Local Insights Inspire New Products Specialized surgical staples are often  used to connect tissue during certain  surgeries. They’re credited with quicker  recovery times than suturing by hand. But  in emerging markets, it often costs too  much to use specialized equipment  designed for developed markets. Dr. Zhao  is excited about what the new surgical tool  could mean for his patients.  “Patients who can now receive better  health care at lower cost are certainly  grateful,” he says. “Now, patients don’t  carry the psychological weight of financial  burden, so their recovery is complete.” For a health care company passionate  about meeting the unmet needs of  hundreds of millions more patients,  Johnson & Johnson needs to challenge its  innovation capability to develop solutions  that will be both appropriate and afford- able. To that end, Johnson & Johnson is  strategically basing research and develop- ment (R&D) centers in emerging markets  to develop medical devices and pharma- ceutical and consumer products based on  insights available in local markets. The Asia Pacific region is home to more  than  4  billion people, almost  60  percent of  the world’s population. While the more  affluent societies, such as Japan, Australia,  coastal China and metropolitan India,  have access to innovative products and  services, a large segment of the population  has been unable to access or afford much  beyond a very basic level of health care  until now.  Recent health care reforms in China and India, spurred by continuing  economic growth in these countries, are  10  JOHNSON & JOHNSON 2010 ANNUAL REPORT In June  2011 , a Medical Devices and Diagnostics R&D center will open in  Suzhou, China, focused on market-  appropriate innovation for fast-growing  emerging markets. Functions to support this  innovation will also be based on the campus,  including new product development and  marketing, clinical research, regulatory,  quality assurance and operations.  “Our vision is to be a source of innovation  for emerging markets and address the  unique needs of Asia Pacific patients,” says Michael del Prado, Company Group  Chairman, Medical Devices & Diagnostics,  Asia Pacific. “This might include devices for  specific disease states that are prevalent in  Asia, simplified and smaller instruments,  multi-use or disposable products that are  more economical, or a product range for  rural health centers.”  These mass markets are being addressed  with a different business model that is  focused on bringing an appropriate port- folio of technology and products to smaller  and more rural health care settings,  matching the specific range of procedures  offered. This approach has led to the development of high-quality, affordable  products that provide superior outcomes  for patients who would not otherwise have  access to such technology.  creating possibilities for governments to  deliver a higher standard of care to many  more people. Such reforms, along with the  rise of a middle class and expectations of a  better quality of life, are providing Johnson & Johnson with an enormous  opportunity to address a previously underserved market.  Johnson & Johnson has also entered into pharmaceutical research partnerships that connect biotech,  medical and academic communities to  its global research centers. One is a partnership in cancer research formed in  2008  with Tianjin Medical University  Cancer Hospital in China. In November  2010 , a research collaboration between  Tsinghua University in China and  Janssen Pharmaceutica N.V. was  announced. “This five-year strategic  partnership aims to accelerate discovery  research and foster new therapeutic  approaches for infectious diseases, an  area of significant unmet medical need  and one where we feel we can contribute  positively to public health goals in  China,” says Kim Taylor, Company  Group Chairman, Pharmaceuticals, Asia Pacific. In  2009 , Johnson & Johnson established a first-of-its-kind late-phase  chemical entity facility, Analytical and  Pharmaceutical Development Center, in  Mumbai, India. The center will play a key  role in addressing major global health  care challenges, many of which also face  Mumbai and the region.  For the consumer sector, the Emerging Market Innovation Center  that opened in Shanghai in  2007  is built  on a consumer closeness and bonding  program, an integral part of emerging  market product design and development  to meet needs in China. “I am happy Johnson & Johnson is  focused on making new technologies and better health care accessible to lower-income patients,” says Dr. Zhao.  “This results in better outcomes and fewer complications, really improving the lives of patients.” IMPROVING LIVES  Surgeon Zhao  Zhongliang is happy to be a part of making  new technologies and better health care  accessible to patients like those in the  farming community he serves. EMERGING MARKET NEEDS PASSION FOR INNOVATION S urgeon Zhao Zhongliang serves a farming community in China’s Hebei province. He recently  worked with the Ethicon Endo-Surgery franchise  to develop a new, market-appropriate surgical  stapler to meet needs of patients like his.  EMERGING MARKETS