Good morning. Welcome to Johnson and Johnson's 4th Quarter 2020 Earnings Conference Call. All participants will be in listen only mode until the question and answer session of the conference. This call is
being recorded.
I would now like to turn the call over to Johnson and Johnson.
You may begin. Good morning.
This is Chris D'Lorffes, Vice President of Investor Relations for Johnson and Johnson. Welcome to our company's review of business results for the Q4 and full year of 2020 and our financial outlook for 2021. Joining me on today's call are Alex Gorski, Chairman of the Board of Directors and Chief Executive Officer and Joe Wolk, Executive Vice President, Chief Financial Officer. A few logistics before we get into the details. This review is being made available via webcast, accessible including today's presentation and associated schedules.
Please note that today's presentation includes forward looking statements. And factors that may cause the company's actual results to differ materially from those projected. In particular, there is significant uncertainty about the duration This means the results could change at any time and the contemplated impact of COVID-nineteen A further description of these risks, uncertainties and other factors can be found in our SEC filings, including our 2019 Form 10 ks Subsequent Form 10 Qs along with reconciliations of the non GAAP financial measures utilized for today's discussion The most comparable GAAP measures are also available at investor. Jandj.com. Several of the products and compounds discussed today are being developed in collaboration with strategic partners or licensed from other companies.
This slide acknowledges those relationships. Moving to today's agenda. Alex will provide on our overall results and business highlights for the year. I will review the 4th quarter sales and P and L results for the corporation And the 3 business segments. Joe will conclude by providing insights about our cash position, capital allocation deployment I will now turn the call over to Alex to share our overall results and business highlights.
Thank you, Chris, and thank you,
Thank you, everyone, for taking time
to join us today to discuss our full year 2020 results and outlook for 2021. At the start of last year, No one could have imagined just how drastically our lives were about to change because of a virus that would impact billions of people around the world. By any measure, 2020 was a year dominated by uncertainty, yet the pandemic also helped to clarify Both our priorities and our values and within Johnson and Johnson, it has illustrated the power and importance of our credo In guiding our actions to meet the needs of all our stakeholders. Now because of COVID-nineteen, we now have a deeper appreciation on just how pivotal Good health is to our safety, security and prosperity as a society. We have a profound We expect and gratitude for all the doctors, nurses and hospital staff serving on the front lines of care, for the everyday heroism of the essential workers We show up every day to keep the world's critical infrastructure up and running and expectations that companies can and should help drive positive change in the society are higher than ever.
As the world's largest and most broadly based global healthcare company, Johnson and Johnson was built for times like these. We've been leading to the world's biggest public health challenges for over a century. And today, our diversified businesses cut so many parts of people's lives. We had both the ability and the responsibility to act when the COVID-nineteen outbreak turned into a global pandemic. Within weeks of the DNA sequencing of the COVID-nineteen virus, Janssen scientists were working 20 fourseven To identify the most promising lead candidate for a vaccine, I'm proud of the progress of our COVID-nineteen vaccine candidate And the fact that we've moved so quickly while maintaining the highest level of science and safety standards.
This is truly a remarkable accomplishment And a testament to the ingenuity and determination of our vaccine and supply chain teams. We look forward to sharing further details for Phase 3 study by early next week. Additionally, I'm just as proud of the ways each of my Johnson and Johnson colleagues I've gone above and beyond the call of duty to provide uninterrupted access to our medicines, embrace radically new ways of working and use the full breadth and depth of our expertise to deliver our important medicines and products to patients and consumers and support healthcare systems They've been overwhelmed by the pandemic. The fact that we've been able to not just weather this crisis, but bring our broad based capabilities to support this and deliver on our shorter term top and bottom line business goals, while increasing our investments and innovation to record levels It's a remarkable testament to our purpose driven culture and core strengths that characterized our company for over a century, Execution, innovation and people. Our relentless focus on excellence and execution is key to meeting the needs Of all our stakeholders today and tomorrow, the performance of our business in 2020 reflects the continued confidence from patients, Physicians, customers and consumers in our life saving medicines and products.
Our pharmaceutical business performed well above market, Pipeline submissions and approvals on track and exceeded patient enrollment in clinical trials compared to 2019. Our consumer health business also performed above market for the year and our medical devices business demonstrated resiliency and agility Leading to a strong second half recovery. Our unparalleled scientific expertise allows us to create life enhancing innovation. Our R and D colleagues across Johnson and Johnson have continued to advance our robust pipeline of innovative and transformational new products. Of note, we initiated our U.
S. Filing for our BCMA CAR T in multiple myeloma in December. In addition, we filed emivatinib for the treatment of exon 20 mutations in non small cell lung cancer in the U. S. And Europe.
Our Medical Device business has made strong progress advancing our pipeline despite the pandemic, achieving and even accelerating certain key milestones throughout the year. As you heard from Ashley, Doctor. Moll and the team at the Medical Device Update in November, we are developing an end to end digital ecosystem across 3 robotics platforms And we achieved a significant milestone this month receiving FDA clearance for our Velas Robotic Assisted solution. We believe the industry is just starting to unlock the full potential and benefits of robotic and digital technologies. Johnson and Johnson is well positioned to bring innovative, differentiated solutions to the surgery suite over the next 10, 20 30 years.
I'm also very proud of the great work from our supply chain colleagues in driving improvements and efficiencies over the past year. Gartner even honored Johnson and Johnson with a number 3 ranking across all industries on its annual 2020 supply chain top 25 index. That's up 5 spots from our 2019 ranking. Gartner also awarded Johnson and Johnson the number one spot on its 2020 healthcare supply chain, COP 25, citing our commitment to continuous improvement while putting innovation into practice, particularly in our response to the COVID-nineteen pandemic. And finally, we are powered by our people, purpose and value system.
More than 75 years since it was authored, Our credo continues to guide all 135,000 of us at Johnson and Johnson.
And with that in mind, I want to
highlight a recent appointment To our Board of Directors, an incredibly high honor awarded to one of our own directors. In December, Johnson and Johnson Doctor. West's accomplished healthcare background in addition to their deep strategic leadership experience are strong additions to our Board of Directors. In October, Johnson and Johnson Board Director, Doctor. Jennifer Doudna, along with her colleague, Doctor.
Emmanuelle Charpentier, Was awarded the 2020 Nobel Prize in Chemistry for the revolutionary discovery of CRISPRCas9 gene editing technology Considered to be one of the most significant breakthroughs in molecular biology in the past decade, we are truly proud of our recognition for this incredible work. Our commitment to diversity, equity and inclusion in both our workforce and the communities in which we serve has always been an important part of our culture. However, the past year has also shown a spotlight on this act that we can all do more. To that end, I am proud Our Race to Health Equity platform launched in November. Our Race to Health Equity aims to help improve racial equity By eliminating health inequities for people of color and our $100,000,000 commitment to invest in and promote health equity, I'm excited to be part of this progress and for Johnson and Johnson to play a part in impactful lasting change.
