Good morning, and welcome to Johnson & Johnson's second quarter 2015 earnings conference call. All participants will be able to listen only until the question and answer session of the conference. This call is being recorded. If anyone has any objections, you may disconnect at this time. If you experience technical difficulties during the conference, you may press star zero to reach the operator. In order to ask a question, please press star one on your telephone keypad. I would now like to turn the conference call over to Johnson & Johnson. You may begin.
Good morning, and welcome. I'm Louise Mehrotra, Vice President of Investor Relations for Johnson & Johnson, and it is my pleasure this morning to review our business results for the second quarter of 2015. Joining me on the call today are Alex Gorsky, Chairman of the Board of Directors and Chief Executive Officer; Sandi Peterson, Group Worldwide Chairman; and Dominic Caruso, Vice President, Finance, and Chief Financial Officer. A few logistics before we get into the details. This review is being made available via webcast, accessible through the investor relations section of the Johnson & Johnson website at investor.jnj.com. I'll begin by briefly reviewing second quarter for the corporation and for our three business segments. Alex will provide additional commentary on the business and our progress with regards to our near-term priorities. Sandi will provide an update on our consumer and consumer medical device businesses.
Dominic will review the income statement and discuss guidance for 2015. We will open the call to your questions. We expect the call to last approximately 90 minutes. Included with the press release that was issued earlier this morning is a schedule of sales for key products and/or businesses to facilitate updating your models. These schedules are available on the Johnson & Johnson website, as is the press release. Please note we will be using a presentation to complement today's commentary. The presentation is also available on our website. Before we begin, let me remind you that some of the statements made during this review are or may be considered forward-looking statements. The 10-K for the fiscal year 2014 and the company's subsequent filings identify certain factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made today.
The company does not undertake to update any forward-looking statements as a result of new information or future events or developments. Our SEC filings, including the 10-K, are available through the company and on our website. During the review, non-GAAP financial measures are used to provide information pertinent to ongoing business performance. These non-GAAP financial measures should not be considered replacements for and should be read together with GAAP results. Tables reconciling these measures to the most comparable GAAP measures are available in the schedules accompanying the press release and on the investor relations section of the Johnson & Johnson website. I would like to review results for the second quarter of 2015. Worldwide sales to customers were $17.8 billion for the second quarter of 2015, down 8.8% versus second quarter 2014. On an operational basis, sales were down 0.9%, and currency had a negative impact of 7.9%.
In the U.S., sales were down 2.4%. In regions outside the U.S., our operational growth was 0.5%, while the effect of currency exchange rates negatively impacted our reported results by 14.8%. On an operational basis, the Asia-Pacific-Africa region grew by 2.2%, while Europe grew 1% and the Western Hemisphere, excluding the U.S., declined 4%. Growth in the U.S. and Japan was negatively impacted by hepatitis C competition. Growth in all regions was impacted by divestitures, the most significant one being Ortho Clinical Diagnostics. Excluding the net impact of acquisitions and divestitures, underlying operational growth was 1.7% worldwide, 0.6% in the U.S., and 2.7% outside the U.S. Additionally, excluding hepatitis C sales, underlying operational growth was 5%. Turning now to earnings. Net earnings were $4.5 billion, and earnings per share were $1.61 versus $1.51 a year ago.
As referenced in the table reconciling non-GAAP measures, 2015 second quarter net earnings were adjusted to exclude after-tax amortization expense of $230 million and a charge of $66 million for after-tax special items. 2014 second quarter net earnings were adjusted to exclude a charge of $807 million. Dominic will discuss special items in his remarks. Excluding amortization expense and special items for both periods, adjusted net earnings for the current quarter were $4.8 billion and adjusted diluted earnings per share were $1.71, representing decreases of 6.3% and 3.9% respectively as compared to the same period in 2014. Currency translation significantly impacted net earnings. On an operational basis, adjusted diluted earnings per share grew 6.7%. Turning now to business segment highlights. Please note percentages quoted represent operational sales change in comparison to the second quarter of 2014, unless otherwise stated, and therefore exclude the impact of currency translation.
I'll begin with the consumer segment. Worldwide consumer segment sales of $3.5 billion increased 2.3%, with U.S. sales up 2.7%, while outside the U.S., sales grew 2.1%. Excluding the net impact of acquisitions and divestitures, underlying operational growth was 3.1% worldwide, 2.9% in the U.S., and 3.2% outside the U.S. Growth was driven by OTC worldwide, women's health outside the U.S., and oral care. OTC sales growth was driven by worldwide analgesics, ZYRTEC in the U.S., and other upper respiratory products outside the U.S. Upper respiratory, including ZYRTEC sales, included a seasonal inventory build. In the U.S., adult analgesic market share was approximately 12%, up from approximately 11% a year ago, while U.S. pediatric share was nearly 44%, up from 39% a year ago. New product launches and successful marketing campaigns drove the results for LISTERINE in oral care and women's health products outside the U.S.
Moving now to our pharmaceutical segment, worldwide sales of $7.9 billion increased 1%, with U.S. sales down 1.5% and sales outside the U.S. up 3.8%. New competitors in hepatitis C significantly impacted sales results. Excluding sales of our hepatitis C products, OLYSIO and SOVRIAD, as well as the impact of acquisitions and divestitures, underlying growth worldwide, U.S. and outside the U.S., was approximately 9.7%, 16.5% and 2.5% respectively. U.S. results included a positive adjustment to sales reserves for Managed Medicaid rebates reflecting final data received. U.S. comparisons to second quarter 2014 were positively impacted by approximately 2% and worldwide by approximately 1%. The most significant impact from the Managed Medicaid adjustment was to hormonal contraceptives. Significant contributors to growth were INVOKANA/INVOKAMET, IMBRUVICA, XARELTO, ZYTIGA, INVEGA SUSTENNA or XEPLION, CONCERTA, and immunology products, STELARA and SIMPONI. Strong momentum and market share increases drove results for INVOKANA/INVOKAMET.
In the U.S., INVOKANA/INVOKAMET achieved 5.9% TRX within the defined market of type 2 diabetes, excluding insulin and metformin, up from 5.1% in the first quarter of 2015. TRX with endocrinologists grew to 13.2% for the quarter and 5.2% in primary care, up 1.2% and 0.8% respectively on a sequential basis. INVOKANA/INVOKAMET remains the category leader in new-to-brand share with endocrinologists and has greater than 80% preferred access across commercial and Part D plans. Strong patient uptake with new indications, approvals, and demonstrated efficacy drove results for IMBRUVICA in the U.S. IMBRUVICA is a leader in both new and total patient regimen share in the second-line CLL and MCL. Outside the U.S., results were driven primarily by Europe, with strong patient uptake, particularly in Germany, France, and the U.K.
XARELTO sales were up nearly 31%, and total prescription share or TRX for the quarter in the U.S. anticoagulant market grew to 15.4%, up over two points from a year ago. TRX in primary care reached 12.4%, and in cardiology, 23.7%. XARELTO is broadly reimbursed with over 90% of commercial and Medicare Part D patients covered at the lowest branded product copay. Strong growth of the combined metastatic castrate-resistant prostate cancer market at nearly 12.5% drove the results for ZYTIGA in the U.S. ZYTIGA share was approximately 28.6% of that market, down approximately 1.7 points on a sequential basis due to increased competition.
As an update, during the quarter, we received several Paragraph IV notifications from generic manufacturers advising that they filed abbreviated new drug applications with the FDA seeking approval to market a generic version of ZYTIGA in the U.S. before the expiration of the relevant patents listed in the Orange Book. The composition of matter patent is owned by our partner BTG and expires in December 2016, and the method of treatment patent is owned by Janssen Oncology, Inc and expires in August 2027. We are currently evaluating the notices. Outside the U.S., ZYTIGA achieved very strong growth in Asia and Latin America, which was partially offset by lower sales in Europe due to increased competition. INVEGA SUSTENNA or XEPLION achieved strong results due primarily to increased market share, while CONCERTA growth was primarily due to therapeutic equivalence reclassification of generic competitors.
The results for immunology were driven by strong double-digit market growth, complemented by increased market share for STELARA and combined SIMPONI/SIMPONI ARIA. Growth was partially offset by lower REMICADE sales to our distributors, reflecting the weakening of the EUR and the loss of exclusivity in Europe, as well as a reduction in inventory levels. I'll now review the medical devices segment results. Worldwide medical devices segment sales of $6.4 billion decreased 4.7%. U.S. sales declined 5.8%, while sales outside the U.S. declined 3.9%. Ortho Clinical Diagnostics was divested mid-year 2014. Excluding the net impact of acquisitions and divestitures, underlying operational growth was 1.4% worldwide, with the U.S. up 1.6% and growth of 1.4% outside the U.S. Growth was driven by specialty surgery, cardiovascular care, and orthopedics.
