Johnson & Johnson (JNJ) Earnings Call Transcript & Summary

Good morning, everyone. I'm Alex Gorsky, the Chairman and CEO of Johnson & Johnson. It is my pleasure to welcome all of you to the 2021 Annual Meeting of Shareholders. As part of our ongoing commitment to promote global health and protect the health of our shareholders, our employees and all our other stakeholders, this is the second year we are hosting our Annual Meeting of Shareholders in a virtual setting. To begin today's webcast, I'd like to welcome our Executive Committee members. I'd also like to introduce our Board of Directors. This is an outstanding and diverse group of global business and health care leaders with deep expertise in science, policy and more. We have with us Dr. Mary Beckerle, Scott Davis, Ian Davis, Dr. Jennifer Doudna, Marillyn Hewson, Hubert Joly, Dr. Mark McClellan, Anne Mulcahy, Chuck Prince, Dr. Eugene Washington, Mark Weinberger, Dr. Nadja West and Ronald Williams. We also have on the line today, Steve Johnson and Chris King, representing PricewaterhouseCoopers, our independent auditors. A copy of today's program, including the agenda and the rules of order, are available in the Meeting Materials section of the virtual meeting website. There, you will also find links to our 2021 proxy statement and 2020 annual report. Let's start with the business review section of today's agenda. When I look back to this time 1 year ago when we gathered for our first-ever virtual annual shareholders meeting, it's astonishing to consider how much we have accomplished and how much we have learned in just 12 months. When we last met in April of 2020, Johnson & Johnson was fully committed to leveraging all our company's strengths to fighting COVID-19, and the Phase I clinical trials of our vaccine candidate were underway. But even then, we couldn't possibly have guessed just how deep and lasting the impact of the virus would be. And the success of our ambitious and unprecedented COVID-19 vaccine development plan was anything but guaranteed. I'm incredibly proud of all the ways my colleagues at Johnson & Johnson have upheld our commitment to advancing innovation by always following the science, including in our work on our COVID-19 vaccine, which we can talk about more specifically in the Q&A portion of this meeting. Progress. While progress is rarely linear in nature, but reacting and adapting is an integral part of ensuring the safety and wellbeing of the patients who depend on us. Following the science has led us to unprecedented levels of collaboration with regulators, governments and organizations around the world, creating partnerships that will continue to enhance our efforts to address new health care challenges in the future. Thanks to the resilience, dedication and resourcefulness of my colleagues all around the world, Johnson & Johnson didn't just endure the disruption and uncertainty caused by the pandemic, our company pivoted with great agility or remaining focused on the long term, delivering notable business results while continuing to invest in sustainable, transformative innovation. Even as the ways in which we work, live and communicate evolved at light speed, our mission to deliver better health to communities around the world remained unchanged. Since 1943, our credo has served as the moral compass guiding our business decisions and anchored our operations and our unyielding purpose of delivering better health solutions to people and communities around the world. The unwavering clarity it provides has never been more important or welcomed than during times of crisis. While the urgency and importance of our COVID-19 vaccine development work justifiably capture the world's attention, our colleagues all around the globe never lost sight of our collective responsibility to deliver on all of our stakeholder commitments. We've continued to innovate in advance for the long term with life-enhancing products and medicines for patients and consumers. In fact, we increased our global spending on research and development to $12.2 billion from 2020, an increase of $800 million from 2019. Now the benefits of investment in new ideas and approaches to improving human health will touch the lives of billions of people in the years to come. Our Pharmaceutical business recorded its ninth consecutive year of operational above-market growth, remaining on track with all regulatory submissions and approvals. Notably, we move forward our oncology and immunology pipelines with filings for new products and indications while also demonstrating our strong commercial capabilities through successful launches in a virtual environment. Innovation is and has always been our calling card, and that was more true than ever last year. Consumer Health exceeded our goals for 2020 and moved quickly to meet the increased demand for Johnson & Johnson's trusted consumer brands throughout the pandemic. But we didn't stop there. Our Consumer Health team also launched the Healthy Lives Mission, our holistic approach to health and wellness aimed at advancing sustainable innovation, providing enhanced transparency and supporting proactive self-care for consumers. While our Medical Device business faced the greatest impact from the pandemic due to elective procedures being placed on hold, we continue to focus on the needs of health care providers and hospital systems while making strong progress on key pipeline milestones. We advanced critical programs across each franchise. We also remain incredibly excited about the great potential of the end-to-end digital surgery ecosystem. We are simultaneously developing 3 differentiated robotic programs and look forward to continuing to innovate and transform the future of surgery for better patient outcomes. I'm also proud to say that by delivering on our business objectives and goals, we continued to return value to our shareholders throughout the year. Just a few days ago, we announced that we have increased our shareholder dividend for the 59th consecutive year, a testament to our strong financial position and confidence in our ability to continue delivering value and innovate across our businesses. Meeting our commitments to all our stakeholders is a balancing act even in times of stability and prosperity. I'm incredibly proud that Johnson & Johnson colleagues around the world approached this once-in-a-century pandemic as a call to action rather than an excuse to delay. Our teams look for additional ways we can help advance human health. This includes moving forward our environmental sustainability efforts by setting new climate goals that we are tracking over the next 10 years as continuing our corporate leadership in climate action and water security with 2 A List ratings from the Carbon Disclosure Project. And we could not possibly ignore the events of last summer that led us as individuals and a company to confront the reality of systemic racism in our society. We knew we wanted to do more and find a way to make the most meaningful and lasting impact, which is why Johnson & Johnson shows the focus on eliminating health inequities for people of color with our $100 million Race to Health Equity platform. The dramatic higher mortality rate for communities of color in the COVID-19 pandemic is just the most recent example of disparity in access to quality health care. And we are absolutely determined to put better health within the reach of everyone. I am incredibly proud of our teams around the world for truly living into our credo values and want to extend a heartfelt thank you to each and every one of our Johnson & Johnson colleagues around the world. You have shown true resilience and remarkable grit throughout the pandemic, and the way you support each other through every challenge continues to inspire me every day. As I said earlier, I believe that when this pandemic is fully behind us and we look back on 2020, what we learned during this consequential year will be just as important as what we accomplished. Because of COVID-19, we have all been served a reminder of the importance of the doctors, nurses and hospital staff serving on the very front lines of care and for the everyday heroism of essential workers. It has been undeniable to the entire world just how central good health is to our collective prosperity, our security and our society. And we saw firsthand how much can be accomplished through partnership and collaboration. The phrase, no one is safe until everyone is safe, took on new resonance. And expectations that companies drive positive change on behalf of everyone are higher than ever. Inside the very halls of Johnson & Johnson, there's a phrase we use when trying to capture the breadth and scope of our ambitions as a purpose-driven company. We aim to change the trajectory of health for humanity. This was a year we showed the world exactly what that looks like in action. I know we can use the incredible momentum and lessons from this extraordinary time to speed our progress forward to a healthier and more equitable future for everyone. I have never been more optimistic about the future of our company and our industry. And I am profoundly grateful to have had the opportunity to lead this company during such a historic moment and join our exceptional employees in showing that for every challenge in life, there is an equal and opposite force of opportunity. I'd like to now introduce our Worldwide Vice President of Corporate Governance and Corporate Secretary, Matt Orlando, to conduct the official business portion of this meeting. I now call this meeting to order. Matt, do we have a quorum?

