COMPANY PROFILE -Johnson & Johnson
Business Sector :Consumer Products, Medical equipment and Pharmaceuticals
Operating Geography :United States, North America, Global
About Johnson & Johnson :Johnson & Johnson is an American consumer products, medical equipment and pharmaceutical manufacturing company founded in 1886. It's headquartered in New Brunswick, New Jersey. It has 250 subsidiary companies, with operations in 60 countries and its products are sold in over 170 countries. It has around 134,000 employees, in more than 260 operating companies as of 2017. Their products marketed internationally include those produced in the U.S. and by subsidiaries abroad.
Johnson & Johnson has been recognized for its innovative products, commitment towards employees, betterment of people through healthcare products and social responsibility. These key aspects of company have named Johnson & Johnson as ‘2018 Fortune World's Most Admired Company’, this is the 16th time in a row that Johnson & Johnson has featured in the Fortune top 20 list. The company also ranks #1 in pharmaceutical category making it the highest ranked healthcare company in 2018.
Johnson & Johnson is also a leading medical device provider, its business is broadly organized into franchises to meet the specific requirements of distinct customers. Ethicon Inc. is one such subsidiary of Johnson & Johnson that manufactures surgical sutures and wound closure devices. Constant improvisation in technology and innovation helps the company offer an extensive variety of high technology medical and surgical equipment, devices, and services. Johnson & Johnson medical devices and services are widely used in surgeries, orthopedics, and cardiovascular diseases.
Johnson & Johnson’s mission statement reads “Make diversity & inclusion how we work every day. Our mission is to make diversity & inclusion our way of doing business. We will advance our culture of belonging where open hearts and minds combine to unleash the potential of the brilliant mix of people in every corner of Johnson & Johnson.”
The company’s vision statement reads “Be yourself, change the world. Our vision at Johnson & Johnson, is for every person to use their unique experiences and backgrounds, together – to spark solutions that create a better, healthier world.”
The USP or Unique Selling Proposition of Johnson & Johnson is in, being the producer of most innovative healthcare products with worldwide brand recognition and trust, making it the largest biotechnology and pharmaceutical companies, based on its market capital and is regarded as one of the highest ranked healthcare companies of the globe.
Johnson & Johnson Revenue :
$76.5 Billion FY ending 31st Dec 2017 (y-o-y growth of +6%)
$71.9 Billion FY ending 31st Dec 2016
Competitive Analysis of Johnson & Johnson
The Internal analysis of Johnson & Johnson shows that factors like strong brand equity, market leader in pharmaceutical sector, largest healthcare provider, most trusted brand especially by mothers, board array of quality products, sensible mergers and acquisitions of renowned healthcare and pharmaceutical companies etc., are some of the key strengths of Johnson & Johnson that also yield competitive advantage to the company.
Producing and merchandising such a huge array of products under so many brands and subsidiary companies can get troublesome at times. Johnson & Johnson has been cited under multiple lawsuits and litigations against many of its products, which does hurt its brand value. Apart from this, product recall, a conflict between partner companies, failure or decline of product sales, local sellers merchandising products beyond expiry dates etc., are some of the weakness of the company.
Medical Industry is one of the most consistent industries, whose demand can never decline and with increasing awareness amongst customers about healthcare and medical issues there is a huge opportunity for the proliferation of Johnson & Johnson products. Another opportunity prevails in the expansion of the Company, since strong fiscal muscle is one of the key strengths of Johnson & Johnson and it can be beneficial to manufacture a variety of more products and help invest in potential markets.
The leading American pharma company also faces certain threats in its external environment, some of which are intense competition from local and international players, negative impact on brand value due to product recalls, counterfeit products at extremely cheaper rates, threats from less expensive substitutes, government interference in medical industry etc.
The SWOT analysis for Johnson & Johnson is presented below in a SWOT Matrix followed by the detailed analysis:
|1. Revenue spread across many product categories|
2. Enjoys a healthy brand equity in the minds of shareholders
3. R&D Focus and Integrated Supply Chain
|1. Uncertainty of the research outcomes and regulatory approvals
2. Negative word of mouth as a result on ongoing litigations
|1. Opportunity to cross sell products|
2. Growth in revenue streams through recent acquisitions
3. Robust growth opportunities in the pharmaceutical segment
|1. Interruptions in sourcing manufacturing materials
2. Changes in tax liabilities or sudden regulatory scrutiny
3. Healthcare reforms and pricing pressures can negatively impact the Company’s Pharmaceutical and Medical Devices segments
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Detailed SWOT Analysis of Johnson & Johnson
1. Revenue spread across many product categories: Johnson & Johnson revenue sources are broadly spread across pharmaceuticals, consumer products and medical devices. All three business sectors are well positioned to address the changing needs of the customers and patients. The sales in the Consumer segment were $13.3 billion, in the Pharmaceutical segment were $33.5 billion whereas in the Medical Devices segment were $25.1 billion in 2016. Excluding the effect of acquisitions, divestitures, on the operational front, global sales jumped 7.6%, domestic sales escalated 9.5% and international sales shot up by 5.6%.