And most importantly, the talented and committed people of Johnson and Johnson drive our success by putting the patients and consumers we serve around the world at the Forefront of all we do. We thank and rely on them to continue to innovate, execute and focus on our shared purpose to deliver better health I look forward to addressing your questions during the Q and A portion of the webcast. Right now, I'll turn the call over to Chris to share details related to our performance for the quarter. Thank you. Chris?
Thanks, Alex. Now to recap the Q4. Worldwide sales were $22,500,000,000 for the Q4 of 2020, an increase of 8.3% versus the Q4 of 2019. Operational sales growth, Which excludes the effect of translational currency increased 7.1% as currency had a positive impact of 1.2 points. In the U.
S, sales increased 9.6%. In regions outside the U. S, our reported growth was 7%. Operational sales growth outside the U. S.
Was 4.3% with currency positively impacting our reported OUS results by 2.7 points. Excluding the net impact of acquisitions and divestitures, adjusted operational sales growth was 7.3% worldwide, 9.6% in the U. S. And 4.8% outside the U. S.
As referenced on prior calls, would like to remind everyone that our 2020 fiscal year included an additional week. Since this week occurred during a holiday period, It does not represent a full week of sales, but rather a few more shipping days, with these additional shipping days adding approximately 4 points To the quarterly sales growth rate at one point to the annual growth rate, this can be roughly applied across all segments. The additional sales were more heavily skewed to the U. S. For the enterprise, offsetting this sales benefit was the estimated negative impact The COVID-nineteen pandemic.
Lastly, while these few shipping days added to sales, we also had a full week's worth of operating costs. Therefore, the impact to earnings was negligible. Turning now to earnings. For the quarter, net earnings were $1,700,000,000 And diluted earnings per share was $0.65 versus diluted earnings per share of $1.50 a year ago. Excluding after tax intangible asset amortization expense and special items for both periods, adjusted net earnings for the quarter were $5,000,000,000 And adjusted diluted earnings per share was $1.86 representing decreases of 1.2% 1.1%, respectively, compared to the Q4 of 2019.
On an operational basis, adjusted diluted earnings per share Declined 3.2%. For the full year 2020, consolidated sales were $82,600,000,000 An increase of 0.6% compared to the full year of 2019. Operationally, full year sales grew 1.2% In regions outside the U. S, our reported year over year change was negative 1.3%. Operational sales growth outside the U.
S. Declined by 0.2% with currency negatively impacting our reported OUS results By 1.1 points, excluding the net impact of acquisitions and divestitures, adjusted operational sales growth was 1.5% worldwide, 2.8% in the U. S. And 0.2% outside the U. S.
Net earnings for the full year 2020 Were $14,700,000,000 and diluted earnings per share was $5.51 versus diluted earnings per share of $5.63 a year ago. 2020 adjusted net earnings were $21,400,000,000 And adjusted diluted earnings per share was $8.03 representing decreases of 8.1% And 7.5%, respectively, versus full year 2019. On an operational basis, adjusted diluted earnings per share decreased By 7.8%. Beginning with Consumer Health, I will now comment on business segment sales performance for the 4th quarter, Highlighting items that build upon the slides you have in front of you. Unless otherwise stated, percentages quoted represent the operational sales change In comparison to the Q4 of 2019 and therefore exclude the impact of currency translation, While not part of the prepared remarks for today's call, we have provided additional commentary on our website for the full year 2020 sales by segment To assist you in updating your models, worldwide consumer health sales totaled $3,600,000,000 and grew 2% With growth in the U.
S. Of 2.7% and 1.5% outside of the U. S. Consumer Health delivered strong above market growth Due to our Oral Care, Wound Care and OUS Skin Health Beauty businesses, partially offset by the negative impact of COVID-nineteen, Primarily in our OTC business and the SKU rationalization program, which predominantly impacted baby and skin health beauty outside the U. S.
E commerce growth continues to be strong across regions and franchises. Over the counter medicines had a decline of 1.5%. In the U. S, OTC sales were flat and the OUS declined by 2.9%. Globally, results were negatively impacted by COVID-nineteen resulting in lower cough, cold and flu incidences impacting Children's Tylenol, Global Cough and Cold And Digestive Products.
Offsetting these declines was strong adult Tylenol market and share growth attributed to elevated demand Driven by COVID-nineteen, ZYRTAC share growth, partially due to competitive out of stock and strong market growth in anti smoking aids in EMEA. The Skin Health and Beauty franchise experienced recovery with a 2.6% increase driven by strong performance of OGX due to share gains And OUS growth for Doctor. Salabo, partially offset by Neutrogena declines as retailers carry less inventory, Coupled with market declines primarily in the makeup category due to fewer use occasions driven by COVID-nineteen restrictions and SKU rationalization. As consumers continue to focus on products related to personal health and hygiene, WorldCare grew by 12% on continued growth of Listerine mouthwash Due to new flavor and product innovations and increased demand globally related to COVID-nineteen, wound care grew 12.2%, primarily due to strong performance across Neosporin and BAND AID brand adhesive bandages in the U. S.
And Asia Pacific. In the baby franchise, we saw Avino Baby strength offset by our planned SKU rationalization program, primarily outside the U. S. Moving on to our Pharmaceutical segment. Worldwide Pharmaceutical sales of $12,300,000,000 grew 14.6%, Enabled by strength in all regions with U.
S. Sales increasing by 15.3% and OUS sales increasing by 13.5%, The business realized double digit growth in 8 key products across our portfolio, supporting growth in all therapeutic areas Except for cardiovascular metabolism other, which experienced a decline of 1%, primarily driven by continued biosimilar competition for Procrit. Our strong portfolio of products and commercial capabilities has enabled us to deliver our 9th consecutive year of Global adjusted operational growth at above market levels. Our oncology portfolio delivered another robust quarter With worldwide growth of 23.7 percent, DARZALEX continued its strong performance growing 49%, Led by share gains globally with the U. S.
Market share up about 4 points across all lines of therapy. Furthermore, the U. S. And European markets continue to exhibit increased adoption of the subcutaneous formulation launched in the 2nd quarter As feedback continues to be very positive on the ease and reduced time to administer the new formulation. Also, we continue to advance the DARZALEX innovation pipeline with the recent U.
S. Approval of DARZALEX FASTPRO for the treatment of patients with newly diagnosed light chain amyloidosis, IMBRUVICA grew 25.3% globally, mainly driven by market growth and our strong leadership position in all key indications. We continue to progress the development of IMBRUVICA and further differentiate BTK inhibitor as evidenced by the robust data presentation at the American Society of Hematology Conference in December. Erleada continued its strong growth momentum with sales of just over $240,000,000 in the quarter, driven by market share and penetration gains, especially in the metastatic indication. Our immunology therapeutic area delivered global sales growth of 15.3%, Driven by strong double digit performance of STELARA and TREMFYA, STELARA grew 30.3%, driven by global demand increase in Crohn's disease With over a 5 point share increase in the U.
S. And continued growth in ulcerative colitis. TREMFYA grew 39.3% and is up about 3 points of share from the Q4 of 2019 in the psoriasis market in the U. S. TREMFYA continues to strengthen its leadership position as the most prescribed IL-twenty three inhibitor for patients worldwide through its differentiated data package that was presented earlier this year.