Thank you, Mr. Chairman. Hello, everyone. I am Matt Orlando, Johnson & Johnson's Corporate Secretary and Worldwide Vice President of Corporate Governance. I will present the formal portion of today's meeting. I'm pleased to announce that we do have a quorum of shareholders present today, in person or by proxy, representing more than 83% of the outstanding shares entitled to vote at today's meeting. In accordance with the laws of the state of New Jersey, a list of all shareholders of record entitled to vote at this meeting is available upon request. Please refer to the Meeting Materials section of the virtual meeting website. The first item of business is the election of directors to serve on the Board of Directors until the next annual meeting. As described beginning on Page 10 of the proxy statement and as our Chairman introduced earlier in today's webcast, there are 14 nominees for the Board of Directors. Under our bylaws, the election of each director nominee in today's election requires the affirmative vote of a majority of the votes cast, excluding abstentions. The Board recommends a vote for each of the nominees. The second item of business is an advisory vote to approve the compensation of our named executive officers and the executive compensation philosophy, policies and procedures described in the compensation discussion and analysis section beginning on Page 46 of the 2021 proxy statement. As an advisory vote, the results of this vote will not be binding on the Board or the company. However, the Board understands the importance of receiving shareholder feedback on executive compensation. The Board recommends a vote for this management proposal. The third item of business is the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for Johnson & Johnson for fiscal year 2021, as described in the proxy statement beginning on Page 103. The affirmative vote of a majority of the votes cast at this meeting is required to ratify this proposal. The Board recommends a vote for this management proposal. The final items of business are 4 proposals submitted by shareholders. Let me start by explaining the rules of order, a copy of which is available using the link in the Meeting Materials section of this webcast page. Each shareholder proponent or a qualified representative thereof will have 2 minutes to present their proposal and must address only that matter. Following the presentation of the shareholder proposals, the polls will remain open for a short period of time if you wish to vote or change your proxy vote. There is no need for anyone who has already voted his or her proxy to do anything. However, if you have not voted your proxy and wish to vote or if you wish to change your proxy vote, you may do so by clicking the Vote Here button highlighted in red, shown on the virtual meeting website. The first shareholder proposal and its supporting statement appear on Page 105 of the proxy statement and was submitted by Oxfam America, beneficial owner of 26 shares of the company's common stock. Mr. Ady Barkan, who will introduce the proposal on behalf of the proponent, is a health care activist who was diagnosed with ALS at the age of 32 and is the co-founder of Be a Hero. Mr. Barkan will have 2 minutes.