Specialty surgery growth was driven by Biosurgery growth of over 8% and energy growth of approximately 6% due to market growth, share gains in certain segments, and new product introductions. Cardiovascular growth was driven by a 10% worldwide increase in electrophysiology due to strong sales of the THERMOCOOL SMARTTOUCH catheter. Orthopedic sales growth was driven by knees and hips as well as ORTHOVISC and MONOVISC in sports medicines. The growth was partially offset by lower sales in trauma and spine due to pricing pressure coupled with the timing of tender business and competitive challenges in spine. Knee worldwide increased 4%, with the U.S. up 5% and sales outside the U.S. up 2%, driven by strong sales of ATTUNE, partially offset by pricing pressure. Hips' growth of 2% worldwide was driven by 4% growth in the U.S., with strong volume growth partially offset by continued pricing pressure.
Primary stem platform sales were a major contributor to the results. Outside the U.S., sales were flat with strong growth in China and India, offset by lower sales in the Middle East due to the timing of tender business. For your reference, there were some notable developments in the second quarter, which we have summarized on this slide to assist you as you develop your models. That concludes the segment highlights for Johnson & Johnson second quarter of 2015. It is now my pleasure to turn the call over to Alex Gorsky. Alex?
Thank you, Louise, and good morning, everyone. I really appreciate you taking the time to join our call today. Since we're at the midpoint of the year, I'm excited to share the progress we've made against our near-term priorities. I'll also use the time today to give some perspective on the environment that we're operating in and some of the macro level issues we're seeing, also discuss why we believe with our innovation model and breadth and scale of our business, that Johnson & Johnson is strongly positioned to drive continued growth in shareholder value. I'll start the discussion, though, where I always do, with our credo.
Our credo serves as the moral compass for our company and expresses a set of values that bond our associates worldwide with a shared commitment to meet and really exceed the expectations of the more than 1 billion people a day that rely on our products. As well as to support our fellow colleagues, the communities in which we live and work, and generate solid return to our shareholders. Now, back in January, I laid out our near-term priorities for the business, I'm pleased with our progress towards them. Across the enterprise, we're very focused on delivering our financial and quality commitments. First, our commitment to ensuring our products meet the highest quality standards is, of course, non-negotiable.
As to our financial commitments, thus far in the year, we generated sales of $35.2 billion, reflecting the strong underlying operational growth across the enterprise of about 6% when we adjust for the impact of hepatitis C sales and acquisitions and divestitures. For the first six months, we delivered adjusted net earnings of $9.2 billion and adjusted EPS of $3.27. On an operational basis, we delivered adjusted EPS of $3.59, growing at 5.3%. As we've highlighted previously, we knew that our year-over-year comparisons to our current results would be challenging because of the tremendous contributions of OLYSIO last year, as well as the impact of divestitures we made, and also the significant devaluation of major foreign currencies against the US dollar. Despite these headwinds, our broad base of innovative offerings, scale, and global footprint are driving our strong core performance.
In pharmaceuticals, we reported sales of $15.7 billion, reflecting strong underlying operational growth when excluding the impact of hepatitis C and divestitures of over 11% for the first half of 2015, led by our new and core products, including INVOKANA, IMBRUVICA, XARELTO, STELARA and ZYTIGA. Our focused R&D strategy and commitment to driving launch excellence to ensure broad access and reimbursement has really come together to make a difference for patients and has us well-positioned to continue to drive above-industry compound annual growth over the next several years. Fueled by seven of our recently launched products that we expect will each exceed $1 billion in sales this year, and the more than 10 new products we plan to file by 2019 that each have billion-dollar plus potential of their own based on their transformational potential to treat significant unmet medical needs worldwide.
Just last week, our partner, Genmab, announced that we have completed the FDA submission for daratumumab, a promising new breakthrough treatment option for people with multiple myeloma. This organization has collectively done great work to generate strong clinical evidence in the development process, which is enabling our reimbursement teams to gain the right coverage levels in order to create broad access and drive the strong performance of our products, despite the pricing pressures that exist in the marketplace. I also want to make a comment here on our position regarding biosimilar competition for REMICADE, which I know many of you are thinking about. Remember, biosimilars are not generics, and we expect the biosimilar market to behave quite differently than the market typically has toward the introduction of a generic.
More than 2.2 million people have been treated with REMICADE, and about 70% of the current patients are receiving sustained and effective treatment, so we believe their doctors are very unlikely to switch them off with that level of success. We also have a patent for the REMICADE antibody that doesn't expire until September 2018, that you can be sure we'll continue to vigorously defend. We know competition in the immunology space is fierce, and to ensure we maintain a leadership position, we've built an established portfolio of billion-dollar plus medicines that includes STELARA and SIMPONI, and have potential billion-dollar plus products in our late-stage development, like sirukumab for rheumatoid arthritis and guselkumab for psoriasis that we expect to introduce in the near term.
We're also making very significant investments in disruptive research areas like the microbiome, which holds the potential to intercept a disease and prevent it entirely that will have applications in immunology and really across all our disease areas. Turning to medical devices. You know, we're number one or number two in the majority of the categories in which we compete and have 10 $1 billion-plus platforms. Year-to-date, we reported global medical device sales of $12.6 billion, which is an operational decline of 4.6% due to the impact of the sale of Ortho Clinical Diagnostics, which we completed a year ago. When we adjust for that, our underlying operational growth in medical devices is up 1.4%.
I've been particularly pleased with the performance in several areas of this business where new innovations are driving growth, including our Biosense Webster business, which has grown nearly 11% operationally through the first six months of the year. Our Endocutter business has grown 15.5%, and our Biosurgery business with continued strong growth of 7.5%. In diabetes, our products and strong in-market execution are helping to revitalize that business, while our Vision Care business is on track to return to growth later in the year, when it will anniversary the impact of the 2014 price reset. In orthopedics, the business grew 1.5% operationally this year, with good growth in the reconstruction and sports medicine segment, particularly in the second quarter here in the U.S., where despite the pricing dynamics in the market, we saw over 5% growth in knees and approximately 4% in hips.
Our spine and trauma businesses, however, have lagged market growth to date. We are absolutely committed to turning them around. We have new products launching this year that will help us do just that. As we look at this market, the ongoing consolidation among health systems and within the insurance industry is continuing to create pressure on pricing. We've been encouraged, though, by data showing that healthcare utilization trends in the U.S. have continued to improve for the fourth consecutive quarter, with growth in both hospital admissions and hospital surgical procedures. We remain optimistic about increased global healthcare utilization as well.
We are absolutely committed to accelerating our growth in medical devices through innovation and through our research and development, which has been productive as the teams have already submitted more than half of the 30 major filings we previously announced we plan to file by the end of 2016. The work we're doing with Google illustrates how we're aiming to pioneer the operating room of the future with robotic surgery tools that will increase the surgeon's precision and minimize trauma for their patients while also reducing costs for the systems. We're also transforming our go-to-market models to fully leverage the breadth and scale of our capabilities. We've taken significant measures to strengthen our core businesses and effectively position ourselves to lead over the long term.
We just recently integrated our Global Orthopedics and Global Surgery businesses under the leadership of Gary Pruden, which will enable us to have a much more holistic approach to the way we do business. The goal here is very straightforward. Let's enhance our partnerships with the hospital systems and identify ways to improve outcomes by leveraging our comprehensive portfolio. Now, we already have numerous examples of co-promotions, broad contracting agreements, and service and solution offerings in place that we can look to expand. By better working in this new alignment model, we will be better positioned to create more of them to drive future growth. Gary will be on the third quarter call in October to tell you more about this approach.
Now in the consumer business, Sandi Peterson and her team, which includes our new Worldwide Chairman for the Consumer Companies, Jorge Mesquita, a seasoned leader who's been with us since the end of last year, are in this work in building and executing a strategy that has effectively addressed the past challenges in our supply chain and reprioritized our approach in the category. We're positioned to expand our market leadership in key segments moving forward. Year to date, we generated $6.9 billion in sales and reported operational growth of nearly 4%, excluding acquisitions and divestitures, driven by our market-leading OTC and oral care businesses. Our strategy to focus the portfolio around the key consumer need states and brands that are backed with strong clinical science and professional endorsements is having a strong impact.
The U.S. OTC medicines are sharply up 13% for the year, led by the strong campaigns we're leading in support in the relaunch of key brands like Tylenol, MOTRIN, and ZYRTEC. Our momentum here could not have been achieved without the efforts of our colleagues to complete the complex work required around consent decree. Globally, we see strong operational growth in emerging markets, particularly in Argentina, Brazil, India, Russia, and Venezuela. We are, however, experiencing market pressures in China, where our volumes have slowed due to lower demand that is being compounded by shifts in consumer behaviors and the emergence of new retail channels in the country.
