|Name||Johnson & Johnson (NYSE: JNJ)|
|Industry||Health Care & Drugs|
|Headoffice||New Brunswick, New Jersey|
|Revenues||$82.58 billion, 2020; $82.05 billion, 2019; $81.58 billion, 2018.|
|Net income||$14.7 billion, 2020; $15.11 billion, 2019; $15.29 billion, 2018.|
|Competitors||Procter & Gamble, Unilever, Roche, Abbott, GlaxoSmithKline, Bayer, Pfizer, Bristol Myers Squibb, Novartis, Medtronic|
Johnson and Johnson (2021) have 130 years of heritage in research, manufacturing, and marketing human health and wellbeing products. The company operates through segments of pharmaceutical, consumer health, and medical devices. The pharmaceutical segment focuses on infectious diseases, immunology, oncology, and metabolic diseases. The consumer health segment includes oral care, baby care, beauty, wound care, and women’s health. The medical devices segment develops orthopedic, interventional solutions, and surgery products (Reuters, 2021). In 2020, the company ranked 20th in the 50 Most Innovative Companies, 15th in World’s Most Admired Companies list, and 36th among Fortune US 500 (SyncForce, 2021).
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Table of Contents
Johnson and Johnson Strengths 2021:
- Strong brand portfolio:
Johnson and Johnson has a solid, recognizable brand portfolio, including Listerine, Aveeno, Stayfree, Neutrogena, Motrin, Tylenol, Zyrtec, Remicade, Benadryl, and many other brands to enhance the superiority and stability of the company (Ranker, 2021).
- Single Dose – Covid-19 vaccination development:
Katella (2021) appraised that the company has developed Janssen COVID-19 single-dose vaccination in a short period of 12 months with an efficacy of 66.8% when compared to two doses of BioNTech (Pfizer) and Moderna (NIAID). It is one of three vaccinations in the US approved and recommended by the US FDA and CDC.
- Global, diverse workforce and feedback system:
According to Statista (2021), the company has 134,500 employees with 34.4% in North America, 20.5% in Asia-Pacific, 30% in EMEA, and 14.9% in Latin America, as shown in the diagram below. Moreover, in 2020, the company conducted a Credo survey for human resources risks in 36 languages, and 93% of global employees from 90 participated (Johnson and Johnson, 2021).
- Persistent extensive research and development investments:
In 2020, the company’s total research and development expenses were $12,159 million (14.7% of sales) to deliver innovative and high-quality products. The company has invested $9,583 million in the pharmaceutical segment, $2,174 million in the medical device segment and $422 million in the consumer health segment, as shown in the diagram below.
- Strong real-estate production facilities portfolio:
Globally, Johnson and Johnson operate 90 manufacturing facilities in Europe, the US and Africa, Asia, and the Pacific. The US has 30 facilities, Europe has 25 facilities, Western Hemisphere has ten facilities and Asia, Africa, and Pacific have 26 facilities. In the US, the 19 facilities are used by the Medical segment, 5 for the Pharmaceutical segment, and five for consumer health. Outside the US, 23 facilities are used by medical devices, 14 by the Pharmaceutical segment, and 24 facilities for the consumer health segment (Johnson and Johnson, 2021).
Johnson and Johnson Weaknesses 2021:
- Patent challenges and generic products:
Reuter (2020) analysed that the company has the problem of loss exclusivity for biological products when competitors develop new or improved technology that makes Johnson products less desirable or obsolete. Thus, it reduces in sales as competitors gain approval for competing and generic products in the market.
- Lower share return:
The diagram below shows the total cumulative returns for Johnson and Johnson in comparison to the Standard & Poor’s Pharmaceutical Index (SPPI), the Standard & Poor’s 500 Stock Index (SPSI) and the Standard & Poor’s Healthcare Equipment (SPHE). Johnson and Johnson have higher returns of $158.16 in 2019 and $175.32 in 2020 when compared to the SPPI index of $137.85 in 2019 and $148.33 in 2020 (Johnson and Johnson, 2021)
- Product liabilities and lawsuits:
Dunleavy (2021) reviewed that Johnson and Johnson have numerous lawsuits and claims, including product liability, patent disputes and claims for pricing and marketing practices. The significant lawsuit and liabilities claims are the PINNACLE, DePuy ASR, Hip Resurfacing System, RISPERDAL, JOHNSONS Baby Powder, XARELTO and INVOKANA. For example, the company has 550, 12600 and 2500 plaintiffs in the US for DePuy ASR injuries, XARELTO and Johnson’s baby powder.
- Geographic and segment sale concentration:
Johnson and Johnson generate 53% ($43.1 Billion) of its revenues from the US market and only 6% ($5.3 Billion) revenues from Africa, Asia and Pacific markets. Likewise, the pharmaceutical segment generates 54% ($45.6 billion). The consumer health segment contributes only 17% towards total revenues, as shown in the diagram below.