Good morning. My name is Ady Barkan, and I am speaking on behalf of a resolution filed by Oxfam America and 12 co-filers. For 2 decades, I have worked to ensure that everyone, everywhere can get the medicines and health care that we need to survive and thrive. We are in the midst of the greatest public health crisis in 100 years. In response, taxpayers have provided J&J with more than $1.5 billion to develop a vaccine. We are all profoundly grateful to the scientists whose work is now protecting millions of people. But this vaccine will be 0% effective for those who cannot access it. We need a people's vaccine. While J&J has committed to a nonprofit price during the pandemic, it is still more expensive than some other vaccines, and we do not know how long this price will last. Will J&J price its vaccine out of reach for most people in the world post-pandemic? Will J&J continue to abstain from joining the WHO's Coronavirus Technology Access Pool, which would allow the world to make as many doses as possible? We remain in the dark about these critical decisions. We cannot reopen our global economy if most people on the planet cannot access vaccines. We know that access to vaccines has been distributed inequitably along lines of race, socioeconomic status and political power. This is unacceptable for a publicly funded vaccine, and J&J has the opportunity to be a leader in creating a people's vaccine. That kind of reputation will pay dividends for a long time. Together with the 12 co-filers, we urge shareholders to support this proposal to provide more clarity on how public financial support factors into J&J's approach to ensuring access to its coronavirus products. Thank you.

Thank you, Mr. Barkan, for your comments. Since the beginning of our COVID-19 response, Johnson & Johnson has been committed to bringing forward a safe, effective and affordable vaccine on a not-for-profit basis for emergency pandemic use globally. Now the not-for-profit pricing has been determined using the company's not-for-profit framework, which is consistent with the Bill & Melinda Gates Foundation's cost methodology for vaccines. The company has an agreement in principle with Gavi, the vaccine alliance, to supply up to 500 million vaccine doses to lower-income countries. And last month, we announced a separate agreement with the African Vaccine Acquisition Trust to provide up to 400 million vaccine doses to the African Union's 55 member states. Johnson & Johnson is absolutely committed to transparency. And the 5th Annual Janssen U.S. Transparency Report, which was published earlier this month, already details our responsible business practices. For these reasons, the Board recommends a vote against this shareholder proposal.

The second shareholder proposal and its supporting statement appear on Page 107 of the proxy statement and was submitted by Trillium Asset Management LLC on behalf of Oneida Trust Minors, a beneficial owner of 604 shares of the company's common stock. Mr. Jonas Kron will introduce the proposal on behalf of the proponent and will have 2 minutes.