In neuroscience, our paloperidone long acting portfolio performed well, growing 9% driven by market And share growth due to increased new patient starts and strong persistency. In 2020, we filed submissions in the U. S. And EU for paliperidone palmitate 6 month formulation for the treatment of adults diagnosed with schizophrenia. And if approved, it will be the first And only long acting injectable medication with a twice yearly dosing regimen.
Our total pulmonary hypertension portfolio achieved strong growth of 37.4 percent with OPSUMIT growth of 36.7% And OBTRAVI growth of 44.1 percent, both driven by market penetration and share growth as well as a one time benefit of about 10 points each, resulting from the U. S. Distributor model change we communicated in Q4 2019. I'll now turn your attention to the Medical Devices segment. Worldwide Medical Devices sales were $6,600,000,000 declining 2.2%.
Excluding the net impact of acquisitions and divestitures, Primarily the divestiture of ASP, adjusted operational sales decline was 1.5% worldwide. Onetime items positively impacted the current quarter by about 200 basis points. The net benefit from these onetime items is comprised Of the benefit of the extra shipping days associated with the 53rd week, partially offset by the anticipated inventory contractions In China, across our portfolio and in our U. S. Contact lens business as communicated last quarter.
Adjusting for the impact of these one time items, Q4 results were in line with Q3 2020 performance. COVID-nineteen remains a dynamic variable within the medical device market. In Q4, COVID-nineteen cases and hospitalizations Reached their highest levels in certain parts of the world, while cases remained relatively stable in others. This did lead to some softening in recovery trends late in the quarter. However, impacts varied across geographies and procedure types.
Looking geographically, China, where COVID-nineteen cases have continued to remain more stable, delivered double digit growth within the quarter. Excluding the benefit of the additional shipping days, the U. S. Declined low single digits due to COVID-nineteen related restrictions occurring late in the quarter. Sales also declined in Europe, where some of the strictest restrictions were deployed to curb the increases in COVID-nineteen cases.
As we have noted previously, healthcare systems continue to demonstrate their resiliency and dedication to treating both COVID-nineteen And non COVID-nineteen patients, resulting in significantly less disruption during this recent surge of cases versus the impact seen earlier this year. Interventional Solutions continue to demonstrate strong performance delivering another quarter of double digit growth. Electrophysiology grew 12.7% Globally, led by market recovery and share gains from new products. CeraNovus returned to double digit growth with strong sales in China. Worldwide Orthopedics declined 5.3% versus prior year, driven by the negative impact of COVID-nineteen or procedures deemed to be more elective in nature.
Worldwide Trauma delivered growth of 3.6% globally. U. S. Growth of 10% for the quarter reflects market recovery As well as success of our new products, such as the cannulated compression headless screws. Declines of about 6% Outside the U.
S. Reflects slower procedural volumes due to COVID-nineteen restrictions as well as contractions in inventory in China worth around 400 basis points. Worldwide hips declined 2.7%, primarily due to the impact of COVID-nineteen on the market. U. S.
Declined 0.7% versus prior year and continues to benefit from our leadership position in interior approach And strong demand for the Actus Stem and enabling technologies helping to partially offset the negative COVID-nineteen impact. We continue to introduce innovation in this space. And in December, we entered the modular dual mobility market With the first implant of Pinnacle dual mobility, which is planned for a full U. S. Market launch this year.
These declined 13.9% globally as we continue to see procedures in this space highly impacted by COVID-nineteen, especially revision procedures where we have a higher share than primary. The 20.6% decline outside of the U. S. Reflects the impact With COVID-nineteen on procedures, especially in markets like the U. K.
And India, where we hold higher share positions. We are very excited about the FDA clearance of our Velas orthopedic robotic system and bringing this to the U. S. Market in 2021. The combination of the differentiated robotic system with our Attune Knee platform are expected to drive enhanced performance in this segment.
Worldwide decline in spine of 7.1% reflects the impact of COVID-nineteen on the market as well as inventory reductions in China impacting global performance By about 3.50 basis points. Offsetting this decline is the growth we continue to see from the success of recent launches of new products such as Symphony and Conduit. For the quarter, U. S. Price remained consistent with historical levels down low single digits.
Moving to the results for the surgery business. Advanced Surgery returned to growth with a 2% increase versus prior year led by strong performance in U. S. Biosurgery, which grew 12.1% in the quarter. U.
S. Biosurgery growth is due to the strength of Sertraphlo and the continued recovery from the previously disclosed 2019 stop shipment. Endicutters delivered 1.6% growth, mainly driven by the success of new products in China, Offsetting impacts from COVID-nineteen. Energy declined by 3.1%, reflecting the negative impact of COVID-nineteen competitive pressures in the U. S.
Partially offset by the strength of new products outside the U. S. This month, we received FDA 510 clearances For both the Nseal X1 curved and straight jaw tissue sealer instruments, which will further strengthen our portfolio of advanced energy devices. Global wound closure grew by 1.5% through the strength of STRATAFIX Barb Suture and Perennial Topical Skin Adhesive products in both the U. S.
And OUS Inventory dynamics in the quarter added about 3.50 basis points to the U. S. Growth of 8.5% It negatively impacted the OUS decline of 2.9% by about 150 basis points. The Vision business declined 6.6% globally. U.
S. Contact lens declined 7.1%. However, after adjusting for the impact of both the additional days this quarter and the impact of the anticipated channel inventory correction communicated last quarter Worth about 9 points, the underlying U. S. Contact lens business grew and continues to deliver competitive performance.
While Surgical Vision declined 10.1% globally, this represents an improvement from Q3, where the business declined 16.4% as well as new products like Technis, Toric II, IOL for stigmatism. Now regarding our consolidated statement of earnings for the 4th exclude intangible amortization expense and special items, as reported earlier, our adjusted EPS of 1 point And $0.86 reflects a reported decrease of 1.1% and an operational decrease of 3.2%. I'd like to now highlight a few noteworthy items that have changed on the statement of earnings compared to the same quarter last year. Cost of products sold delevered slightly, primarily driven by COVID-nineteen period costs and fixed costs impacting the medical device business, Partially offset by favorable enterprise portfolio mix and portfolio mix within the Pharmaceutical business. Selling, marketing and administrative margins improved for the quarter as a result of favorable segment mix and expense leveraging in the pharmaceutical And consumer businesses, partially offset by the negative COVID-nineteen impact on medical devices sales.
We continue to invest in research and development at competitive levels, investing 17.9% of sales this quarter. This was higher than the Q4 of 2019 by 2 30 basis points, driven by portfolio progression, including the COVID-nineteen vaccine in the Pharmaceutical business. The other income and expense line showed net expense of $2,400,000,000 in the 4th quarter of 2020 compared to net expense of $16,000,000 last year. This was primarily driven by higher litigation expenses Related to a Missouri Supreme Court verdict on talc in the Q4 of 2020, which was previously disclosed in our November 3, 8 ks filing, We intend to seek review of that decision by the United States Supreme Court. Regarding taxes in the quarter, our effective tax rate decreased from 4.9% in the Q4 of 2019 to a 5.5% benefit in the Q4 of 2020.