In a few minutes, Sandi will take you through the strategy and approach for how our consumer-facing businesses are leveraging our unique consumer insights and integrating science and different forms of technology to better meet the needs of consumers and drive growth. Before we do that, I want to reiterate how we're navigating the environmental changes before us and how we strongly position Johnson & Johnson to deliver continued growth. As you well know, everything starts with innovation, and at Johnson & Johnson, we're doing that on multiple fronts. We're committed to working with researchers around the world to ensure we continue to operate at the leading edge of science, medicine, and technology. That approach drives our enterprise R&D and the significant investments we are making to benefit patients and stakeholders.
We have a good balance of internal and externally sourced innovations, acquisitions have accounted for just under half of our sales growth over the last decade. We're always actively looking for new value-creating acquisitions and deals to continue that success. We also invested about 11.5% of our net trade sales, or $8.5 billion in R&D last year across the enterprise to discover, in-license, and develop innovative new products. You can see the impact reflected in our portfolio and robust development pipeline, which includes 25 active late-stage development programs, 160-plus early-stage programs, and over 70 venture investments. In just two years, there's already 90 startups working in our JLABS, which creates tremendous access to new ideas and potential downstream partnerships for the future.
Now, when it comes to making significant R&D investments, we must also focus on managing through the inherent complexities in the global regulatory environment in order to ensure our products are ultimately able to reach consumers. We're encouraged by the steps governments are taking to increase access to quality healthcare for their people, to also create and support a more innovation-friendly environment through designations that speed the review and approval of transformational products. We benefited from that with IMBRUVICA, today we have two other candidates in our pharma pipeline already designated as breakthrough therapies by the FDA.
At the same time, we can all agree that governments around the world must do more to protect intellectual property and ensure fair, transparent, and consistent enforcement of regulations governing the trade of innovative products, we'll continue to watch and engage in these issues in the more than 65 countries in which we do business. Globally, about half our total year-to-date sales come from countries outside the United States. With strong national and regional models, like those we've installed in China and Southeast Asia, we're better able to maximize the breadth of our portfolio, interact more effectively with governments, develop contracting strategies and gain consumer insights that are shaping our international portfolios and informing R&D, ultimately driving growth.
By executing with excellence in all that we do, we've introduced a strong cadence of new product launches over the past five years that today account for about 25% of our overall sales. We're taking steps to ensure we're even more effective and efficient across the enterprise by investing in greater uses of technology and streamlining our back-office processes, which we expect will help to free up about $1 billion that we can invest back into the business by 2018. We're also continuing to make strategic decisions about the areas we're going to participate in or move on from. As we stated before, our focus is on areas where we are or we can be number 1 or number 2 in a particular area, as well as on those products or businesses that will be directly complementary.
If we have an asset or a business that doesn't meet those criteria, we've demonstrated that we will divest it and redirect our resources to accelerate existing programs or to acquire new ones that we think are ultimately going to help more patients and also add more value to our enterprise. We also see that our broad base across the healthcare spectrum is a competitive advantage when the strategies we create consider, and where appropriate, incorporate insights and innovations from every aspect of our operations to attack disease and improve health outcomes. The work we are doing with IBM and Apple does this by cutting across the enterprise and leveraging our science, technology, and consumer insights to empower patients and caregivers to help speed the post-surgical recovery process.
Executing our strategy ultimately comes down to people, by focusing on them and emphasizing our credo-based purpose, we developed a deep bench of extraordinary talent who are accountable for driving their businesses and who also ensure we are taking leading roles within the industry and world medical community to combat global public health issues like Ebola and HIV. Now, just to summarize, Johnson & Johnson is a company that's built a remarkable legacy and has a very exciting future. Healthcare, though, remains one of every society's greatest challenges, nothing affects people more personally or affects communities and nations more directly. Our business is strong, you can see that we're continuing to make considerable investments in innovation and have a robust pipeline of truly transformative products to ultimately benefit patients, and that we're taking actions to strengthen our leadership positions in areas in which we compete.
With our transparent and consistent capital allocation strategy, we extended our track record of dividend increases to 53 consecutive years in April, when we declared a 7.1% increase, taking our quarterly payout up to $0.75 per share, and have returned about 70% of our free cash flow over the past decade to investors, outpacing the S&P 500 in 2014, as well as over the last 3, 10, and 20 years. With that, it's now my distinct pleasure to turn the call over to Sandi Peterson. Sandi joined Johnson & Johnson just over two and a half years ago and is leading a significant transformation across major components of our enterprise, including our consumer-facing businesses, enterprise supply chain, quality, and IT, and she's been a tremendous leader here since day one.
I want to thank her and her team for what they've already accomplished for our business, and more importantly, for what they will continue to do to help patients and consumers worldwide. With that, I'm pleased to turn the meeting now over to Sandi, and we'll rejoin you a bit later to take your questions.
Good morning. I am happy to have the opportunity to talk about our progress in our consumer-facing businesses, consumer diabetes solutions, and vision care. I will also discuss the evolution in our approach to technology across the enterprise. Increasingly, as we lead through the disruptions and opportunities in global healthcare, we are fusing the power of technology with the power of science to deliver improved outcomes for patients, consumers, and customers. First, our three consumer-facing businesses. As Alex Gorsky said earlier, the future of these businesses looks promising. While they are at different stages of transformation, we believe that they are all well-positioned in attractive, growing global markets, and we are driving scale and growth in each. Let me start with consumer. Our iconic consumer brands are Johnson & Johnson's face to the world. They are how we are known by millions around the globe.
They are our first point of entry into emerging markets. They really are very important to the overall enterprise. They are, and will increasingly be, important contributors to Johnson & Johnson's financial performance. Demographic trends and changes in the way consumers make healthcare decisions are creating new opportunities for our consumer business. Our consumer expertise and insight are highly valuable to payers and providers, which differentiates us from our competitors. We view a healthy consumer business as a growth annuity for Johnson & Johnson, with less volatility than other markets. As many of you know, we launched our new consumer strategy in 2013. We focused on stabilizing and revitalizing the business, remediating quality issues in U.S. OTC, and being clear about where and how to compete and win around the world. We are executing successfully against that strategy. We are pleased to say that we have remediated and relaunched our U.S. OTC business.
Over 80% of our brands have returned to the market. Tylenol Arthritis will launch soon. We have made significant progress in meeting consent decree requirements. The FDA has certified our manufacturing facilities in Las Piedras, Puerto Rico, and Lancaster, Pennsylvania. We recently had a successful FDA inspection in Fort Washington and are awaiting final notification. Our OTC brands continue to be loved by consumers, and we have regained the trust of our customers. Most of our OTC products are endorsed as number 1 in their categories by healthcare professionals. Tylenol remains the number 1 doctor-recommended brand for pain relief and the brand most used by hospitals. Zyrtec, Children's Tylenol, and Children's MOTRIN are also number 1 recommended brands. Last year, our OTC portfolio grew 4 times the category in the U.S. That strength has continued this year with 13% growth in the first half and 16% in the latest quarter.
More broadly across the consumer business, we have made significant progress in creating a world-class brand-building and marketing organization. We have globalized the management of 12 mega brands and are focused on 11 consumer need states. We have expanded these brands into new markets and are seeing strong share gains in oral care, beauty, and OTCs. We are growing 11% year-to-date and gaining share in feminine protection. For example, in places like India, Germany, South Africa, and Poland. We have revitalized our iconic BAND-AID brand. In the U.S., BAND-AID consumption grew 6.3%, and we gained two share points, thanks to decorated BAND-AID and commercial innovation. As we invest in our global brands, in our top regional brands, and in our priority markets, we are building new marketing capabilities, such as digital. We doubled our digital media investment in digital channels with emphasis on social and mobile.
Today, 40% of our digital ad spending is via mobile, and more than 90% of our Facebook ads are served up on either smartphones or tablets. This global, centrally led marketing approach is bringing our beloved brands to their full potential. You may have seen the results of the new model come to life in the Johnson's Baby So Much More campaign, the first global campaign for our iconic baby equity. The campaign launched in seven lead markets in February and has rolled out to more than 20 markets. By the third quarter of this year, all major markets will launch. Early results show sequential consumption growth and share improvement. In the U.S. alone, through May, Johnson's has grown 2.4 share points since the launch. Our product pipeline in consumer is also quite robust.
We are focused on developing science-based, clinically validated products grounded in deep consumer insights, and most importantly, endorsed by professionals. We have 20 key product launches this year. For example, Neutrogena Hydro Boost, MOTRIN Liquid Gels, and the launch of the new LISTERINE whitening formula in Europe, the Middle East, Africa, and Latin America. Improving our supply chain has also been another critical focus in the consumer business, with a strong emphasis on the U.S. OTC consent decree. Across the enterprise, we have made remarkable progress in transforming our supply chain to ensure we deliver quality, customer reliability, and benchmark profitability. We continue to see the benefits of integrating our supply chain organization to drive performance improvements in every J&J segment. As we look ahead in consumer, we will continue to rebuild our competitive edge.
