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WIKI ANALYSIS
| Table of Contents |
| Intro and Overview |
| Introduction |
| Business Overview |
| Trends and Forces |
| Key Trends and Forces |
| Competition |
The consumer health market is expanding as consumers are taking greater responsibility and interest in their own health. Johnson & Johnson owns highly successful brands such as Tylenol, Band-Aid, and Neutrogena. The acquisition of Pfizer's Consumer Healthcare division in 2006 and addition of brands such as Listerine, Lubriderm, Visine, and Neosporin further solidified Johnson & Johnson dominance in consumer health care.
The company's pharmaceutical segment faces many of the challenges that face all pharmaceutical companies, including issues surrounding patent expiration and FDA approval. In addition, there are constant threats of litigation and a growing pressure in the US and abroad to lower the price of medication.
History
Johnson & Johnson Corporation was founded in 1886 by Robert Wood Johnson, an American entrepreneur and Industrialist. Inspired by the developing scientific understanding of proper of sanitation, Johnson aimed to make antiseptic surgical procedures easier. Through numerous targeted acquisitions and research over the next century, the company steadily diversified its business to encompass pharmaceutical, medical devices, and consumer packaged goods.
Business Overview
Johnson & Johnson has interests in a broad spectrum of the health care market, and takes a decentralized approach to managing its 250 operating companies and franchises. In the company's continuing effort to diversify its business and increase profits, Johnson & Johnson is constantly acquiring new companies, including 8 in the last year alone. In 2007, worldwide sales totaled $61.1 billion, making Johnson & Johnson the second largest manufacturer of health care products, behind Pfizer.
Johnson & Johnson's 2009 second quarter net income fell by 3.5% to $3.21 billion compared to $3.33 billion a year ago. Quarterly sales fell by 7.4 percent to $15.24 billion, down from $16.45 billion the year before but above expectations of $15 billion. The decline is partially attributable to two major patent expiries (Risperdal and Topamax), as well as a decline 4.5% in consumer products revenue. [1]
JNJ's 2009 struggle continued in Q3, as sales ($15.1 billion) decreased 5.3% from Q3 2008.[2] JNJ's poor domestic performance (8.1% sales decline) was the reason for the sales decline, as the firm is still trying to handle "tough economic conditions."[2]. JNJ is optimistic for the rest of it's fiscal year, however, as it made two acquisitions and had four new drugs become FDA approved.[2]
Business Segments
The company consists of three major divisions: consumer healthcare, medical devices, and pharmaceuticals.
Consumer Health Care: 25.1% of FY 2008 Revenue
Consumer products are non-prescription health care products marketed directly to the general public. Johnson & Johnson has diverse franchises in over-the-counter pharmaceuticals and nutritionals, skin care, baby & kids care, and women's health products, totaling $16.0 billion in sales in 2008.[4] Although the Consumer Health Care division is the smallest of the company's three segments, it includes some of the company's most recognizable brands such as Tylenol, Neutrogena, and Band-Aid.
In 2006, Johnson & Johnson bought Pfizer's Consumer Healthcare for $16.6 billion. This acquisition represents a significant expansion in Johnson & Johnson's Consumer Health Care division, adding brands such as Listerine, Sudafed, and Neosporin.
Pharmaceuticals: 38.6% of FY 2008 Revenue
The Pharmaceutical division is the largest of the three business segments, bringing in $24.6 billion in revenue for 2008.[6] Pharmaceutical products are usually prescription medications distributed to retailers, wholesalers, and health care professionals. Johnson & Johnson's pharmaceutical program is ranked third in sales in the United States and fourth in the world. It uses the same business model and faces similar challenges as other major pharmaceutical companies.
Of Johnson & Johnson's pharmaceutical portfolio, the four most successful drugs each brought in over $2 billion in 2008 annual revenue, and are:
- Remicade - a drug used for several auto-immune disorders such as Crohn's disease and some forms of arthritis. Sales for the drug were $3.7 billion in 2008 (see Arthritis Drug Market).
- Topamax - a drug used for migraine prevention. Sales for the drug were $2.7 billion in 2008 (see Antiepileptic Drug Market).
- Procrit (a.k.a. Eprex) - a drug used to treat one of the side effects of cancer treatment - a loss of red blood cells. Sales for the drug were $2.5 billion in 2008.
- Risperdal - a drug used for treatment of schizophrenia. Sales for the drug were $2.1 billion in 2008 (see Antipsychotic Drug Market.
Medical Devices and Diagnostics: 36.3% of FY 2008 Revenue
Johnson & Johnson is the world's largest developer and manufacturer of medical treatment and diagnostic devices, with annual sales of $23.1 billion.[7] This segment includes a wide variety of equipment and supplies used mostly in the professional fields, by physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics. Major franchises in this division include:
DePuy: Products for reconstructing joints and traumatic skeletal injuries, including spinal deformities and bone fractures. DePuy is the largest franchise within Johnson & Johnson's medical devices segment, with sales of $5.0 billion in 2008. DePuy Mitek, a brand of sports medicine products, has been particularly profitable.
Ethicon and Ethicon Endo-Surgery: Surgical instruments and accessories. The two groups' sales in 2008 were $4.3 billion and $3.8 billion, respectively.
Cordis: Stents, catheters, guidewires, and other surgical products. Cordis sales totaled $3.1 billion in 2008. On September 28, 2009, Boston Scientific (BSX), a major competitor to Cordis in the stents business, announced that it would pay $716.3 million to Johnson & Johnson over several patent infringement claims. Disputes continue to exist between the two companies over other patents within the stents business.[8]
Acquisitons
- On December 1, 2008, Johnson & Johnson announced plans to purchase breast-implant maker Mentor (MNT) for $1.07 billion. Mentor's revenues were lower in 2008, attributable largely to decreased spending on cosmetics due to the 2008 global recession. The acquisition will allow J&J to enter the market of medical cosmetics, both through Mentor's breast implant business and through its wrinkle remover PurTox, a rival to Allergan (AGN)'s Botox. [9](Read more about Johnson & Johnson's key trends and forces...)
- On September 17, 2009, Johnson & Johnson announced that its new subsidiary, Janssen Alzheimer Immunotherapy had completed the acquisition of Elan Corporation's Alzheimer's program for $855 million. This deal involved the purchase of ownership of Elan totalling 18.4% of the company's outstanding shares. The acquired Alzheimer's program includes bapineuzumab, an antibody therapy currently in Phase III trials and a vaccine currently in phase II trials.[10]
- On September 28, 2009, Johnson & Johnson announced that it had purchased a 18% stake in vaccine-maker, Crucell, for $440 million. As part of this deal, the two companies will focus efforts toward jointly developing flu-mAb, and antibody-based vaccine designed to fight flu variations, including the H1N1.[11]
References
- ↑ [NYTimes.com. "Johnson and Johnson's Profit Falls 3.5%." 14 July 2009.]
- ↑ 2.0 2.1 2.2 Johnson & Johnson Reports Third-Quarter Results
- ↑ JNJ 2008 Annual Report
- ↑ JNJ 2008 Annual Report
- ↑ JNJ 2008 Annual Report
- ↑ JNJ 2008 Annual Report
- ↑ JNJ 2008 Annual Report
- ↑ Boston Scientific will pay J&J $716M in stent suit
- ↑ Orange County Business Journal. "J&J Buying Key Allergan Rival in Medical Cosmetics." 1 Dec 2008
- ↑ Johnson & Johnson and Elan Corporation plc Announce Closing of Transaction Related to Alzheimer's Immunotherapy Program and Equity Investment
- ↑ J&J buys stake in flu-vaccine developer Crucell
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