This decline was primarily driven by the tax benefit associated with the Q4 2020 litigation expenses. Excluding special items, the effective tax rate was 11.4% versus 10.7% in the same period last year. I encourage you to review our 10 ks for further details on specific tax matters. Let's now look at adjusted income before tax by segment. In the Q4 of 2020, our adjusted income before tax for the enterprise as a percentage of sales decreased from 27.1% to 24.9%, primarily driven by the COVID-nineteen impact this quarter.
The following are the main drivers of adjusted income before tax Including fixed cost deleveraging associated with sales declines. Consumer margins improved by 430 basis points, Primarily driven by portfolio and investment optimization, including execution of our SKU rationalization program. The decline in pharmaceutical margins of 90 basis points was primarily driven by investment in R and D Associated with portfolio progression, including the COVID-nineteen vaccine. This slide provides our full year consolidated statement of earnings. Please direct your attention to the boxed section at the bottom of the schedule, where again, you will see we have provided our earnings adjusted to exclude intangible amortization expense And special items, as reported today, our full year 2020 adjusted EPS of $8.03 Reflects a reported decrease of 7.5% and an operational decrease of 7.8%.
The decline is primarily related to COVID-nineteen impacts realized predominantly in our Medical Device business, Along with increased R and D investment, including the investment associated with our COVID-nineteen vaccine candidate. Moving to the next slide. Our full year 2020 adjusted income before tax for the enterprise decreased by 360 basis points versus 2019. Looking at the adjusted pretax income by segment, Medical devices declined from 35.4% in the previous year to 17%, Primarily driven by COVID-nineteen impacts on the business, including fixed cost deleveraging associated with sales declines. 2019 also includes approximately $2,000,000,000 related to the divestiture of the Advanced Sterilization Products Business.
Pharmaceutical margins improved by 200 basis points to 42%, driven by favorable product mix And sales, marketing and administrative expense leveraging. Consumer margins improved by 240 basis points to 23.8 percent, Driven by portfolio and investment optimization, including the execution of our SKU rationalization program. Moving on to important developments. For your reference, here is a slide summarizing notable developments occurring in the 4th quarter, some of which were mentioned in my comments. For your planning purposes, we plan to host a business review featuring our Pharmaceutical business On November 18 this year, the format and location will be announced at a later date, but we hope that you're able to join us for this event We look forward to sharing the details about our robust pipeline and differentiated capabilities that gives us the confidence in our ability to sustain growth That concludes the sales and P and L highlights for Johnson and Johnson's 4th quarter and full year 2020.
I'm now pleased to turn the call over to Joe Wolk.
Thank you, Chris, and thanks to everyone joining today's call. As you heard, Johnson and Johnson's results reflect the strength and resilience of an agile broad based business predicated on innovation Despite unique challenges throughout 2020, the unwavering commitment of our 135,000 global colleagues was on full display, Delivering trusted, life saving, life enhancing products to patients and consumers around the world. Their efforts resulted in sound shareholder returns, while advancing value creating opportunities that benefit all of our stakeholders now and over the long term. Alex stated on this call and really throughout 2020 that Johnson and Johnson is built for times like this. Our disciplined long term focus yields a financial strength that affords us the ability to quickly act to address the COVID-nineteen pandemic in many ways, Most notably, on our ongoing vaccine development, but to also continue investing in innovative solutions to better the future of healthcare Even when short term uncertainty exists, I am very pleased today to share our financial guidance for 2021, which reflects these principles.
But first, let me review our cash position and capital allocation priorities. We generated free cash flow for the year of $20,000,000,000 Surpassing last year's record high, we did benefit by having our fiscal year end lapse into 2021, as Chris noted, And we are now planning for payment related to the anticipated final opioid litigation agreement in principle in 2021 versus the previous planned 2020 payment. In terms of our cash position, at the end of 2020, we had approximately $10,000,000,000 of net debt, Comprised of approximately $25,000,000,000 of cash and marketable securities and approximately $35,000,000,000 of debt. One element of our business that we're particularly proud of that despite the challenges of 2020 offered, we maintained Our long term approach to drive growth and value creation across the enterprise. From an innovation standpoint, the development of a safe and effective COVID-nineteen vaccine It was certainly a top priority throughout the year.
Yet, as I said earlier, we continue to make other strategic investments That fortified our pipeline and further enhanced our competitive advantage even during the pandemic. Our level of R and D investment reached an all time high Of $12,100,000,000 $800,000,000 more than our 2019 R and D investment. On the transaction front, we continue to evaluate opportunities that strategically complement our portfolio and where our scientific expertise or commercial capabilities As discussed in our Q3 earnings call in October, we acquired Momenta Pharmaceuticals and a lead therapeutic candidate, nipocalumab, Which is in Phase 2 and Phase 3 clinical development for the treatment of rare auto antibody driven diseases. We believe nipocalumab encompasses a pipeline and a product opportunity that can treat a broad range of devastating auto antibody driven diseases. In December, we expanded our retina pipeline by acquiring the rights to HEMAIRA Biosciences' investigational gene therapy HMR-fifty nine, A one time outpatient intravitreal injection to help preserve vision in patients with geographic atrophy, A severe form of age related macular degeneration where currently there are no other approved therapies.
And as shareholders in Johnson and Johnson have come to expect, We continue to prioritize our dividend by announcing last April a 6.3% increase. This translated in returning $10,500,000,000 In 2020, approximately 50% of our free cash flow. Let's now turn to our full year 2021 guidance. Given our full year 2020 performance in this unprecedented environment and the underlying strength of our broad based business, we are well positioned to continue delivering Long term value to our stakeholders. We continue to monitor and work with healthcare systems around the globe as they balance surges in COVID-nineteen cases With treatment for non COVID-nineteen patients, I would be remiss if I didn't acknowledge the tremendous efforts of healthcare providers around the world That have society in a much better place today with improved treatment protocols and resource allocation compared to the start of the pandemic.
We are also encouraged by the recent availability of COVID-nineteen vaccines that will provide added reassurance to people in need of medical procedures. From a macroeconomic perspective, our outlook assumes stabilizing employment levels and a reduction in social restrictions as the year progresses. From From a legislative standpoint, we are not assuming significant changes in current tax policy and consistent with the past 4 years in our Pharmaceuticals business, we expect net price decreases at similar levels. We will continue to focus on providing access to more patients for our innovative products resulting in growth being volume driven. So let's get into the details for full year 2021 guidance for you to consider in updating your models.
I'd like to note upfront that our guidance excludes the financial impact from the potential distribution of our COVID-nineteen vaccine candidate. As Alex noted, we remain committed to provide a safe and effective vaccine. Being in the final stages of a robust 45,000 person study, Analytics will be completed and we plan to report out the results by early next week. Therefore, it would be premature to speculate we will let the science play out. Once we have the data, obtain regulatory authorization and finalize agreements to supply, we will provide financial updates as warranted, Likely during our Q1 earnings call in April.