The underlying environmental drivers, demographics, the developing middle class in emerging markets, and lifestyle shifts suggest growing consumer need for our products and increased opportunity to help more people live healthier, more vibrant lives. Across the business, we are focused on delivering above-market growth and benchmark profitability. Consumer IBT margin before special items and intangible amortization expense has increased from 14.1% in 2013 to 15.4% in 2014. We'll continue to improve profitability until we achieve benchmark levels. Our organic sales, adjusted for currency and excluding acquisitions and divestitures, grew approximately 4% in the first half. Since mid-2013, we have grown organic sales steadily. Last year, we grew share for the first time in a number of years, and we're committed to continuing that trend. We manage our consumer brand portfolio actively with an eye towards targeted expansion in key geographies and need states through focused acquisitions and licensing agreements.
A recent example includes the acquisition in India of ORSL. The intersection of changes in the healthcare landscape, disruptions in the retail environment, and changes in consumer expectations and behaviors creates an opportunity J&J's consumer business is well-suited to capitalize on. Now, let me turn to our diabetes solutions business. Diabetes is the fourth largest healthcare category in the world. Globally, the therapies and devices market is growing at 5%. 50% of patients with diabetes are unfortunately undiagnosed or not in control, which creates an opportunity for us to grow and an important opportunity to impact patients' lives. Given the power of our OneTouch brand, a highly innovative pipeline, strong commercial execution, and operational efficiency, we are well-positioned to deliver profitable growth in diabetes despite negative industry pricing dynamics. In blood glucose monitoring, we hold the number 1 value and volume positions in our nine top markets.
This year's OneTouch Verio platform launch is our most successful launch in the last two decades. In the U.S. alone, volume share grew three points. We have strong penetration in emerging markets where type 2 diabetes is growing. We have simplified our portfolio dramatically, reducing the number of strip platforms from five to two and module meter offerings from 14 to three. We have reduced our facility footprint, slashed the number of SKUs by more than 55%, and taken significant costs out of the business. In insulin delivery, we are growing at market-leading rates, up operationally 32% year-to-date worldwide, driven by Animas Vibe. In 2015, we took over the number 2 share position. In addition, we are making excellent progress in preparing for the launch of Calibra, a new product which will create an entirely new category.
Calibra is a wearable, disposable insulin delivery patch that meets type 2 patients' need for discretion, convenience, and control. We are beginning the clinical outcome study and anticipate entering the market next year. Looking forward, we are developing insight-driven, market-appropriate innovations across the BGM and insulin delivery platforms in areas such as digital solutions, continuous glucose monitoring, and automated insulin delivery. We will continue to leverage enterprise capabilities and expand targeted strategic partnerships. Great examples of this include our collaboration with Nova Biomedical and Hospital Systems and Dexcom with continuous glucose monitoring pumps. We are particularly enthusiastic about the potential to improve engagement and health outcomes with digital solutions that motivate patients to better self-manage while creating value for healthcare providers and healthcare systems. Now, let me turn to Vision Care. Eye health remains one of the largest, fastest-growing, and most underserved segments in healthcare.
Vision correction represents more than half of that market, with contact lenses representing a $7 billion segment. The presbyopia and astigmatism markets are especially underserved. Johnson & Johnson's Vision Care has a long history as the global market leader in contact lenses. Our success was built on category-leading innovation, strong relationships with the eye care professional, and the most recognized brand equity in the category. It's no secret, however, that we face capacity and portfolio issues in Vision Care in 2012 and 2013. At the same time, competition intensified and consumer preferences shifted. The market structure has evolved in response, driving increased emphasis on e-commerce and increased price competition between channels. These developments have reduced engagement for eye care professionals, who are an important ingredient in strong category health. Despite this, we continue to lead the category globally by 11 points.
We continue to grow at double digits in our lead emerging markets. BRIC market operational sales are up double digits, driven by continued strong performance of Russia, Brazil, and China. Last year, we instituted a one-time price reset to bring more value to consumers in close partnership with eye care professionals in the trade in the U.S. and Japan. We will anniversary this event in Q3, as Alex said earlier. We should see revenue momentum in the second half. Share is stabilized in the U.S. for five consecutive months. We are outperforming the market in volume in our top 2 strategic brands, ACUVUE OASYS and 1-DAY ACUVUE MOIST. Our equity measures with eye care professionals have improved.
In Q2 alone, we grew 15% operationally in Japan. Driven by strong performance of our leading 1-DAY ACUVUE TruEye and the recent launch of 1-DAY ACUVUE DEFINE, as well as favorable comps. Our R&D strategy leverages consumer expertise and science-based, clinically supported, manufacturing-enabled innovation, and we have built a robust multi-generational pipeline. We are launching our first major innovations in five years with 1-DAY ACUVUE DEFINE, 1-DAY ACUVUE Multifocal, and ACUVUE OASYS Overnight. You will see us accelerate innovation in high-growth specialty segments such as beauty, presbyopia, and astigmatism. We will sustain innovation in our largest core platforms, spherical reusable and sphere daily disposable. We anticipate at least one major product launch in each of the next three years, including innovations with the potential to disrupt the category. Vision Care used the new marketing process developed in consumer to relaunch the iconic ACUVUE brand.
The new global ACUVUE campaign, which went live last week, is designed to drive consumer engagement and category growth and ensures a differentiated position with eye care professionals. Our world-class supply chain is a competitive advantage in Vision Care. Our manufacturing team produced approximately four billion lenses in 2014. We are continuing to invest in capacity expansion while operating with 99.6% customer service levels. Though we are still in the throes of rejuvenating our eye care business, we have made considerable progress, which will continue this year and into the next. As we bring our core contact lens business back to market-leading growth, we will also pursue our aspirations in the broader eye health market. Alex started this morning by talking about the power of Johnson & Johnson's broad base in healthcare. Our consumer-facing businesses are a critical contributor to that broad base.
While Consumer, Diabetes Solutions, and Vision Care are at different stages in their transformations and represent unique opportunities, we are driving scale and growth in all of them. Before I turn it over to Dominic, I'd like to share some perspective on how Johnson & Johnson is capitalizing on the way technology is reshaping the entire healthcare landscape. The consumerization of healthcare, wearables, and mobile apps are giving patients unprecedented access to health information. Physicians, regulators, and payers are leveraging big data, analytics, and real-world evidence to personalize care, understand product safety and efficacy, and drive improved outcomes. Artificial intelligence, machine learning, and advanced sensors are creating new opportunities to take advantage of the best clinical and wellness expertise. We are at a tipping point where technology is becoming the medium through which healthcare can become a more effective and efficient system.
The opportunities this creates for Johnson & Johnson to become a healthcare technology innovator are immense. We have identified key technology areas that will accelerate growth and are actively pursuing programs and partnerships in those areas. The relationships with Google and with IBM and Apple that Alex mentioned are great examples. There are others in the works and more to come. We are working with and talking to nearly every major technology company and many early-stage companies. We are collaborating with retailers like Walgreens and CVS, where care is increasingly delivered. Health plans like Aetna and Kaiser Permanente and health systems such as Jefferson Health and Premier to leverage technology, digital tools, and our health and wellness expertise. We find that Johnson & Johnson is most often the partner of choice for technology providers.
We have the patient and consumer insight, the clinical and behavior modification expertise, and the regulatory experience that can combine with technology to transform the continuum of care. This is particularly exciting when you think about the work that we are doing with payers and providers, as in our work with IBM and Apple. We are creating an ecosystem embedded in hospital networks, which gives us the ability to integrate the right patient data with the right record and the right clinical outcome in the healthcare IT infrastructure. I've been in healthcare long enough to have heard over and over again that technology was going to disrupt the industry beyond recognition. Today, maturing technology, scientific advances, and global healthcare reform are combining to make disruption a reality. Today, technology is intrinsic to the business.
As the world's most broadly based healthcare company, we are uniquely positioned to be the company that connects the fragmented world of healthcare. Now, let me summarize. Our consumer-facing businesses are executing well against focused strategies. They are demonstrating results, improving profitability, and growing. They have strong presence in the world's fastest-growing markets and are building insight-led innovation pipelines. Each business is strengthening its brand-building capabilities, actively managing its portfolio, and leveraging technologies in ways that increase efficiency and create competitive advantage. Across J&J, we are using technology to unlock the power of the enterprise to improve patient and financial outcomes in ways that will create value for our customers and ultimately for our shareholders. We are building what I firmly believe is the best team of leaders in the industry. With that, I'll turn it over to Dominic, and I look forward to answering your questions.
