Thus, our experience with the McNeil Consumer Healthcare recalls  has been difficult for all of us. Most important, we disappointed  our customers. Trust and confidence in Johnson & Johnson and  our products are fundamental to everything we do. Even though  millions of customers remain supportive of our work to assure  quality and restore our consumer brands to the market, that trust  and confidence have been truly tested. During this past year, I visited many manufacturing locations  around the world. I can assure you that our people are dedicated to  giving our customers the highest-quality products, with no  compromises whatsoever. It is our responsibility to learn from  what happened, address problems at their root causes and ensure  that only the highest-quality products reach our customers.  That hard work—and the subsequent results—will help earn back trust and respect. We are on our way to restoring McNeil Consumer Healthcare to the high levels of quality and compliance that people expect of  all Johnson & Johnson companies and that we expect of ourselves. As part of this commitment, we accelerated the imple-  mentation of organizational changes to our Supply Chain,  Manufacturing and Quality and Compliance areas, which began early in  2010 . We also undertook a thorough review of how we  operated our manufacturing plants and examined in detail the  historical production records of McNeil Consumer Healthcare  products sold in the U.S. and produced in McNeil’s internal  manufacturing network. We have completed this internal review, and we will continue to conduct reviews at external sites that manufacture  McNeil products. If these reviews reveal any further issues, we will not hesitate to take whatever steps are needed, including  further market action, to ensure that our products meet world-class quality standards. These and other steps we have  taken under the Comprehensive Action Plan submitted to the U.S. Food and Drug Administration (FDA) constitute an  uncompromising effort to ensure high quality at McNeil. These actions will help us assure that moving forward, our  products in the marketplace live up to the standards and  expectations that consumers have for all products coming from Johnson & Johnson.  At the same time, we are focused on returning the recalled  products to the marketplace in  2011 . We began shipping a small  amount of product in the fourth quarter of  2010,  and alternate supply of the remaining key products will ramp up in the latter half of  2011 . At the appropriate time, we will invest in market support for our over-the-counter brands. We also will be introducing product and packaging innovations for a number of products, especially those for young children. Even as we faced challenges throughout  2010 , we remained  unwavering in who we are as a company. The source of our  enduring strength is a fundamental commitment to Our Credo and an operating model that has served us well for decades. Our operating model includes a commitment to being broadly based in human health care; a decentralized management  approach that keeps our people close to customers; managing for  the long term; and a focus on people and values. We focus on four  growth enablers—products, pipelines, global presence and people—that support the model and enable accelerated growth.  • New Products:  We introduced innovative products across  our businesses and saw strong growth in recently introduced  products. These include consumer products that address  emerging health care needs, such as  JOHNSON’S ® NATURAL ® baby products and  LISTERINE ® ZERO ™  mouthwash. In our  Medical Devices and Diagnostics (MD&D) segment, we  launched more than  50  new products. For example, a new  ENSEAL ®  tissue-sealing device for large vessel sealing in open  surgery was introduced in the U.S., strengthening our energy  surgical instrument portfolio. In Pharmaceuticals, we saw  growth of key innovations approved in  2009 — NUCYNTA ® *  (tapentadol) for pain,  STELARA ®  (ustekinumab) and  SIMPONI ®  (golimumab) in immunology, and  INVEGA ® SUSTENNA ®  (paliperidone palmitate) for schizophrenia.  With a consistent flow of new products based on scientific innovation, approximately a quarter of  Johnson & Johnson sales last year came from new products  introduced in the past five years, and approximately  70  percent  of our sales were from products with No.  1  or No.  2  global market share positions. • Leading Product Pipelines: Across our businesses, we invested nearly $ 7  billion in research and development to  advance our newest technologies and pipeline compounds.  Our Pharmaceuticals pipeline is recognized as among the best in the industry.  Rivaroxaban**, our anti-coagulant, has been filed in the U.S. for the prevention of stroke in patients with atrial  fibrilation, a condition that can lead to major physical and  behaviorial impairments, or death. The Company also  responded to the FDA Complete Response Letter for its review  of the rivaroxaban filing for preventing deep vein thrombosis and pulmonary embolism following total knee and hip  replacement surgery. Abiraterone acetate, an investigational  compound for the treatment of metastatic advanced prostate  cancer from last year’s acquisition of Cougar Biotechnology,  was granted priority review in the U.S. and accepted for accelerated assessment in Europe. Telaprevir,*** for hepatitis C, an undertreated global infectious disease, has also been accepted for accelerated assessment in Europe.  Additionally, we filed TMC 278  for HIV in both the U.S. and Europe. In MD&D, the Fibrin Pad, a revolutionary hemostasis  product that combines two biomaterials and two biologics to  stop bleeding during surgical procedures, was filed for regula- tory approval with the FDA.  • Targeted Acquisitions:  We believe in an organic and  collaborative approach to innovation. In addition to our own  internal research and development programs, we create  partnerships through licensing and make targeted acquisitions  to either add a capability or gain an asset from which we can drive more value. We acquired Micrus Endovascular, a  * NUCYNTA ®  is licensed from Grünenthal GmBH. ** Rivaroxaban is co-developed with Bayer HealthCare. *** Telaprevir is developed in collaboration with Vertex Pharmaceuticals, Inc. JOHNSON & JOHNSON 2010 ANNUAL REPORT 2 2010 HIGHLIGHTS Our  2010  accomplishments reflect the strength of our model and  growth enablers.