Good morning, Mr. Chairman. My name is Jonas Kron, and I'm here on behalf of Trillium Asset Management and the Oneida Nation of Wisconsin Trust to hereby move Item 5, seeking an independent Board chair policy for Johnson & Johnson. This proposal has been co-filed by Greater Manchester Pension Fund, Hexavest, Daughters of Charity, Bon Secours Mercy, Providence St. Joseph Health, Calvert Research and Management, Congregation of Divine Providence and Providence Trust. The Board opposes this shareholder proposal largely relying on the presence of an independent lead director as its answer. But as the EY Center for Board Matters put it, independent lead directors "do not command the same authority as a Board Chair." At Johnson & Johnson, the lead director, in the position since 2012, sits on 3 other Boards and chairs the Compensation Committee at 2 of the 3. According to PwC's 2020 survey, only 3% of directors serve on 4 Boards. And we believe the lead director's significant commitments to numerous Boards weakens effectiveness. Consistent with our position, a 2019 PwC survey of over 700 directors found that 57% of directors who sit on a Board with the unified Chair and CEO say that under those circumstances, it is difficult to voice dissent. Finally, it is worth remembering that in 2017 and 2020, the independent Board share proposals at Johnson & Johnson received votes of approximately 42%. We believe this represents a clear and consistent desire over a significant amount of time for a change. Let us not miss this opportunity to reinforce that message and help set the company on the path towards creating a more successful future, not only for J&J and its employees and its shareholders, but for individuals, families and communities around the world. Thank you for your time.

Thank you, Mr. Kron, for your comments. Now as described in detail in the proxy statement, our Board believes that it is crucial to maintain the flexibility to tailor its leadership structure to best fit the needs of Johnson & Johnson as they evolve as well as to best respond to the challenges facing the company. Our Board considers extensive shareholder feedback and reviews market developments on an ongoing basis and continues to believe that the Board's current structure, with a robust lead director and committees each composed entirely of independent directors, provides appropriately strong independent leadership and oversight as well as efficient and clear communication and administration. Importantly, the leadership provided by the Johnson & Johnson Board under the current structure has enabled the creation of significant value for shareholders. The Board believes that a one-size-fits-all policy would deprive the company of the benefit of its current leadership structure and would not result in better governance or oversight or performance. For these reasons, the Board recommends a vote against this shareholder proposal.

The third shareholder proposal and its supporting statement appear on Page 110 of the proxy statement and was submitted by Trillium Asset Management LLC on behalf of Christopher and Anne Ellinger, beneficial owners of 70 shares of the company's common stock. Ms. Susan Baker will introduce the proposal on behalf of the proponent and will have 2 minutes.

Good morning, Mr. Chairman, members of the Board and fellow shareholders. My name is Susan Baker. And on behalf of Trillium clients and several co-filers, I hereby move Proposal #6. The proposal requests that the company conduct and publish a third-party audit to assess the racial impacts of its policies and practices and to provide recommendations for improving the company's racial impact. Why a civil rights audit? An audit can provide objective insights related to steps already underway and reveal actions to take to have a greater impact on racial justice. From our conversations with management, we all agreed that there is a critical need to ensure racial equity across many aspects of health care. However, there are a number of red flags which suggest that J&J investors and its stakeholders would benefit from a third-party audit. We are concerned about the controversies related to talcum-based powder products and claims of aggressively marketing these products to black and brown women. We are concerned that the company stopped using a third-party tool to measure its chemical footprint. The Chemical Footprint Project, backed by companies and investors, tracks progress away from toxics, toxic chemicals that can disproportionately harm communities of color. We are concerned that investors cannot track progress on racial and ethnic diversity in the company's total U.S. workforce because J&J does not yet disclose full EEO-1 reports. The good news is that there are companies that have conducted civil rights audits. The audits built public trust and allowed stakeholders to rely on the accuracy of third-party data. We want to say the same for J&J. By making a plan that puts it on a path to conduct a civil rights audit, J&J has an opportunity to deepen its commitment to change the trajectory of Health for Humanity. We very much hope it does.

Thank you, Ms. Baker, for your comments. Diversity, equity and inclusion is built into our credo and has long been a core value of Johnson & Johnson. The Board and management regularly evaluate our DEI policies, practices and goals, and Johnson & Johnson already produces 2 annual publications describing our progress. The Board is proud of the company's external recognition for its work and progress on DE&I. In response to global protests and movements in conjunction with the COVID-19 pandemic that have spotlighted the racial and social injustices and inequities that continue to impact underserved populations and communities of color, we recently launched several programs designed to advance racial and social justice through our Race to Health Equity platform. Now the audit this proposal requests would divert resources away from our Race to Health Equity and other important DE&I initiatives and instead put them toward conducting an audit and preparing a report that would fail to yield meaningful enhancements to the company's practices or to the robust public disclosures the company already makes about its DE&I efforts. The company embraces DE&I as a key driver of its success and intends to continue to publicly demonstrate Johnson & Johnson's strong commitment to DE&I. For these reasons, the Board recommends a vote against the shareholder proposal.