Thanks, Sandi, and good morning, everyone. As you've heard on the call, we're certainly pleased with the progress we continue to make and the execution against our priorities, which is reflected in the solid underlying financial results we have achieved thus far in 2015. As Alex and Sandi discussed, we are well-positioned for continued growth in this dynamic healthcare environment. I'll take the next few minutes to review our financial performance in the second quarter, and we'll also provide guidance for you to consider in refining your models for the balance of the year. Turning to the next slide, you can see our condensed consolidated statement of earnings for the second quarter of 2015.
As we expected, as many of you on the sell side also reflected in your updated models, direct comparisons to our second quarter of 2014 are challenging due to the exceptional uptake of OLYSIO that we recorded last year, as well as currency headwinds and the impact of not having Ortho Clinical Diagnostics in our results for 2015. Our sales results for the second quarter 2015 were essentially in line with analyst estimates as reflected in First Call. On an operational basis, excluding the impact of acquisitions and divestitures and excluding the impact of Hep C products, sales were up 5% for the quarter. Please now direct your attention to the box section of the schedule, where we have provided earnings adjusted to exclude special items and intangible amortization expense.
Adjusted net earnings of $4.8 billion in the quarter are down 6% compared to Q2 2014, and adjusted earnings per share of $1.71 versus $1.78 a year ago are down approximately 4%. However, the adjusted EPS results exceeded the mean of the analyst estimates as published by First Call. Excluding the net impact of currency translation, our operational earnings per share was $1.90, or up 6.7%. There were no significant non-GAAP adjustments in the 2015 second quarter other than the exclusion of the expense for amortization of intangible assets. Let's take a few moments to talk about the other items on the statement of earnings.
As we have said before, we would use any gain from divestitures in 2015 to offset the lower earnings impact of not having the OLYSIO sales uptake we had in 2014, and to provide some offset to currency headwinds while also allowing continued investment for future growth. This quarter's results reflect just that. Cost of goods sold was 90 basis points lower than the same period last year, mainly due to favorable product mix, somewhat offset by currency impacts. Selling, marketing, and administrative expenses were 30.3% of sales or 220 basis points higher as compared to the second quarter of 2014. We are investing in a responsible manner, and the absolute spending level is comparable to the prior year, mainly due to the impact of currency as we continue investment spending behind our key brands on a global basis.
The prior year percent to sales level was artificially lower as there was very little spending in relation to OLYSIO sales. Our investment in research and development as a percent to sales was 12% and 170 basis points higher than the prior year as we continue to make important investments in our pipeline for future growth. Interest expense, net of interest income was similar to last year. Other income and expense was a net gain of $900 million in the quarter, compared to a net charge of $200 million in the same period last year. Excluding special items that are reflected in this line item, other income and expense was a net gain of approximately $1.1 billion compared to a net gain of $300 million in the prior year period. This quarter, we recorded the gain on the previously announced divestiture of the NUCYNTA product.
Excluding special items and intangible amortization expense, the effective tax rate for the six-month period was 22.3% compared to 21.1% in the same period last year. As I noted during our call in April, the effective tax rate this quarter is again higher than our guidance for the year, as it does not yet reflect the benefit of the R&D tax credit, as that legislation has not yet been passed, although we expect that it will be. The effective tax rate is higher in 2015 as compared to 2014 as a result of the mix of earnings being higher in the U.S. this year. I'll provide some guidance for you to consider as you refine your models for 2015.
Before I discuss sales and earnings, I will first give some guidance on items we know are difficult for you to forecast, beginning with cash and interest income and expense. At the end of the quarter, we had approximately $15 billion of net cash, which consists of approximately $34 billion of cash and marketable securities and approximately $19 billion of debt. I am pleased to report that we completed our share repurchase program to help offset the ongoing impact of the OCD divestiture. For purposes of your models and assuming no major acquisitions or other major uses of cash, I suggest you consider modeling net interest expense of between $450 million and $550 million. This is unchanged from our prior guidance.
Regarding other income and expense, as a reminder, this is the account where we record royalty income as well as gains and losses arising from such items as litigation, investments by our development corporation, as well as divestitures, asset sales and write-offs. We would be comfortable with your models for 2015 reflecting net other income and expense, excluding special items as a gain ranging from approximately $2.2 billion to $2.3 billion. This is slightly higher than our previous guidance. As a reminder, this includes the gain from the divestiture of the U.S. rights to NUCYNTA pain medicine, as well as the anticipated gain on the pending divestiture of the Cordis business to Cardinal Health, which we expect will close towards the end of 2015, subject to regulatory clearances and other customary closing conditions.
We have also refined our estimates for the items in this account now that we are halfway through the year. As I also noted in April, the guidance for other income and expense will flow through to increase operational earnings as we expect to use this other income to compensate for the decreased income from OLYSIO in 2015 as compared to 2014, as well as to help mitigate some of the impact of strong foreign currency headwinds this year, while we also continue to invest in our core business and opportunities for future growth. Now a word on taxes. Our guidance for 2015 anticipates that the R&D tax credit will be renewed by Congress, although that has not yet occurred. We would therefore be comfortable with your models reflecting an effective tax rate for 2015, excluding special items, of approximately 21%-22%, consistent with our previous guidance.
If the R&D tax credit is not approved, that would negatively impact the tax rate by approximately half a percent for 2015. Now turning to guidance on sales and earnings. Consistent with our previous guidance for sales, our assumption for PROCRIT is that there will not be biosimilar competition in 2015. We also do not anticipate generic competition this year for RISPERDAL CONSTA or INVEGA SUSTENNA, but we are expecting a generic entrant for Invega in 2015. As expected, we have seen additional biosimilar competition for REMICADE in Europe following the patent expiration in many countries in February of this year. As we've done for several years, our guidance will be based first on a constant currency basis, reflecting our results from operations. This is the way we manage our business, and we believe this provides a good understanding of the underlying performance of our business.
We will also provide an estimate of our sales and adjusted EPS results for 2015 with the impact that current exchange rates could have on the translation of those results. Consistent with our previous guidance, we would be comfortable with your models reflecting an operational sales increase on a constant currency basis of between 1% and 2% for the year. This would result in sales for 2015 on a constant currency basis of approximately $75 billion to $76 billion. Additionally, by way of comparison to how we've described our sales results in 2014, our operational sales growth for 2015, excluding the impact of all acquisitions and divestitures, as well as the impact of hepatitis C products, would be approximately 6%, a higher level of growth than the comparable 5% for 2014. Just to note, we are monitoring the situation in Greece as the country considers its path forward economically.
We do not anticipate any significant negative impact to our sales results for 2015, nor to our earnings for 2015, unless there is a significant change in the current expected resolution. As of last week, the euro was lower by approximately 17% as compared to 2014 average levels. The dollar has strengthened recently versus virtually all major currencies. Though we are not predicting the impact of currency movements, to give you an idea of the potential impact on sales if currency exchange rates were to remain where they were as of last week for the balance of the year, our sales growth rate would decrease by nearly 7%, reflecting the weakening of the euro and other major currencies against the US dollar.
Thus, under this scenario, we would expect reported sales to reflect a change in the range between negative 5% and negative 6%, for a total expected level of reported sales of between approximately $70 billion to $71 billion. This is consistent with our previous guidance. Now turning to earnings. A significant factor impacting our earnings guidance for 2015 is the impact of currency movements on transactions. Although they are hedged, it is still somewhat negatively incremental versus the prior year. We expect transaction currency impacts to be negative to our gross profit by approximately 60 basis points in 2015 as compared to 2014. We would be comfortable with adjusted EPS guidance in the range between $6.70 to $6.80 per share on a constant currency basis, reflecting an operational or constant currency growth rate of 5% to 6%.
This is higher than our previous guidance, as we have increased the lower end of the range, reflecting some operational improvements in the business and our confidence at this point in the year. Again, we're not predicting the impact of currency movements, to give you an idea of the potential impact on earnings per share, if currency exchange rates for all of 2015 were to remain where they were as of last week, our reported adjusted EPS would be negatively impacted by approximately $0.60 per share, which is consistent with our previous guidance. Therefore, our reported adjusted EPS would range between $6.10 to $6.20 per share. At this stage in the year, we would be comfortable with your models reflecting the midpoint of this range, which is higher than our previous guidance.
In summary, as you update your models for the guidance that I just provided, I would like to make a few key points. Although operational sales growth is expected to range between 1% and 2%, we are pleased to note that when excluding the impact of acquisitions and divestitures and hepatitis C products, our operational sales growth at the midpoint of our guidance is a solid 6% for the full year 2015, as compared to 5% for 2014. With regard to earnings on a constant currency basis, our guidance on operational EPS growth is strong and in the range of between 5% and 6%. Finally, as we execute on our growth plans, we're continuing to make portfolio choices and investments in our business, particularly in research and development, as we continue to build our pipelines across the enterprise, which will position us for sustained future growth.
Now I'd like to turn things back to Louise for the Q&A portion of the meeting. Louise?
Thank you, Dominic. Holly, can you please give the instructions for the Q&A session?