Johnson and Johnson Opportunities 2021:
- Expand in consumer health market:
The global consumer healthcare market is expected to be $301 billion by 2026 (Market Data Forecast, 2021). The consume health combines consumer insight and science to deliver products for pain relief, oral health, digestive system, multivitamins, and allergies. Johnson and Johnson can expand the existing portfolio into developing a comprehensive product portfolio in the consumer healthcare market.
- Business diversification:
PRNewswire (2021) estimates that the global Telehealth market will grow from $60 Billion in 2020 to $475 Billion in 2026 with a CAGR of 26%. The Covid-19 has accelerated telemedicine adoption, and globally, many governments, clinicians, and healthcare systems have decongested the new electronic distribution of health and related services. For Johnson and Johnson, telehealth would offer new ways to expand the business and increase business revenues.
- Internet of Medical things (IoMT):
IoMT market will be $254 Billion with a CAGR of 25% by 2026. Johnson and Johnson have the opportunity to develop new connected medical equipment and devices to automate applications like smart diagnosis, remote patient care, and automatic disinfection (Deloitte, 2021).
Johnson and Johnson Threats 2021:
- Extensive regulatory scrutiny:
In human health and wellbeing, the company is subject to legal actions, investigation, and comprehensive regulations in the US. Hiero (2021) analyzed that the pricing and marketing scrutiny include state unfair trade practices, the Federal Food, Drug, and Cosmetic Act, Federal claims acts, Good Manufacturing Practices, the Medicaid Rebate Program, and consumer protection laws.
- Covid-19 impact and income pattern:
Despite the fact, Johnson and Johnson’s sale has remained the same during Covid-19. However, the income pattern dramatically has changed for the company. For instance, the consumer segment income in 2019 was $2,061, which decreased to ($1,064) and medical device income in 2019 was $7,286, which decreased to $3,044. On the other hand, the revenue from the pharmaceutical segment has increased from $8,816 to $15462, as shown in the diagram below.
- Intense competition:
There is intense competition in the healthcare and drug industry because several companies such Roche, Abbott, GlaxoSmithKline, Bayer and Pfizer, Bristol Myers Squibb, Novartis, Unilever and Medtronic offer a massive range of products. For example, GlaxoSmithKline is a market for consumer healthcare and Bayer, Pfizer, and Roche have an extensive portfolio of specialist lifesaving drugs (GlobalData, 2021).
- Significant Foreign exchange translation risk:
Johnson and Johnson have 48% of total sales outside the US, and changes in foreign currencies in relation to the US dollar impact sales and expenses of the company. Despite the fact, the company uses hedging to mitigate the impact of foreign exchange (Dunbar and Singh, 2020), the unhedged losses are significant for the company. For example, the net currency transaction losses were $265 million, $267 million and $209 million in 2018, 2019 and 2020, respectively.
Johnson and Johnson SWOT Analysis Conclusion:
Johnson and Johnson have a strong brand portfolio, product innovation capabilities, and a global workforce. However, the company faces complex challenges of patents management, intense competition, regulatory scrutiny, and changing sale trends. Johnson and Johnson have dynamic capabilities portfolio to tackle its challenges and exploit new opportunities for business growth and outperform competitors in the healthcare and wellbeing industry.
- Johnson & Johnson (2021). About Johnson & Johnson.
- Deloitte (2021). Medtech and the Internet of Medical Things.
- Dunbar, Nicholas and Manpreet Singh (2022). Johnson & Johnson is following in the route of PayPal using derivatives to increase returns on cash and securities investments.
- Dunleavy, Kevin (2021). Pfizer, Johnson & Johnson settle high-profile Remicade biosim lawsuit on undisclosed terms.
- GlobalData (2021). Johnson & Johnson: Competitors.
- Hiero (2021). Johnson & Johnson’s 10-K, section on Risk Factors.
- Johnson and Johnson (2021). Annual Report – Credo. 2021. 2021.
- Katella, Kathy (2021). Comparing the COVID-19 Vaccines: How Are They Different? 2021.
- Market Data Forecast (2021). Global Consumer Healthcare Market Size, Share, Trends, COVID-19 Impact & Growth Analysis Report.
- Mikulic, Matej (2021). Johnson & Johnson’s expenditure on research and development 2005-2020.
- PRNewswire (2021). Telehealth Market Size to Reach USD 70.19 Billion by 2026 at a CAGR of 17.7% | Valuates Reports.
- Ranker (2021). Johnson & Johnson.
- Reuters (2021). About Johnson & Johnson.
- Rueter (2020). J&J warns of hit from generic drugs in third quarter, shares fall.
- Statista (2021). Johnson & Johnson’s number of employees from 2004 to 2020.
- SyncForce (2021). Johnson and Johnson.