trial judgment in favor of Defendants on all claims.

In February 2022, Plaintiffs’ motion to set aside and vacate the judgment was denied.

Plaintiffs appealed the judgment, but later filed a request to dismiss the appeal after electing to participate in the national settlement agreement.

In October 2019, the Company announced a proposed agreement in principle that would include the Company paying $ 4 billion as settlement of these matters that had not been tried or settled.

In October 2020, the Company agreed to contribute up to an additional $ 1 billion to an all-in settlement amount that would resolve opioid lawsuits filed and future claims by states, cities, counties and tribal governments, for a total of $ 5 billion which has been accrued, subject to various conditions and an agreement being finalized.

This agreement is not an admission of liability or wrong-doing.

In July 2021, the Company announced that the terms of the agreement to settle the state and subdivision claims had been finalized and approximately half of the all-in settlement was expected to be paid by the end of fiscal year 2022, depending upon the level of participation by the states and their subdivisions.

The terms provided a period of time for states to elect to participate in the agreement and, thereafter, a period for the subdivisions of the participating states to opt-in.

Based on expected participation, the Company committed in advance to proceed with the settlement in five of the participating states (New York, Texas, Florida, Nevada, and New Mexico) and with tribal governments.

By late February 2022, 45 states, five territories, the District of Columbia, and the vast majority of eligible subdivisions had elected to participate in the settlement, and the Company confirmed that the level of participation was sufficient to proceed with the agreement as to all participants.

The agreement was effective in April 2022.

Also in April 2022, the Company entered into settlement agreements with the states of Alabama and West Virginia and their participating subdivisions.

In July 2022, the Company reached a settlement agreement with all litigating Oklahoma subdivisions, and in September 2022, the Company settled with the State of New Hampshire and its participating subdivisions.

Consequently, by the end of the fiscal year 2022, the Company had settled the opioid claims advanced by all states except Washington.

There are approximately 60 cases remaining post-settlement in various state courts.

There are approximately 570 remaining federal cases against the Company and JPI coordinated in a federal Multi-District Litigation (MDL) pending in the U.S.

District Court for the Northern District of Ohio, and approximately 20 additional cases pending against the Company and JPI in other federal courts.

In October 2019, an antitrust complaint was filed by private plaintiffs in federal court in Tennessee and is pending transfer to the MDL.

The suits generally seek penalties and/or injunctive and monetary relief and, in some of the suits, the plaintiffs are seeking joint and several liability among the defendants.

In August 2019, the Company received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York for documents related to the Company’s anti-diversion policies and procedures and distribution of its opioid medications, in what the Company understands to be part of a broader investigation into manufacturers’ and distributors’ monitoring programs and reporting under the Controlled Substances Act.

From June 2017 through December 2019, the Company’s Board of Directors received a series of shareholder demand letters alleging breaches of fiduciary duties related to the marketing of opioids.

The Board retained independent counsel to investigate the allegations in the demands, and in April 2020, independent counsel delivered a report to the Board recommending that the

Company reject the shareholder demands and take the steps that are necessary or appropriate to secure dismissal of related derivative litigation.