Ladies and gentlemen, if you would like to ask a question at this time, press star then one on your telephone keypad. If you would like to withdraw your question, press the pound key. Your first question comes from Glenn Novarro with RBC Capital Markets.
Morning, Glenn.
Hey, good morning. Question for Alex. In your first couple of years, Alex, you've spent a lot of time with divestitures, divesting cardio devices, diagnostics, pharmaceutical, and consumer brands. As you look at the enterprise now, do you think we are finished with the divestitures? Question one and question two, do we now enter a period where the company's more focused on acquisitions? Thank you.
Hey, good morning, Glenn. Alex here, and thank you very much for your question. Glenn, three years ago, when we started looking at our strategies going forward, we tried to outline a very clear path ahead that would really consist of multiple components. One is obviously continuing to invest in our organic businesses, both in sales and marketing and research and development. I think we demonstrated that in spite of a lot of different puts and takes, that we've continued to do that in a responsible way as Dominic outlined earlier when he was taking you through the P&L. An area where we did have a lot of focus was on making sure that our businesses were competitive. Of course, we tried to be very clear in our criteria there that, look, we want to be number one or number two in the marketplace.
We want to have a clear innovation or technology path to really helping patients or consumers. Very importantly, we wanted a business to be complementary to something else that we're doing in another area of the enterprise. Of course, just fundamentally be a strong business. If they didn't meet those criteria, then, of course, we'd consider other options where they may be better served in someone else's hands. As you noted, we've demonstrated that we're willing to do that as well. We think that's an ongoing process in the business. We would expect there, a business our size is in excess of $70 billion involved in the numerous platforms that's something that you'll see as part of our natural cadence and flow going forward. Clearly, we're always also interested in growth opportunities.
When we see strong innovations that really make a difference for patients, that also where we feel it offers a great complement to one of our existing franchises or frankly, a platform for significant growth into the future. We've got the balance sheet. We've got the wherewithal to make those investments, that's always a priority for us and will remain so into the future.
Just as a follow-up to that, if you look at the pipeline of M&A potential, number one, would you call the pipeline meaningful? In other words, there's a lot of rich targets out there. Then as you look at these targets, what do you see in terms of the valuation of these targets? Are these targets getting stretched? Is that maybe one of the reasons why you haven't done as much M&A here in the last few years? Thank you.
No, Glenn. Thank you. Look, we do feel that there are several significant opportunities really across each one of our segments that offer potential for growth and that are consistent with the strategic outline that I mentioned earlier. At the same time, I think we demonstrated that we want to be thoughtful and disciplined about our approach. We intend to continue that path going forward.
Thank you. Next question, please.
Your next question comes from the line of Kristen Stewart with Deutsche Bank.
Morning, Kristen.
Hi, Kristen.
Hey, good morning, everybody. I was just wondering, Dominic, if you could maybe just walk us through just again with the disposition of Cordis, just kind of what you're assuming in terms of timing of the sale of the business and then the dilution, how we should think about that. Should we think about that similar with the OCD business in terms of the use of the proceeds, perhaps with another round of repurchase to offset dilution again, or just kind of how we're thinking still about cardiovascular?
Sure, Kristen. Well, we expect that the Cordis divestiture will close in the latter part of the year. We still have some regulatory approvals and customary closing conditions. We would expect that toward the end of the year, that's been consistent with our previous discussion. Nothing's changed there. The dilution of not having Cordis as part of the business is not that significant, quite frankly, not as much as it was for OCD. As you know, that business after we exited the drug-eluting stent business is a relatively small portion of our business. With respect to use of proceeds, as we do typically when we do divestitures, we wait till after the transactions are complete, look at other opportunities we have for use of cash, and then make our decisions then as we prepare our plans for the coming year.
As of now, I really can't comment on what we might do with any of the proceeds.
Hey, Kristen, this is Alex. I just might also add that cardiovascular remains an area of strategic importance for us. We have a very strong Biosense Webster business. In fact, if you look at the quarterly performance for the second quarter, it's once again double digit. I think this reflects almost three or four years now of consecutive improvements in that performance at a very similar level. A great flow of new technologies that's really making a difference for patients. We also think cardiovascular, look, it still remains a global healthcare issue with a lot of innovation. It's an area where we remain interested, and we still feel we have very solid footing with our Biosense Webster EP business.
Got it. Just maybe if you could give us a little more color just on Remicade. I know that that's obviously been a key concern of investors, just what you're seeing in the quarter and expectations ahead just with respect to the business over in Europe with biosimilars.
In the quarter, Kristen, in the export sales, we actually had an inventory change that negatively impacted the reported results there for the pharmaceutical group by about 2%. What we're seeing in Europe is as expected. For the countries that went off patent in February 2015, we're seeing about a market share for the biosimilars in the mid-single digits, as expected.
Okay, perfect. Thank you.
Okay. Next question, please.
Your next question comes from the line of Mike Weinstein with JP Morgan.
Morning, Mike.
Hi, good morning. Let me turn to the pharma side for a minute. I think two products that people focused on in the first half of the year for impact of competition were STELARA and INVOKANA. INVOKANA looks like its momentum has continued and continues to look fantastic. STELARA looked like it slowed this quarter. Could you just comment on both?
Yeah, Mike, Alex. Look, we still see STELARA growth at over 15%, strong growth in the U.S. and particularly strong growth outside the United States at almost 27%. There was a slight sequential decrease in share we're projecting, but overall, if we look at the competitive profile of the product, how we're doing, combined frankly with our overall franchise presence that we see in this area, we remain really confident in it.
Any comments on INVOKANA?
INVOKANA, the same. I think, look, we've continued to highlight the profile. We've got great reimbursement, well in excess of 50%-60% in both commercial as well as the Medicare side of the business. We've continued to see strong TRX trends, both in primary care as well as endocrinology. Overall, we're seeing strong uptake and we think it's a big opportunity, Mike.
Okay. Alex, while I've got you here, it's been three years since you guys closed the Synthes acquisition. I'm sure as you commented, you're not thrilled by the first half performance in trauma and spine. Can you just talk a little bit about how you're feeling about that deal and what it will take to get it back on track? Thanks.
Sure, Mike. Thanks for the question. Look, overall, we absolutely believe it was the right move when to bring Synthes in and create the largest and most diversified orthopedics company. When we reflect back, there have been changes that have taken place in the market. One is just the market growth across all these segments. If you remember, back in 2008, 2009, 2010, we saw high single-digit growth really for hips, knees, trauma, as well as spine. That has changed significantly. We're now seeing that in the 3%-4% range. I am pleased with the performance overall that we've seen through the integration. Whenever you bring two large organizations together, there's always a lot of moving pieces.
I think over the last three years, if you take a look at the overall disruption and the way that we've been able to manage it, I think the team has done a very good job. Now we're really focused on what do we do to ensure that we're best positioned for the future. Frankly, we're doing it at a time when a lot of our competitors are just getting ready to go through a significant amount of integration and transition. This is where we're excited, and I think it starts with innovation. We've had a nice cadence of innovation. In fact, we're in the midst, we just launched the TFNA, the transfemoral nail in trauma that we're excited about. We think will be an important addition to the bags of the portfolio of that part of the business.
In the U.S., we were encouraged by the performance that we saw in knees and hips at 5% and 4% growth respectively for the quarter. Also going forward, I think we're also quite excited about the opportunity to work with customers in new, unique, and different ways across that portfolio. I also think it's fair to say that in all those areas, we're going to continue to look for ways to drive that business through innovation, but also through increasing our effectiveness and efficiencies across all areas as well. I think we're pleased. We're not satisfied. There's more work that we need to do, and that's where we're focused right now.
Thank you.
Thanks, Alex.
Next question, please.
Your next question comes from the line of Larry Biegelsen with Wells Fargo.
Morning, Larry.
Good morning. Thanks for taking the questions. Two clarifications on the utilization comments about the fourth consecutive quarter of improving utilization. Is that through Q1 or Q2? On REMICADE outside the U.S., by our math, we had the total international and export sales growth in Q2 down about 18% constant currency. Louise, you talked about that 2% impact from the inventory reduction. Was that to that 18% or so? Was that just to REMICADE outside the U.S.? If you could help clarify those two points, that would be great. I just have one follow-up for Alex after that.
Larry, that 2% is on total pharmaceutical sales, so is a large reduction in the inventories.
Total worldwide pharma?
Yes.
On the utilization, was that through Q1 or Q2?
Yeah, Larry, Alex here. That was through Q2. You know this data as well as we do, and we're trying to triangulate from multiple different sources. What we see is, for example, around 4% growth in hospital admissions. If you take a look at hospital surgical procedures, we're thinking probably between 2.5%-3%. If we look at overall outpatient procedure growth, probably around 3%. It's still positive. In some cases, it's flat, perhaps a slight decrease versus what we saw in Q1. We think overall, the trends are relatively constant in what we've seen thus far.