The fourth and final shareholder proposal and its supporting statement appear on Page 114 of the proxy statement and was submitted by the Sisters of St. Francis of Philadelphia, a beneficial owner of 25 shares of the company's common stock. Mr. Thomas McCaney will introduce the proposal on behalf of the proponent and will have 2 minutes.

Good morning. My name is Tom McCaney, and I'm here to present Proposal #7 on behalf of the Sisters of St. Francis of Philadelphia, who are members of the Investors for Opioid and Pharmaceutical Accountability. The proposal requests that Johnson & Johnson defer a certain portion of senior executives' annual incentive pay for a specified time period, both to be determined by the Compensation and Benefits Committee. The deferral period will permit an informed review of whether a bonus award was warranted in light of subsequent events and will facilitate any adjustments resulting from use of the company's recruitment policy from the deferred portion of that award. J&J is at risk of significant regulatory action fines and numerous lawsuits, including ongoing regulatory inquiries related to its opioid marketing practices and multibillion-dollar costs associated with top litigation. In our view, J&J's current compensation practices fail to adequately address these risks. We believe that a bonus deferral policy is critical to aligning management's interest with those of long-term shareholders and ensuring accountability. A bonus deferral policy offers a straightforward mechanism to recoup annual awards under the company's recoupment policy, which could otherwise require legal action and the expenditure of additional company time and resources. A bonus deferral policy would enhance J&J's ability to use its recoupment policy, and we believe it could serve a retention focus as well. J&J's significant risk exposure and troubled history of lawsuits, investigations, settlements and fines suggest a compensation system that rewards or at the very least insufficiently discourages short-term gains at the risk of sustainable long-term growth. Therefore, we urge shareholders to vote for Proposal 7. Thank you.

Thank you, Mr. McCaney, for your comments. Our Board and our Compensation and Benefits Committee actively oversee and monitor Johnson & Johnson's executive compensation programs to align the programs with our credo and the long-term value we create for our shareholders. The Compensation and Benefits Committee already has the discretion this proposal requests to defer senior executive annual incentive awards. Furthermore, approximately 2/3 of our executives' compensation is delivered in the form of long-term incentives that are already deferred for 3 years. The company has robust recoupment policies and stock ownership guidelines that further align the interest of our executives with the long-term interest of our shareholders. As further described in the proxy statement, the company has demonstrated its commitment to safeguarding against inappropriate risk-taking. For these reasons, the Board recommends a vote against this shareholder proposal.

Thank you, Mr. Chairman. The polls will now remain open for a few minutes. We will report on the voting results for each item of business in a few minutes after the polls have closed and the inspector of elections has had the opportunity to conduct its preliminary tabulation. [Voting]

In the meantime, we would like to share a powerful photo montage, honoring the men and women of Johnson & Johnson and their steadfast commitment and passion to innovation and advancing products and medicines for patients and consumers everywhere. [Presentation]

The polls have been closed, and I will now report on the preliminary voting results and the items of business that were presented. The preliminary voting results are based on the tabulation received from the inspector of elections a few moments ago, and they're as follows: the 14 director nominees named in the proxy statement have been elected to the Board of Directors. The advisory vote to approve named executive officer compensation has been approved. The ratification of appointment of our independent public accounting firm was approved. The government financial support and access to COVID-19 vaccines and therapeutics shareholder proposal did not pass. The independent Board share shareholder proposal did not pass. The civil rights audit shareholder proposal did not pass. The executive compensation bonus deferral shareholder proposal did not pass. Final voting results will be published within 4 business days of this meeting in a Form 8-K that will be filed with the Securities and Exchange Commission. This now concludes the formal portion of our program, and this year's annual meeting is adjourned. We will now open the meeting for a Q&A session. We want to thank you for all the questions you submitted online both before and during today's webcast. We will try to get to as many as we can over the next 10 minutes. As we review the submissions, there were several questions on the same topic. For those topics, we have selected a representative question to answer today. I will now turn it back over to our Chairman who will lead the Q&A session.