2. Enjoys a healthy brand equity in the minds of shareholders: The Company has $72 billion in revenue and coupled with its solid balance sheet across the last 4 quarters makes the New Jersey-based health care giant the first choice of many mutual fund portfolios. Johnson & Johnson shares have been on a roll for five years, doubling in price from about $67 in August 2012 to $133 and change in 2017. The shares are up 16 percent so far in 2017.
3. R&D Focus and Integrated Supply Chain: Research activities represent a significant part of the Company’s businesses. The Company remains committed to investing in research and development with the aim of delivering high quality and innovative products. In terms of worldwide costs of research and development activities, 9.1 billion dollars were spent in 2016, 9 billion dollars were spent in 2015 and 8.5 billion dollars were spent in 2014. Research facilities are located in the United States, Canada, India, China, Netherlands, France, Switzerland, Germany, Israel, Belgium, Japan, Singapore, Brazil and Britain. They aim to utilize operational efficiency and a robust supply chain to ensure operating margins are at benchmark levels.
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1. Opportunity to cross sell products: Johnson & Johnson has a wide spectrum of products available across pharmaceuticals, medical devices and consumer products. As a result, it can diversify its cross sell offerings on retail shelves. A consumer is more likely to buy multiple Johnson & Johnson products in a single transaction because of this opportunity of being cross marketed at a retail level.
2. Growth in revenue streams through recent acquisitions: In the last year alone, Johnson & Johnson completed 14 acquisitions and major licensing deals including 8 divestitures, positioning themselves for sustainable growth and profit for the next few years. Their acquisition of Abbott Medical Optics, which happened in the beginning of 2017, shows their flexibility to invest in diverse areas of specializations across the spectrum of health care. All in all, the corporation consists of 230 subsidiary companies with businesses spread across 60 countries. Good management in these newly acquired businesses can boost their bottom line. As a result, the opportunity to expand the business and thrive looks bright for the near future.
3. Robust growth opportunities in the pharmaceutical segment: There is ample space for increasing penetration in markets such as anti-coagulants, psoriasis, and long-acting anti-psychotics. DARZALEX®, IMBRUVICA®, and STELARA® drugs which help in Crohn’s disease were submitted to FDA and EMA (European Medicines Agency) for approval in early 2016, which have been approved in combination with lenalidomide and dexamethasone, or bortezomib and dexamethasone, for the treatment of patients with multiple myeloma and J&J hopes to launch them shortly and capitalize on its success. They are also expecting regulatory approval for Guselkumab and Sirukumab in the near future.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
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2. The SWOT analysis assesses the strengths and opportunities that Johnson & Johnson’s holds and how it strategizes itself to overcome its weaknesses and threats in its operating macro environment.
3. The Pestle analysis highlights the current trends in the FMCG industry & pharmaceutical industry with an explicit depiction of macro factors and its impacts on the industry and largely on the Johnson & Johnson company
4. Johnson & Johnson’s external environment analysis highlights the impact of political, economic, social, technological, legal and environmental factors on the company.
5. Understanding of Core competitive advantages, Johnson & Johnson possesses over its peers and competitors from the FMCG industry
6. Penetration into the Johnson & Johnson business diversification, extracting its key business segments and highlighting its major competitors
7. Critique of Johnson & Johnson merger, acquisitions, capital raising, equity transactions, alliances or partnership ventures, deal valuations and the synergies that were achieved with them.
8. Johnson & Johnson’s business case study gives intelligence into its's business model, eliciting its key business segments
9. Overall company analysis to gather information about company profile, number of employees, business model, business plans and marketing strategy
10. An abstract data of Johnson & Johnson founders, its headquarters, owners & stakeholders, share price, subsidiaries, value proposition, and revenue jumps
11. Summarization of Johnson & Johnson USP or unique selling proposition, mission statement and vision statement
12. Identifying the core competencies and values, key performance indicators and success factors that contributed to the sustainable growth and proliferation
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Johnson and Johnson SWOT and PESTLE analysis has been conducted by Sohum Mishra and reviewed by senior analysts from Barakaat Consulting.
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