Starting with sales, we expect adjusted operational sales growth for the full year 2021 of between 8.0% 9.5%. This adjusted operational sales growth is on a constant currency basis, And as such, are comfortable with your models reflecting operational sales growth in the range of 7.5% to 9.0% We're $88,800,000,000 to $90,000,000 As you know, we do not predict the impact of currency movement. For some context, utilizing the euro spot rate relative to the U. S. Dollar as of last week at 1.21, There is an estimated positive impact of foreign currency translation of approximately 200 basis points, resulting in an estimated reported Sales growth of between 9.5 percent and 11.0 percent or 10.3% at the midpoint compared to 2020 or $90,500,000,000 to $91,700,000,000 Let's now turn to earnings per share.
This slide illustrates the components of our 2021 EPS guidance. Roughly half of our EPS growth is attributed To the robust operational sales growth and the other half is attributable to strong net income margin improvement, driven by expected operating margin improvement of more than 200 basis points versus 2020. The medical device COVID-nineteen recovery and other cost improvement initiatives Our plan to more than offset our continued investment to accelerate our business and further strengthen our pipeline of new products for the long term. As a reminder, included in our 2021 guidance is the dilution from the recent acquisition of Momenta, negatively impacting EPS by about $0.15 or $0.10 versus 20.20. Considering these items results in adjusted operational EPS reflecting a 16.4% year over year increase.
While not predicting the impact of currency movements, assuming recent exchange rates, Our reported adjusted EPS would be positively impacted by approximately $0.15 per share, resulting in adjusted reported earnings per share of $9.50 at the midpoint, reflecting growth of 18.3% versus the prior year. Continuing with EPS guidance, this slide provides a summary of what I just shared along with some additional P and L items To give you more insight into the drivers of our full year guidance, beginning with other income and expense, the line on the P and L where we record royalty income as well as gains and losses related to the items such as investments by our Johnson and Johnson Development Corporation, litigation and write offs. As I discussed on previous earnings calls, we will continue to be rigorous regarding portfolio management, but going forward, we will not include the impact of significant Your gains and adjusted EPS. Given those considerations, we would be comfortable with your models for 2021 reflecting net other income and expense excluding of between $150,000,000 $250,000,000 We are also projecting a higher effective tax rate for 2021 In the range of 16.5 percent to 17.5 percent or a midpoint of 17% due to beneficial one time items in 2020 related to the closeout of audits in several jurisdictions that will not repeat in 2021.
Let me
spend a few minutes providing
some qualitative context about 2021, although not intended to specifically provide segment or quarterly guidance. Given variability that occurred due primarily to COVID related dynamics, this slide, while not to scale and meant to be illustrative, offers some perspectives On the quarterly phasing across our businesses, from a sales perspective, as Chris noted earlier, we benefited from additional selling days in 2020 That will not repeat in 2021. That should be applied to both the full year and the Q4 for the enterprise and by segment. I'll address each segment starting with Pharmaceuticals, where we anticipate another strong year of above market growth. Throughout 2020, we saw COVID-nineteen driven fluctuations and most pronounced was the Q1 when as we noted, we benefited from longer script durations.
We continue to invest in COVID-nineteen vaccine development impacting the Q1 while we pursue authorization. For 2021, we expect more balanced quarter to quarter growth. Lastly, while we expect to continue to face pricing pressures Turning to our Medical Device segment. As mentioned earlier, we observed instances of non emergency procedure postponements late in the 4th quarter, But healthcare systems continue to meet the needs of both COVID and non COVID patients, resulting in less COVID-nineteen market disruption as we progressed Through 2020. While macro market dynamics such as vaccine deployment, unemployment and healthcare coverage remain fluid, We are anticipating some moderate procedural disruption to carry into the Q1, but expect continued medical device market improvement Throughout 2021, fluctuating by quarter.
As you heard during our medical device update in November, Our core platforms continue to strengthen, driven by enhanced execution and improved cadence of innovation and filling critical portfolio gaps, Including and most notably advancing our future digital surgery offerings. We believe the combination of the expected market recovery And the actions taken to strengthen our device business positions us to drive revenue growth each quarter versus 2020 with some Continued headwinds due to COVID-nineteen tempering growth in the Q1 and the highest growth rate expected in the second quarter Given the significant market disruption realized in the Q2 of 2020. Our Consumer Health segment yielded Solid performance throughout the pandemic, resulting in above market growth. But as noted on our Q3 earnings call, that performance is likely to yield negative Continued SKU rationalization program will have a negative impact on sales in the first half of twenty twenty one, while we continue progressing our margin expansion. For the second half, we would anticipate more normalized growth as consumers return to more typical usage patterns for products in areas like skin health and beauty.
Therefore, although not linear, for the full year, we anticipate growing competitively with the markets in which we compete. We are confident in the strength of our broad based business and its underlying fundamentals. We are positioned to deliver meaningful value to all of our stakeholders, not just in 2021, but over the long term. Alex and I look forward to addressing your questions. So I'm now pleased to turn the call back over to Chris
Operator, can you please provide instructions for those on the line wishing to ask a question?
Thanks again for all the work you're doing to combat the pandemic and looking forward to the vaccine data next week. I was just wondering with Back to the vaccine trial, if you can remind us what percentage of participants were enrolled in South Africa and Brazil And if you're gathering sequencing data from these participants that become infected and when you report the data, are you going to break out results By geography and hence, will we have any insight in terms of the vaccine efficacy against some of these new variants? Thank you.
Hey, Terrence, this is Alex. Thank you very much for your question. Look, maybe before I answer this your question, let me just back up for a higher level. And once again, note what I think has been just been the tremendous contributions and performance of our 150,000 approximate associates around the world, 50,000 of whom have been going to work every day in our factories, in our laboratories to ensure the products And services could continue to flow to patients and hospital systems around the world, let alone the important work that we're doing on the vaccine. Next, I also just think it's very important to reflect on the tremendous impact that COVID-nineteen has had around the world.
You've heard some of the numbers that we mentioned earlier today, whether it's almost 100,000,000 cases around the world, let alone 2,000,000 deaths globally or right here in the United States, almost 25,000,000 people and over 400,000 deaths. That's taken a tremendous cost on Certainly, families, individuals, businesses, our economy and just so many different aspects of our lives That all the more important for us to be doing everything we can to make a difference during this pandemic. Last but not least, I'm just very proud of the performance that we had, not only in the Q4, but throughout 2020. If you look at the various segments of almost each of our sectors, all of our major platforms, what you saw Is that ending the year in a better position than where we started? And that wasn't only for what I would call the near term financial performance where we saw things like market share gains and For the future, not only 2021, but that and beyond, again, we think we're well positioned and stronger as we finish the year than even when we begin.
