Johnson & Johnson Plans To Improve Overall Cost Structure, While Continuing to Invest in Opportunities for Sustained Profitable Growth

Identifies Initiatives to Achieve Projected, Pre-Tax, Annual Cost Savings
of $1.3-$1.6 billion for 2008

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Expects to Take Associated Pre-Tax, Restructuring Charges in Range
of $550-$750 million in Second Half of 2007

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Confirms Earnings Guidance for 2007, excluding one-time charges

New Brunswick, NJ.– Johnson & Johnson today announced initiatives that are expected to generate pre-tax, annual cost savings of $1.3-$1.6 billion for 2008 in an effort to improve its overall cost structure and ensure continued profitable growth in the years to come. The company will also continue to invest in both its growing businesses as well as promising technologies and product opportunities to strengthen its position in the fastest growing segments of the health care industry.

“Throughout our history, we have always taken a thoughtful, disciplined approach to address the challenges we face,” said William C. Weldon, Johnson & Johnson Chairman and Chief Executive Officer. “These actions we are taking to improve our cost structure will enable us to continue investing for future growth and profitability.”

The company expects to take associated pre-tax, restructuring charges in the range of $550-$750 million in the second half of the year. It confirmed previous earnings guidance for full-year 2007, which excludes such charges, of between $4.02 and $4.07 per share. The company intends to maintain investments in its research and development to strengthen its portfolio and ensure leadership positions in high-growth areas of health care.

Cost savings will be achieved primarily in the Pharmaceuticals segment, which faces significant patent expirations over the next few years, and in the Cordis franchise, which competes in the drug-eluting stent market:

* The company’s Pharmaceuticals segment will reduce its cost base by consolidating certain operations, while continuing to invest in recently launched products and its late-stage pipeline of new products. The company plans to file applications for seven to ten new compounds between 2008 and the end of 2010.
* The Cordis franchise is moving to a more integrated business model to address the market changes underway with drug-eluting stents and to better serve the broad spectrum of its patients’ cardiovascular needs, while reducing its cost base.

Position eliminations will form only one component of the savings. Weldon said, “These are difficult issues, but ones that must be addressed to ensure the long-term strength of our business.”

The company said initiatives would be implemented at operating company levels to be certain the businesses can meet the needs of the customers they serve on a day-to-day basis and to ensure the fair and respectful treatment of employees throughout the process. The company estimates that position eliminations will be in a range of 3-4 percent of its global workforce, subject to and handled in accordance with local works councils and labor laws. The company plans to minimize the number of employees who are affected by these actions through the use of attrition and hiring freezes in certain areas of the business.

As part of its attention to cost management, the company plans to accelerate steps to standardize and streamline certain aspects of its enterprise-wide functions such as human resources, finance and information technology to support growth across the business, while also leveraging its scale more effectively in areas such as procurement to benefit its operating companies.

The savings and charges discussed today do not include any impact from the company’s previously disclosed integration plans associated with the acquisition of Pfizer Consumer Healthcare, which continue to be on target to achieve $500 - $600 million in synergies by 2009.