That's helpful. I appreciate your comments earlier on M&A and the M&A environment. You have $15 billion in net cash, which is obviously not earning much. I know your first priority for cash is a dividend and then M&A. At what point do you consider using your cash to repurchase shares, Alex? Thanks for taking the question.
Sure. Larry, I think, look, overall, ultimately, we want to create more value for shareholders. As we look at our capital allocation strategy, you just iterated, we have a strong commitment to dividends. We've done that for a long time. You know our statistics and our track record there. Regarding M&A, it's also another area, obviously, that we keep our eye on. I mentioned earlier in the discussion that we're always looking for the right opportunity, and we try to do that in a balanced approach. Of course, we want innovation. Of course, we want complementary things to add to our portfolio and growth opportunities, but we also want to ensure that we maintain the discipline and the perspective of our approach that I think has served us well over a lot of years.
Even if you look at the internal versus external investment in the company, I think if you look over a 20, a 10, or even a near-term period, about 45% of our growth comes from what I'd call organic investment in our research and development versus slightly over half through M&A. That will continue to be our approach.
Also, Larry, I would say that if you look at it over long periods of time, I think we're very proud of the fact that over a decade, we've returned about 70% of our free cash flow to shareholders. I think it's important to keep that in mind. Although we may be evaluating opportunities all the time, we're always mindful of the fact of appropriate return to shareholders consistently over long periods of time.
Yeah. I think even recently, through some of the announcements that we've made about share repurchases, we demonstrated that that's part of our mix and will continue to be so going forward.
Thanks for taking the question.
Next question, please.
Your next question comes from the line of Jami Rubin with Goldman Sachs.
Morning, Jami.
Good morning.
Good morning, everyone. Just a couple of follow-up questions on sort of the major themes of the earnings call. Alex. I appreciate your taking the time to be on the call. Just if you look at the MD&D business, the MD&D business has underperformed its peers for at least the last four to five years, and maybe longer, I'm not sure. I can't imagine you are pleased with that performance. I'm just wondering, what is your interest level in moving up the technology curve out of what you're in, which are mostly commodity businesses? When I look across where the major growth opportunities are in med tech, you guys aren't there, robotics, transcatheter heart valves, et cetera. I appreciate valuations are high and you want to be disciplined, but at the same time, J&J's MD&D business continues to underperform.
If you could comment on that, please. Secondly, to you, Dominic, you are booking about $2 billion in non-operating income in 2015, largely related to divestitures. How do you repeat that performance in 2016 without creating, again, a very difficult comparison? Thanks very much.
Hey, Jami. Thank you for the question. Look, first of all, as I said regarding our medical device businesses, we think this is an important business and remains a very solid growth opportunity going forward. As you look across that entire business, we have a number of very exciting areas, frankly, that are doing quite well. We highlighted some of them earlier, but whether it's Biosense Webster, whether it's what we're seeing in areas like Biosurgical's energy, our Endocutter business. We're starting to see the turnaround in areas such as vision care, and we don't think those are commodity businesses. We think those are driven by innovation, technology, and they've been a steady stream. Are there other areas where we're interested? Well, you know that we've made an investment in the robotics space. We've announced an exciting opportunity with Google.
It's still early days, we recognize that, but we think that there's a lot of opportunity there given our expertise in general surgery overall and combining it with some of the expertise that those new technology partners can add. We're also interested in other areas beyond that, and we've demonstrated the ability in the past that when we see them, we will participate and acquire them. I think we've also demonstrated over the past few years that in areas where we don't see that path forward, that we'll be active on the divestiture front as well. We think that there is room for improvement. We know that we've got businesses, like diabetes care, for example, that had a significant impact from pricing a few years ago, vision care that's still in the midst of a turnaround.
We think that we've got the strategies, the innovation in place to turn those around, and these can be very solid and strong performers going forward.
Jami, with respect to the other income and expenses, $2 billion roughly that you quoted. I think we were very clear early in the year that we were going to use those divestiture gains to offset some pretty significant headwinds, and in particular, the major headwind of currency this year. Going forward, I don't believe we'll have the same level of divestiture income, but we'll still have some. As Alex had mentioned earlier, we're continuously reviewing our portfolio and making decisions of where we want to participate and where we think the assets would be better off in someone else's hands and where we could get value for our shareholders by selling the assets. I think for 2016, we would still see some level of divestiture income.
Again, in 2016 versus 2015, we don't believe we'll have the significant headwinds of currency that we just experienced in 2015, nor will we have the tough comparisons of not having OLYSIO. I think you'll continue to see it as part of our strategy to reevaluate our portfolio and deploy those gains against higher growth opportunities.
Thank you.
I just want to clarify something on the inventory for the pharmaceutical. The 2% negative impact includes also some inventory reductions for OLYSIO. If you just looked at the REMICADE export, total U.S. impact would be about 1%, about half of that, okay? Thank you. Next question, please.
Your next question will come from the line of Josh Jennings with Cowen and Company.
Morning, Josh.
Hey, Josh.
Good morning. Thanks so much for taking the question. I have first one for Dominic. Just as we look into 2016 and beyond and the annualization of OLYSIO and other headwinds experienced in 2015, how should we be thinking about leveraging the P&L, driving a higher level of EPS growth relative to revenue growth? Should we be anticipating consistent constant currency EPS growth in 100, 200 basis points range, or could that spread improve as you experience operating improvements in Consumer and the device franchises and continued strength in the pharma unit?
Yes. Thanks, Josh. As we've said many times, we always plan our business to grow our top line at a rate faster than the competitive set, to grow the bottom line at a rate of growth that's slightly faster than the top line growth. That depends each year on what investments we want to make to continue the growth trajectory of the business. I can't give you a formula to think about, but I think you have seen us be very consistent in our ability to continue to grow earnings at a rate that's appropriately at a level faster than sales, again, depending on what the market's doing depending on what particular investments we have. We do see increased profitability in the Consumer business because you mentioned it in your comments, Sandi had referred to it earlier.
Now that we're through many of the issues in the consent decree, we saw the increase in the profitability last year, and we expect that business will continue to contribute more profitability in the future.
Thanks. Just a follow-up on the pharma product specific question. There is some recent ANDA filers for ZYTIGA. Can you just talk about any inherent risk of a generic coming to the U.S. market prior to 2016, and then just an update on your patent positioning for that asset? Thanks a lot.
Okay. Just to repeat what I said in the prepared remarks, the composition of matter patent expires in December 2016, and the method of treatment patent expires in August of 2027. We would not speculate on any ANDA approval timing or outcome of any litigation. However, if we decide to file a lawsuit, the 30-month stay would begin April 2016 at the earliest, and the length of which would be, of course, subject to the outcome of any litigation. Okay. Thank you. Next question.
Your next question will come from the line of Vamil Divan with Credit Suisse.
Morning, Vamil.
Hi. Good morning, everyone. Thanks so much for taking the question. Just two here if I could. One, you talked a little bit about INVOKANA earlier. I know Mike Weinstein asked about this as well, but just about halfway through the quarter, we did have the FDA comment around ketoacidosis. Just curious, I mean, obviously performance seems fine this quarter, but on a qualitative basis, if you're sensing any sort of questions or changes in prescribing habits as a result of what the FDA has stated at this point. Second, appreciate your comments on Greece.
I was just curious also regarding Puerto Rico, just some of the kind of macro issues that are going on there. I know you guys have some manufacturing down there. Do you sense any sort of risk or concerns there, depending how that sort of plays out over the next few weeks or months here?
I'll take first the question on the DKA. It's early on, but our phase III trials actually included about 10,000 patients, and we saw very few cases of it.
Right. With respect to Puerto Rico, you're right, we have a significant manufacturing presence there and significant employment on the island, of course, as a result. I don't see that as a major factor in our ability to continue progressing with our plan. It's not on our radar screen as a major issue to contend with.
Now it comes to Mike.
Thanks.
Okay. Next question, please.
Your next question comes from the line of Jayson Bedford with Raymond James.
Good morning. Thanks for taking the questions. I think I heard Alex mention a $1 billion in cost savings by 2018. I just wanted a little clarity. Is that a new program, or is that the program that I thought you introduced a couple of years ago?
This is Dominic, Jayson. It's the program that we introduced a couple of years ago. We're a couple years into it now. We're already seeing some of those cost benefits. Alex is describing the same program where we looked at by 2018, if you compared it to a base year of 2013, the overall cost reduction would be in the aggregate of $1 billion.
How far along are you? Are you at 50%, 60%?
We kicked it off in 2013. We did a lot of planning, of course, in 2014. We're just starting to ramp it up this year into the next couple of years.
Okay. Maybe a question for Sandi on the consumer side. You've added investment over the last few years to support the relaunch of the OTC products. Margins seem to have improved nicely over the last few quarters. Does the added investment wind down to generate better margins, or does the growth pick up to improve margins?