Now getting back to your specific question regarding the breakouts, we're going to have much more information in the coming days. We think it's Very important to follow the data, to follow the science. At that time, we think it will be more appropriate to provide you With all of the various cuts of the data that we anticipate having, consistent with the statements that we made from the very beginning, We want to ensure that we've got a very robust program, not only geographically, but also by ethnicity, gender, As well as a number of other different parameters, all as part of an effort to give us the best possible understanding of the efficacy And safety profile of our vaccine. So stay tuned. As Joe alluded to in his earlier comments and Chris, we expect to have these results In the coming days and our scientists, Doctor.
Mittayi Maaman, Doctor. Paul Stoffels and others will be providing much more detail once we have those results. Thank you.
Thanks, Terence. Appreciate the question. Rob, next question please.
Your next question comes from Larry Biegelsen with Wells Fargo.
Good morning. Thanks for taking the question. One more, one on the And then one financial question. So Alex or Joe, I heard Joe's comment on CNBC about your expectations for the Seem to be robust. What do you think you need to show to be competitive?
Is 70% a good floor? And Joe, do you still expect to produce 1,000,000,000 doses in 2021? And just lastly, I know you said the you're not going to give any financial guidance until think your next call, but since the data is coming next week, any color on pricing and margins during and after the pandemic? Thanks, guys.
Hey, Larry, thank you very much for your question. As I mentioned earlier, I think it would be inappropriate for us to speculate in any significant way, given The proximity that we are today versus when we expect the results, we said from the very beginning is that We put a lot of work and thought and very strong science and review into the selection of our lead candidate. I think the Phase 1 and 2a results, Particularly those that were recently published. We are hopeful that's a good precursor to the kind of efficacy and safety that we'll see In larger population, of course, until we see this final data, we won't know for certain. But look, we remain optimistic And we're going to remain very diligent as we go through this final review.
I'll hand it over to Joe to take the second part of that question.
Sure. Good morning, Larry, and thanks for the question. I would say with respect to supply, consistent with the comments that were made earlier, We intend to meet all of the firm order commitments that we have, whether that be to the United States, to the European Union or to developing Through the Gavi organization and right now we're well on track to do that. As Alex alluded to, there's still some fluidity with respect to timelines. And I think what we're seeing happening with a little bit of confusion is people are trying to parse this down into weeks.
I think the definitive statement here is that we are very comfortable in meeting our commitments To those respective countries or organizations that I just outlined. In terms of financial implications and pricing, As you can imagine, once countries get a chance to see the data, we're in active negotiations for other countries And other organizations and the volume will impact the selling price. So, it's somewhat of a fluid situation and that's why we're kind of Projecting or leading folks to think about the April 1st quarter earnings call as a good time when many of those
Thanks, Larry. Appreciate the question. Rob, next question please.
Your next question comes from David Lewis with Morgan Stanley.
Good morning and thanks for taking the question. I guess just maybe just two quick ones here for me. The one would just be just in general, As you think about new variants in the marketplace and the need for a booster, I wonder if you could just comment on number 1, when can we expect the dual dose And what are your thoughts about the booster relative to the mRNA based platforms? And then I guess just on Earnings strength for next year, 'twenty one, Joe, just another 200 basis points of year over year margin expansion, it just seems like given the Earnings upside relative to consensus estimates, you probably need a margin number that is maybe closer to 300 basis points of year on year upside versus 2. So just us any sense of what's driving margin strength, some of that's medical device recovery, I'm sure some of that's pharma strength as well, that would be super helpful.
Just give David, this is Alex. I'll take the first part and then let Joe take the second one. Look, we as I mentioned earlier, we're continuing to pull together all of our data. We're enrolling as we speak in the dual dose Information, we would expect that to have that in the back end of this year. And again, as we This is we tried to be very transparent and very thorough in the disclosure that we're releasing.
We certainly will plan to follow that course With that trial as well and we'll get out information as soon as we can. Regarding some of the variance, obviously, we're watching that closely based upon some of the regional, the Geographical differences that we've seen, and look, our scientists are already anticipating, as you've heard from some of the other companies, About what are potential scenarios to ensure that we're prepared. But look, I think it starts with taking a look at the data that we currently have, that we should have shortly. And I think Doctor. Paul Stoffels and Doctor.
Matthije Maaman, once we have that, we'll be able to give a much more comprehensive review On exactly how we think our vaccine will work against the current strains and variants and our plans for the future.
Joe? Good morning, David. With respect to kind of the earnings outlook and specifically the operating margins, you're correct and Not to get cute, but the words were actually greater than 200 basis points, so that could gravitate upward. We certainly want to keep the flexibility that Well, we've had even during 2021 and all that uncertainty to continue to invest in innovative ideas that really fortify Not just this year, but well beyond. In terms of some of the programs we have that are improving our operating margins, I'd point you to this consumer SKU rationalization.
That is certainly something that will have an impact on consumer sales in the first half of the year, But again, with this objective of improving profit margins and that team has done a great job under Thibault's leadership with respect to improving the margin profile Over the last 2 years. You may also recall a few years back, we made significant investments in our supply chain infrastructure. Some of those are starting to pay off In 2021 as well. And then like it or not, we are working differently and there are efficiencies that correlate to some of this working differently. I'm not suggesting that we found a steady state in terms of the balance between virtual work and work in the office, but there are some efficiencies that are Being realized that I think will actually sustain long term as we move forward.
So those are some of the Factors that are going into our bullish call of above 200 basis points margin improvement.
Great. Thanks, David. Appreciate the question. Rob, next question please.
Your next question is from Louise Chen with Cantor Fitzgerald.
Hi. Thanks for taking my questions. So just curious if you could comment on the durability of your vaccine versus the other vaccines that are in development or at least your goals for durability? You did I like that your Phase III data. And the second question is just as Biden rolls out on his healthcare policies, are there any big moving parts
Regarding durability, again, we're going to have to see how some of the early data in some of the preclinical work that we have done plays out in the actual large scale trials, we're certainly hopeful that you're going to see a durable and a Sustainable and patent response, particularly from our vector approach. We have seen that in other programs that we run. So, we're hopeful that we'll see it here, but we would expect that to play out. We are pleased with Not only the antibody response that we saw, but also some of the cellular level response that would be in T cells. But again, more information will be available once we have our other final results.
Secondly, more broadly about healthcare, I do think that and we do feel that COVID-nineteen has had a very profound effect on healthcare systems, both near term and short and And longer term, I think in the near term, what we've learned is, frankly, the importance of innovation in science. And if you reflect back on where we were just 11 or 12 months ago at the beginning of COVID-nineteen and where we are now and the number not only of Very innovative vaccine candidates, the therapeutics and the differences that they made. If you take a look at the way hospital protocols Very rapidly and quickly started using data sciences and information to better understand what was going on with patients entering Those facilities, how they should be treated, what led to better outcomes, how that's impacted a reduction in morbidity. I think clearly, another example. 3rd, we've seen a rapid expansion in telehealth, and that's in primary care offices, But also specialty offices, the way that companies like ours actually communicate and engage and educate physicians and healthcare systems, We would see that lasting for some time as well.