Our first question is from [ Antoinette Intervaverlo ] and it is, what is the status of the vaccine and reports of side effects specific to blood clots? And will the vaccine be authorized for use again? As we've said on a number of occasions, the safety and wellbeing of the people who use our products is our #1 priority. And consistent with statements made by our Chief Scientific Officer and Chief Medical Officer, we are evaluating reports of an extremely rare disorder involving blood clots in combination with low platelets observed in a small number of individuals following vaccination with our COVID-19 vaccine. Out of an abundance of caution, the CDC's Advisory Committee on Immunization Practices, or ACIP, recommended a pause in the use of our vaccine in the U.S. ACIP will reconvene this Friday, and we look forward to their review and the outcome of the meeting. We strongly support awareness of the signs and symptoms of this extremely rare event to ensure the correct diagnosis, appropriate treatment and expedited reporting by health care professionals. And we continue to believe in the positive benefit/risk profile of our vaccine in the population for which it is authorized. I'm pleased to let you know that earlier this week, the European Medicines Agency, EMA; Pharmacovigilance Risk Assessment Committee, PRAC, confirmed that the overall risk/benefit of our COVID-19 vaccine remains positive and have provided updated guidance for use of the vaccine. Following this recommendation from PRAC, we will resume shipment of our COVID-19 vaccine in the EU, Norway and Iceland. We also continue to collaborate with medical experts and global health authorities, including the CDC and the FDA, as we work toward continuing vaccinations to help end the global pandemic. Question number two is from [ Lynn Ray ], [ Milton Carris ] and [ David Peterson ]. Why are you outsourcing the manufacturing of the vaccine? And have you put in place quality assurance and controls to prevent this from happening again? Let me assure you, the quality and safety of our COVID-19 vaccine is absolutely paramount. Quality control processes identified a batch of drug substance that did not meet quality standards at one of our third-party manufacturing partners. This batch was never advanced to the filling and finishing stages of our manufacturing process. We announced that we would increase our oversight of the manufacturing of drug substance for our COVID-19 vaccine at this facility, including additional controls and personnel to ensure the quality standards of our company and the FDA are met. We will exercise our oversight authority to ensure that all of FDA's observations are addressed promptly and comprehensively. As with the manufacturing of any complex biologic medication or vaccine, the start-up for a new process includes test runs and quality checks to ensure manufacturing is validated and a final product meets our high-quality standards. This approach includes having dedicated specialists on the ground at the facilities that are part of our global manufacturing network to support safety and quality. Our goal remains ensuring all drug substance for our COVID-19 vaccine meets our high-quality standards, and we continue to collaborate with governments, health authorities and other companies to help bring an end to this global pandemic. Question number three, from [ Holly Daily ]. As we evolve, we better understand the negative impact of racial inequality. What are the initiatives and commitments aimed at hiring to build a truly diversified workplace, both at entry and senior levels? Thank you very much for your question, Holly. Diversity -- well, diversity is built into our credo. And we are absolutely committed to cultivating, fostering and advancing a culture of diversity, equity and inclusion. In 2019, we launched our inaugural You Belong: Diversity, Equity & Inclusion Impact Review, which examines how the Johnson & Johnson global DE&I strategy has been a key driver of innovation and impactful business outcomes, in addition to providing a sharpened focus on building our diverse workforce. Now the events of the past year and movements across the United States afforded Johnson & Johnson a critical opportunity to expand and accelerate our long-standing commitment to justice and equality. Through our Race to Health Equity initiative, aimed at eliminating the health inequities that threaten communities of color, we committed $100 million over the next 5 years to support programs that address racial injustice and health inequities for black people and communities of color in the United States. Now the Race to Health Equity strategic pillars are as follows. It starts with a people-first culture and cultivating one of the most diverse and inclusive workforces. In fact, our goal is that we're committed to hiring more diverse employees and have set a goal of increasing black talent at the manager and above levels in the U.S. by 50% over the next 5 years. We're also focusing on healthier communities, and we want to help close the racial mortality gap by investing in culturally competent community care models that create healthy outcomes for people of color. Finally, we also want to work with enduring alliances, leveraging Johnson & Johnson's powerful partnership network to combat racial and social health determinants. We are also focusing on diversity