Thanks for the question. The way in which we're looking at this is as we're sunsetting the consent decree, it enables us to improve the productivity of our manufacturing footprint. A large part of where you'll see continued improvement in the profitability of the business is by improving our COGS and our gross margins for the business. That's one aspect of it. The other aspect of it is we have undertaken over the last couple of years an approach to globalize our brands and globalize how we manage them, which drives increased efficiency in every single marketing $. Our perspective on this is we need to continue to invest behind these brands, both the U.S. OTC portfolio as well as the global portfolio. You'll not see us reduce our investments behind our brand building of all of our core brands.
What you will see is improved leverage in our manufacturing footprint and actually how we're spending those $ to drive improved profitability across the sector.
Jayson, this is Alex. If I could just add, I really want to commend Sandi and Jorge and their teams for the job they're doing on these relaunches. I think when we were having these calls several years ago, there was probably a fair amount of skepticism on our ability to relaunch against private label, making sure that we could work our way through the consent decree requirements. If you look at the progress that's been made over the past few years, obviously it starts with great products. I think now we have over 80% of our brands returned to the shelf, a lot of new recent launches, particularly along the Tylenol line. If you combine that with the way that we've achieved all the consent decree requirements, I think we work closely with the agency.
We've done that, in fact, I think we'll be, if not the, one of the only large over-the-counter companies to ever be able to do that successfully. The really good news is that when you look as we relaunch these brands, the share uptake is strong. I think we're back up to now about 60% of the share that we achieved in areas like pain. We're building our way back up. When you combine that with some of the new innovations that we have, we definitely see a nice growth opportunity in that part of the business.
With respect to everyone's time, we'll take two more questions. Next question, please.
Your next question comes from the line of David Lewis with Morgan Stanley.
Morning, David.
Good morning. Thanks, Louise, for squeezing me in. Maybe just a question for Alex and Sandi and a quick follow for Dominic. The consumer business is clearly recovering. That's the big message, I think, of this call. I think the commentary I think you've made publicly these last few months seems to be that for M&A consumer, it's going to center more on brands and not companies. You seem more willing in consumer, at least from our estimation, to rule out large M&A. Am I reading that right, and why is that the case?
The way in which we're thinking about acquisitions in consumer is a combination of things. We're going to clearly stay focused on our priority consumer need states and geographies. The way we look at it is a combination. Are there brands that are appropriate to tuck into our infrastructure to drive growth in certain markets or in certain areas of the consumer need state? We also will look at technologies that we can license in, like we've done in other parts of J&J. Lastly, we do look at companies to acquire, whether they're mid-size companies or whether they're larger companies. We are highly disciplined about looking at those and understanding the benefit of doing those kinds of larger acquisitions versus mid-size or smaller acquisitions. We haven't ruled out any particular part of the marketplace.
We're looking at a variety of different opportunities. Given that the business is now stabilized and growing again, we believe we're sort of in a position where we can look at these things a little bit more on an ongoing basis.
Yeah. David, I would just add onto that the consumer area remains one of strong strategic importance for Johnson & Johnson. When you think about the role of consumers and healthcare utilization going forward, when you think about the way that you're able to drive innovation, and frankly, when you think about the reach that it gives you, particularly in the emerging markets and the fast-growing markets. By the way, for Johnson & Johnson, it not only operates that way to drive growth in consumer, but it acts also as a way to increase our uptake in our other businesses, particularly in those growth markets. We think there's a lot of opportunities. I think mission one over the past few years has been getting it on the right track. As you mentioned yourself, we think we made a lot of progress there.
We're feeling much better. Now we're obviously looking for ways, how do we expand that? How do we take it to the next level?
Okay. Very helpful. Thank you for that color. Dominic, just a quick question on just thinking about international growth. This quarter was a little slower. I just wonder if you can just give us an update on what you're seeing macro in emerging markets, maybe specifically China, just given the events of the last month. Have you seen any acute slowdown or is it relatively stable? Thank you.
We have seen in China some slowdown. I wouldn't call it acute. There's some dynamics, of course, of generic competition in China and an overall slower growth in economic growth. We are seeing that, but I think we're well positioned. We've been in China for many, many years. We have a good footprint there. We obviously manufacture there as well, and our brands continue to get good uptick there. Of course, we're not in the generic part of the pharmaceutical business in China because we're focused more on innovation in that market. I wouldn't call it acute, but I would say we've seen some slowdown in the overall market growth in China.
Okay. Thank you.
Thank you very much.
Last question, please.
Your next question will come from the line of Rick Wise with Stifel.
Thanks so much for taking the question. Good morning, everybody. Alex, maybe just a question for you and then one for Sandi. You talked again, and you highlighted your focus on the OR of the future and talking about the Google JV and robotics. Can you maybe give us a little more concrete color? Is there a grand plan? Does it require acquisitions? Are we going to see some tangible products or launches that are going to impact sales and earnings over the next six, 12 months? How do you want us to think about it?
Yeah. Rick, we would want you to think about this as a real strategic investment in the future for robotic surgery. As we see the surgical suite continue to develop in today's environment, I would say there's a pretty clear line of demarcation between what you would say is standard surgery and robotic surgery. We think as technology develops in the future, whether it's real-time data collection, whether it's visualization, whether it's incorporating some of the new technologies in areas such as energy and hemostats, combining these in very new and unique approaches, we think offers a real significant opportunity to improve patient outcomes and ultimately to grow a business. We also think there's some inherent limitations to today's robotic surgery environment when you frankly look at the size and the scale of some of the existing innovation.
If you look at what's happened with other technology platforms, as they have become smaller, more flexible, more mobile, and frankly, have a better ability to integrate various activities around the OR, that's where we think we can really make a difference. We realize, of course, that we bring certain capabilities to the table, but we also think working with partners like Google and others, it expands our capabilities significantly. Look, we see this as really not something to have an impact, what I'd say, over the next 6 to 12 months. This is likely more over a 2 to 3 year plus timeframe. But this is something that we are quite committed to, that our partners are committed to, and that we see as a real opportunity to fundamentally change the way we think about surgery and robotics in the future.
I really appreciate that. Just last quickly, Sandi, it seems clear that Vibe is off to a strong start. I think you launched it in the U.S. late last year. Maybe just talk, if you could give us a little more color on the rollout. Where are you? Are you fully rolled out? Are you converting your own patients to Vibe or are you getting new accounts? Just and maybe what's next beyond Vibe? Thanks so much.
Thanks. In insulin delivery in total, what we have done is, as you know, we had launched the product in Europe, and also in Canada over the last couple of years. Both in Europe and in Canada, it also has a pediatric indication, which clearly gives it some unique differentiation in the marketplace. We effectively launched it in the United States really at the beginning of this year. We've seen significant positive growth and uptake of the product in the U.S., which is a combination of existing patients upgrading to the new product, as well as gaining basically new to therapy insulin pumpers, as well as we've seen a lot of conversion from other pump platforms to our platform. We, in the second quarter, also filed for the pediatric indication for the U.S. product.
Obviously the FDA will go through its review process, but we're hopeful that before the end of this year, we should have the pediatric indication, which will be a further uptick in the business in the U.S. and be very helpful to us in the U.S. As I also mentioned earlier, there's two other things in insulin delivery that we're very focused on, actually three, but two of them are working in partnership with Dexcom on a next generation pump that really brings the best of what we've learned of how to make this much more user-friendly and effective with a patient, as well as ensuring that we've got the right algorithm in the pump for insulin delivery. Combining that with the next generation of sensor. Our current pump has that with Dexcom.
We have done a lot of work not just in the insulin side, but also in the BGM side of really creating a much better ecosystem for the patient to have information and data that helps them manage their condition much more effectively. We're using information technology in a smarter way going forward, and we're seeing very positive impact of that, not just in the insulin delivery side, but in our core BGM business. That's another place that we'll see a number of different things that we're going to be doing in this business.
Last but not least, I mentioned that the Calibra patch pump is another great growth platform, we believe, for us because it's really a unique to the marketplace way to help type 2 diabetics who are insulin dependent, have a new way of getting their insulin delivered to them in a much more discreet way. There are a lot of things in the works. There's a lot of things in our pipeline in insulin delivery.
Appreciate it. Thanks.
Thank you. We'll have some closing remarks by Alex.
Okay. Well, thank you everyone. Look, in closing, I want to again extend our appreciation to all of you for joining today's meeting. We're pleased with the solid results we reported this morning, which as we discussed today, really do reflect the strong underlying growth we're seeing across the enterprise. When you combine this with the actions we've taken to even further strengthen our core businesses and advance our pipelines, Johnson & Johnson is well positioned to continue to drive growth over the long term. I wish everyone a great day, and thank you very much.
Thank you. This concludes today's Johnson & Johnson second quarter 2015 earnings conference call. You may now disconnect.