And clearly on the public health side, we think that's also a very Important dynamic for us to consider going forward. I mean, I think it's clear from this that the world now Has a much better understanding of the importance of well established, well funded global public health programs without which We're at significant risk around the world, whether it's our economies, society, just at a number of different levels. So those are perhaps some of the longer term trends. And Last but not least, I'd like to do a just a shout out for the partnership and collaboration that we've seen with not only within industry and across industry, but also with regulators around the world. And it's certainly our hope that we can take some of that and apply it To other advancements, whether it's cures for cancer, neuroscience, other conditions, If we can take some of those same paradigms and accelerations and apply them there, that would be great news, not only for patients, Certainly in Healthcare Systems, but for the industry as well.
Hey, Louise, maybe just one other comment to build upon Alex's commentary is you've Reference towards the end of your question about the new administration and what kind of policies they may have around healthcare, what I would say is, we've been around 135 years, it's I think 24 different administrations from both Republican and Democrat. We're going to continue to do what we do best and that's innovate. If I look at our pharmaceutical portfolio, the great performance that they delivered in 2020 Once again that was for the 4th consecutive year price decreases overall in the portfolio. So we're seeing the benefit of innovation, whether it be for the COVID-nineteen or other solutions in immunology, oncology, pulmonary hypertension and neuroscience. And so that's what we're going to be focused on.
And by the way, Louise, I just got a comment. You did a really nice job on the news program this morning. That was outstanding work by you.
Hey, Louise, I might just add one other point and that is we actually look forward to working with the new administration on issues related to healthcare. Clearly, the pandemic, we feel, will shape the perspective in terms of the prioritization around access, Around the innovation and frankly using this as an opportunity to improve the overall healthcare system. Thank
you. Thanks, Elyse. Appreciate the questions. Rob, next question please.
Yes. Your next question is from Chris Schott
with JPMorgan. Great. Thanks so much for the questions. Just on 2021 device sales, can you just help us quantify or provide more color Around how much of an impact COVID will still be having on sales versus what you consider to be, I guess, normalized levels. I'm just trying to get a sense of How close to normalized is 2021 as we maybe think about 2022 and beyond?
Is there another step up in sales we need to be thinking about in that Time frame. My second quick one was just on STELARA. The product is obviously generating very healthy growth despite increased competition in the psoriasis space. Just maybe a little bit more Color there in terms of the sustainability of growth you see as we just think about that franchise evolving over time? Thank you.
Chris, look, overall, we remain very confident in the long term prospects around the medical device market. And I think we saw very good signs of that actually over the course of 2020, where we saw the medical device market Drop anywhere from 30% up to 70% depending on which category you're looking at to return to some mid single digit Drops in the Q3 as we went through the rest of the year. As Joe and I believe Chris alluded to earlier in some of their commentary, We would expect to see continued impact certainly in the Q1 of 2021. Although the early signs, we're encouraged by what we're seeing in There are certainly regions and hospitals around the world, let alone in the United States, where you see a tremendous strain on the systems. But overall, we're seeing hospital volumes decrease no more than about 10% or 15% in areas such, for example, in the UK, A couple of other places in Europe, but overall, the resiliency and the ability of the hospital systems to continue with elective surgeries Has improved quite significantly.
And as you as I'm sure you would project, if we look at Q2 in particular, the year on year comparison should return. As we look at our team's performance and consider 2021, we're actually looking at 2019 as more of a benchmark To and to use that as an indicator more of what a baseline or normal would be. But Again, we can we would expect to continue to see expansion over the course of 2021 And beyond that, again, see a return to a market that was growing in the mid single digits previously, We would expect that to continue going forward as well.
There was also a question about STELARA?
Yes. Regarding STELARA, look, we remain very upbeat on the overall performance of STELARA. I mean, if you look at performance In the Q4, it was about 30% growth. For the full year, we are looking at 20% growth. What's really important to remember about STELAR is just the diversity of indications now that we have with that compound, especially in GI conditions, Where we think it's particularly differentiated and unique both in terms of its efficacy and now a very robust Safety profile as well based upon the years of experience.
It is a competitive category. There are a number of new agents, But we also know that this is an area of significant unmet medical need, again, particularly in the Crohn's space And the rest of the GI category. And so we think there remains really good opportunity for us to continue to not only maintain, but grow our position.
And Chris, if you look at where the growth is coming from for STELARA in recent quarters, it has been in the GI indications that Alex has noted, Where we're really seeing nice growth and uptake in psoriasis is Tremfya. You're right, it's a competitive market space, but we're seeing some switches out of Stelara to Tremfya And then from Pfizer is picking up new scripts on its own for our psoriasis play.
And just for context, the share growth in Crohn's Still are, it was over 5 points quarter over quarter, so we've seen great progress there. Thanks, Chris. Appreciate the questions. Rob, next question please.
Your next question comes from Joanne Wuensch with Citi.
Good morning, everybody. Two questions in medical Device Land, with the Velas approval, can you sort of give us an update on how you're thinking about rolling that out? And whether or not Those plans change in the current environment. And then in Vision Care, there are a couple of different pushes and pulls going on both in contact lenses as well as Envision Surgery. Could you tease that out a little bit as we think about SKU rationalization versus competitive pressures?
Sure. And good to hear from you, Joanne. Joanne, regarding Velas, look, we're very excited about the approval With the FDA, as we were able to share with you during our Innovation Day with our Medical Device Group, if we look at the flexibility, the accuracy, the reduced footprint that it provides The surgeon and surgical teams, we think that it just has tremendous potential. Again, this is a market that is still As we think as significant opportunity for growth in terms of penetration, we also think it will be a nice complement to our attune fixed Bearing cementless knee. And remember, we also have plans to expand Velas significantly Beyond just the replacement, but to other areas as well.
So when you combine that, we think it will be very competitive. And more importantly, we think it will be a great new option for physicians, for orthopedic surgeons and ultimately for patients and their families. I'm not going to get into all of the launch plans, but what I will tell you is the team has got an aggressive agenda lined up And they're completing all the other associated testing as we speak, but we look forward to launching that over the course of 2021 and again expanding our overall position. Regarding Vision Care, you're right. There are a lot of dynamics that we certainly saw in the past year, in the contact lens market, significant contraction
as well as
in the surgery market. We believe that our position overall in the contact lens has continued to strengthen, and we did see improvement as we went quarter to quarter and ended the year, And we think we'll be well positioned as we enter 2021. We've also made a number of changes regarding our surgical business. We're excited in 2021 about the TEGNA SYMPHONY launch with a depth of focus lens. It's got Improved near term focus and we also have a TechnoSynergy IOL, a first in class product combining a number of different technologies to really deliver Great range with high contrast.
We expect that in 2021. So again, we remain very confident and optimistic about the potential overall in our Vision Care business.
Joanne, just a couple of small builds. In contact lens, we had noted in prior quarter, if you remember, in the U. S, there was double digit growth and some of those were some of the retail dynamics as it related to inventory in Talking that you noted adjusting for that contact lens did grow. It was worth almost 9 points. And we do view our growth as still competitive versus the market.