in clinical trials. We share the concern about the historic underrepresentation of racial and ethnic minorities in clinical trials, and we've taken specific steps through our dedicated team within Janssen. Our 3-part commitment focuses on the following: first, culture, and we want to advance internal awareness on the needs to successfully recruit underserved and underrepresented patients and also to apply new tools to increase enrollment of diverse populations in our clinical trials. We want to better focus on access and increase underserved and underrepresented population's access to participation in clinical trials through internal and external initiatives that address barriers to enrollment. And we want to improve awareness and trust. By doing this in clinical trials and underrepresented populations, we think it will help facilitate greater trust and participation in clinical trials. And we are also recruiting our Board in its board oversight role. The Board and relevant committees review the company's human capital management strategy on an annual basis and receive regular updates throughout the year on key talent metrics for the overall workforce, including diversity, equity and inclusion, talent development and recruiting. Thank you. Question number four is from [ Ralph Swayne, Sr. ] The high price of prescription drugs and copays is a real issue. As an engineer with an IRA, blessed with 5 children and 13 grandchildren, I can afford these costs, but many others can't. What is the company doing to make sure drugs are available at affordable prices? Thank you for your question, Mr. Swayne, and congratulations on both your career as well as your family. Johnson & Johnson's Pharmaceutical business, Janssen, maintains a responsible approach to pharmaceutical pricing, which recognizes the company's dual responsibility to patients today and for the long term in patients of tomorrow. Through our 5th Annual Janssen U.S. Transparency Report just published earlier this month, the company has demonstrated its commitment to growing not by price, but by volume. In fact, in 2020, the average net price decline of Janssen medicines was minus 5.7%. Since the beginning of 2016, the year Janssen launched its first U.S. Transparency Report, the compound net price decline was 14.4%. It's also important to note that we have actually increased our R&D investment, exceeding our spending on sales and marketing by a significant amount. Our R&D investment has increased an average of 8.1% for the past 5 years. In 2020, Janssen spent approximately $9.6 billion in global research and development, more than twice, in fact, 106% more on R&D than on sales and marketing. At the same time, discounts have tripled in the past 5 years. Since 2016, the rebates and discounts we provide have nearly tripled, reflecting payers' growing negotiating power. In 2020, Janssen paid $29.4 billion in discounts, rebates and fees, more than half the list price, in fact, 53% of all our medicines. Question number five is a collective question from [ Jeff Gross ] and [ Adrian Mollard ]. What is Johnson & Johnson's strategy for environmental sustainability? Can you give examples of short-term wins and long-term ES&G goals? I can assure you that as a health care company, we fully recognize that human health, well, it's inextricably linked to environmental health. Healthy people, well, they need a healthy planet. And that's why we've been setting public environmental performance goals for nearly 30 years. Among other ES&G goals, Johnson & Johnson reinforced its long-standing commitment to climate action by setting new-generation climate goals in 2020 that we will track over the next 10 years. They are: by 2025, we intend to source 100% of our electricity needs from renewable sources; by 2030, we want to achieve carbon neutrality for our operations going beyond our Science Based Target to reduce absolute scope 1 and 2 emissions from 60% from 2016 levels; by 2030, reduce absolute upstream scope 3 emissions 20% from the 2016 level. In our Health for Humanity Report, well, this is the company's primary source of annual disclosure on ES&G performance, which includes scorecards reflecting progress towards our Health for Humanity goals. We also have and measure ES&G and company performance. In fact, certain ES&G goals, including product quality, talent development and diversity and equity and inclusion, are part of the company's strategic objectives. Finally, Board oversight. The Science, Technology & Sustainability, the STS Committee reviews the company's performance on its annual ES&G goals. Other Board committees and the full Board oversees strategies and risks that are categorized as ES&G matters, including DE&I, human capital management, quality and medical safety. That now concludes today's meeting. I want to thank you, and thank you for your thoughtful questions. And I also want to thank our Board of Directors and my Executive Committee team members who have joined us by phone. I'd also like to take this opportunity to thank our shareholders for your continued trust and support and for the privilege of leading this great company as we execute bold strategies, develop innovative medicines and products and ensure that good health is within reach of everyone, everywhere. We trust you and your families will stay safe and healthy. Please enjoy the rest of your day.