And then on the surgical side, it was actually good. We See some recovery in the market there. So it's good to see the trend. While we're still declining, it's improving sequentially and we remain optimistic, including the innovation that Alex mentioned. Thanks, Joanne.
Rob, next question please.
Your next question is from Matt Miksic with Credit Suisse.
Good morning. Thanks for taking the question. So just a couple of follow ups on Med Devices. You've made some great progress in 2020 closing the gap on digital surgery and abdominal surgery, orthopedics and lung. And I'm just Curious, sort of following on to Joanne's question around the Velas rollout is, How to think about this you've got a recovery in volumes generally in the market, some of these end markets and then you've got Sort of the benefit of these new digital surgery sort of launches and is that do we see that in the Back half of the year, do we start to see ortho this year and OTTABA maybe the following year, if you could just maybe lay The cadence for both the top line and any investments that those entail for Med Devices, that would be super helpful.
Sure, Matt. Thank you very much. Look, we were I think it's important to put perhaps some additional perspective on it. If we really go back to 2017, Well, I believe the growth rate of our Medical Device division was about 1.5%. And if you look at the expansion as we went through 2019 To where it was growing at almost a 4% rate.
And as we've articulated a number of times, our goal is to grow at Or faster than the markets where we compete. We believe the markets where we compete overall In Surgery and Orthopedics and Vision Care and others, Cardiovascular are in the 4% to 5% range. And that's the goal for our businesses. As we of course, with 2019 or 2020, excuse me, And the effect of COVID, that had a very significant impact. But again, here too, if we normalize out our trends for 3rd Q4, We think that overall, those quarters were pretty consistent, down about 3.5% after you pull everything else out And we'll put us on a good rate, as we mentioned earlier, over the course of 2021 beyond.
Regarding VELAS, as I mentioned earlier, we think it does offer a number of unique advantages. We think it can enhance the surgeon's ability to really personalize total knee arthroscopy. At the same time, It has certain features that will make it easier for use potentially in the operating room. And again, we think it's going to be a great complement to not only our ATTUNE system, but further down the line to our hip procedures And others as well, we do feel that the overall knee market will recover in 2021. It will take place over the course of the year As hospitals are able to continue to get their capacity back, as patients get increasingly confident of the knee Mark, it was perhaps hit more than others just because many of those procedures can be delayed perhaps versus a hip procedure, But we would expect that to return over the course of this year as we see the pandemic dealt with in a more And things hopefully return to a more normal state.
And by the way, we think the outlook for that longer term, given some of the pent up demand that we're likely to see, Will be quite significant. As you saw in our review back in November, we're very excited about OTAVA. We truly think it's going to offer a next generation digital and robotic surgery. As you just mentioned, the team made Great progress over the last 12 months as we brought the various technologies together. We continue to do the build outs And we remain on track with all the timelines that we have previously committed to and we're confident That here too is a market that we think is very has very low penetration, less than 5% or 10%, certainly on a global basis, More so in certain categories here in the United States.
But whether it's penetration or the ability just to expand those kind of The surgeons here in the United States around the world based upon the technology that we'll be bringing, we think it will offer significant upside on the timelines that you just mentioned.
Thanks, Matt. Appreciate the question. Rob, next question please.
Your next question is from Danielle Antalffy with SVB Leerink.
Hey, good morning, everyone. Thanks so much for taking the question. I just have a quick And I'm sorry if I missed this, Alex, I feel like you did allude to this in response to Matt's question. But Over the last few quarters, you had given pretty detailed numbers around the COVID impact. Is there any way you could give that for this quarter just to get a sense Sort of what the normalized growth rate actually would have been were it not for the COVID resurgence?
Thanks so much.
Yes, thanks, Danielle. I can take that one. Yes, we were able to do that in Q1 because there was an early impact and then what we did was as we provide guidance throughout the year, we kind of gave you a range of expected impact by quarter based on what our original guidance would have been at the beginning of the year. If you look at what we shared in Q4, ahead of this earnings, we had anticipated that we could be anywhere from down 10% or flat versus our original thinking, which would have contemplated some growth year over year plus a 53rd week. If you look at where we landed, we basically landed at the low end of that range, Given some of the additional softness that the market experienced in the December timeframe where procedures were probably down more around that 10% range.
So overall, in line with expectations, but more towards the low end given some of the surge we saw at the very end. Thanks, Danielle. Appreciate the question. Rob, last question, please.
Yes. Last question will be coming from Bob Hopkins with Bank of America.
Thank you very much. Just one quick I appreciate the comment that globally in Q4, medical device revenue declines were really no worse than Q3 when you adjust out the one timers. That's Pretty impressive given the headlines. I was wondering if you could give us a sense to what happened to device growth maybe in the United States in Q4 relative to Q3, again, net of those one timers. And also on the U.
S, if we think about 2021, Is it too aggressive to assume that in the back half of twenty twenty one, based on everything you're seeing today, that we might be able to approach normal levels Of Surgical Procedure volumes in the United States. Appreciate the comments. Thank you.
Hey, Bob, thank you very much. What we saw in North America in Q4 was down just about or excuse me, up about 2%. And again, there were regions around the country Where we saw a differential impact, but I think it's fair to say that we were pleased to see The ability of the majority of systems in the United States be able to continue to provide elective procedures even in spite of some of the later surges where we So even more significant impacts were in Europe and LatAm during that period and because of our stronger position in certain places in Europe that had a differential impact on us. And again, so as hopefully we see improving trends with the virus in Europe over the course of 2021, We would expect to see that return. And so regarding your questions on volumes in the back end, Look, it's hard to predict based upon where we currently are.
As we said earlier, we think the most significant impact this year will be Certainly, in Q1, as we continue to deal with some of the ongoing surge, we would expect The year on year comparisons have changed pretty significantly in Q2 and Q3. And again, assuming Much improved vaccine distribution, better overall control of COVID-nineteen. We would then expect to see volumes come back to more normalized levels as we finish the year. But obviously, there's a lot of moving parts. There's a lot of assumptions, a lot of dynamics that we'll have to watch closely, but our current plans We'd take those kind of projections into consideration.
Great. Thanks, Bob. Appreciate the question. Thanks everyone for your questions and your continued interest in our company. Apologies to those who we couldn't get to because of time, but don't hesitate to reach out to the Investor Relations team as needed.
I'll now turn the call back to Alex for some brief closing remarks.
Well, thank you everyone for your comments, for your questions and for your ongoing interest, trust and confidence Johnson and Johnson. It's likely an overused term at this point, but 2020 was a remarkable year on just so many different fronts. And I want to again end where I started by acknowledging the tremendous toll that this has taken On patients, on families, on the hospital systems around the world, but also give credit to healthcare systems and our employees Who have worked so hard to continue to support the same through this challenging period. We're proud of our performance. We think we're positioned very well as we embark on 2021.
And we look forward to keeping you updated as we go through the year and gain more information and insights. Thank you very much, everybody.
Thank you.
This concludes today's Johnson and Johnson's 4th quarter 2020 earnings conference call. You may now disconnect.