Johnson & Johnson is a health care enterprise that is featured throughout three different market segments. Johnson & Johnson strive to innovate products, services, and ideas to help advance the well-being and health of people. J&J has over 265 locations, which spans across 60 different countries and employ more than 126,000 people. Johnson & Johnson is currently the world’s sixth-largest consumer health company, sixth-largest biologics company, and fifth-largest pharmaceuticals company.
The Johnson & Johnson Consumer division creates over-the-counter products and drugs for first-aid and nutritional uses, in addition to skin, baby, and oral care. The J&J Medical Devices division provides orthopedic products, contact lenses, surgical equipment, and monitoring devices, etc. The Pharmaceuticals division offers numerous drugs that can help with pain, blood disorders, autoimmune diseases, and neurological conditions.
History
Johnson & Johnson was founded in New Brunswick, New Jersey in 1886 by the three brothers Robert Wood Johnson, James Wood Johnson, and Edward Mead Johnson. Two years later, J&J published “Modern Methods of Antiseptic Wound Treatment”. This rapidly became a standard for teaching antiseptic surgery. During the same year, J&J released the first commercial first aid kit. In 1894, they launched maternity kits for mothers and babies to make childbirth safer. The maternity kit also included Johnson’s Baby Powder. The first massively produced sanitary protection products for women were manufactured in 1897. In 1898, J&J was the first company to massive produce dental floss. After a hurricane struck Texas in 1900, J&J began its tradition of disaster relief by donating money and products. In 1901, they published First Aid Manuals, which were distributed within their First Aid Kits. Hours after the San Francisco Earthquake of 1906, J&J donated money and products to help the citizens. Earle Dickson, a Johnson & Johnson employee, invented the BAND-AID in 1920, which was then released to the market one year later. It was revolutionary due to being the first commercial bandage that customers could put on themselves. In 1924, J&J opened their first operating company outside of the United States in the United Kingdom, followed by Mexico in 1930 and Australia in 1931. In 1931, J&J created the first prescription contraceptive gel due to the lack of trusted family planning products. Dr. Phillip Levine, who discovered the human rH factor, became a member of the Ortho Research Laboratories. During the same year, Johnson & Johnson became a public company on the New York Stock Exchange.
In the 1950’s, Johnson & Johnson developed the Baby Shampoo with No More Tears formula, opened their first operating center in India, and acquired McNeil Laboratories and Cilage Chemie AG, which gave the company a notable presence in the emerging pharmaceutical industry. Janssen Pharmaceutical N.V. of Belgium joined J&J in 1961, whose founder is considered one of the most innovate pharmaceutical researchers of the century. During the 60’s and into the early 70’s, operating companies were started to help treat schizophrenia, personal care, and family planning. In the late 1970’s, Johnson & Johnson began a partnership with the city of New Brunswick, New Jersey to help revive the city. Beginning in the late 70’s and throughout the 80’s, J&J expanded into the areas of vision care, diabetes management, and mechanical wound closure, along with being a founding partner of Safe Kids Worldwide, and developed the first disposable contact lenses. Over the past twenty-five years, Johnson & Johnson has developed the Palmas-Schatz stent, has begun working toward HIV/AIDS wellness, acquired Pfizer Consumer Healthcare, sponsored the United Nations’ Millennium Development Goals, and launched the first United States’ free mobile health service.
Financial History SWOT Analyses
Strengths – Johnson & Johnson
Johnson & Johnson is ranked as one of Fortune’s World’s Most Admired Companies. In 2011, J&J was bestowed with the Humanitarian of the Year Award by the United Nations for its leading role in its Healthy Mother, Healthy Child strategy. They hold a strong brand presence in advertising and print media for numerous products. Remote villages are supplied by J&J, therefore they have a superb distribution network. They have been on the Top 100 Companies for Working Mothers for the past 26 years, which is when it was first started. Mothers across the globe trust Johnson & Johnson. Their worldwide sales have increased by fourteen percent. J&J has a large and outstanding portfolio of high quality products. Johnson & Johnson also sells its products in over 175 countries, has operations in over 57 countries, and has approximately 250 subsidiary companies, which can help with products in the global market because of cultural consideration. The J&J business model uses altered entrepreneurial values to help them keep a strong hold in the market place, while also working strongly within the scientific community.
Weaknesses – Johnson & Johnson
Market fluctuations may disrupt operations due to being a global brand. Being a global brand may also be a weakness since retailers could sell expired products. The pharmaceutical market has been under pressure to reduce prices. Market demand for some of Johnson & Johnson’s products have decreased, some of which have been replaced by generic products due to expired patents. Internal counterfeiting and theft of drugs has also been a weakness for the industry as a whole.
Opportunities – Johnson & Johnson
An opportunity for Johnson & Johnson would be to continue increasing their brand presence. Acquiring other small companies would also be opportunistic. Increasing the penetration of the rural market and creating more portable products for the economy class would be beneficial, as well. Johnson & Johnson has new pharmaceutical products which are currently under regulatory review, therefore their product portfolio can be expanded. Business growth can be had by developing new diagnostics and medical devices. The World Trade Organization has created rules that prevents the availability of generic drugs, consequently this will assist Johnson & Johnson by giving them the chance to regain lost profits that may have been lost as patents expired.
Threats – Johnson & Johnson
Johnson & Johnson has a few threats that can put the enterprise at risk. Over-promoting products may give the public the perception of it being generic. The high-level of competition within the pharmaceutical industry creates a threat for Johnson & Johnson because generally the first company to enter with a patent is successful. The Inexpensive competitors and substitutes may also pose a risk along with imitation brands whose names sound similar to Johnson & Johnson’s brand name products.
Strengths – Reckitt Benckiser
One of Reckitt Benckiser’s strengths is that they have received numerous awards for their products. RB has a fervent and experienced workforce and competent management team. They have portable packing, which leads to a price advantage. Reckitt Benckiser sells products in over 180 countries and has operations in over 60. With a solid and secure research and development infrastructure, Reckitt Benckiser has been innovative. RB has powerful promotion with advertising and print media.
Weaknesses – Reckitt Benckiser
Reckitt Benckiser faces similar weaknesses as Johnson & Johnson. The industry has extremely high-level competition, therefore expansion throughout the market is sluggish. Their brand image may be affected due to the sale of expired products from retailers.
Opportunities – Reckitt Benckiser
An opportunity for Reckitt Benckiser would be to generally improve their distribution system. Developing new brands for rural areas and the economy class could also be an opportunity for them. It would be beneficial for Reckitt Benckiser to look into increasing their market share by acquiring other companies.
Threats – Reckitt Benckiser
As with all enterprises in this industry, the threat of low cost substitutes is high. Exchange rate variations between currencies may also pose a risk. The purchasing power of the public has decreased because of economic slowdown. Laws and policies enacted by the United States government can influence product execution, as well.
Strengths – Pfizer
Pfizer is spread throughout over 50 countries and is one of the largest pharmaceutical companies in the world. They have acquired and merged with other sizable brands, in turn increasing their own brand reputation, not to mention that Pfizer has well-built brands that are globally known. Pfizer is an extremely innovative company with outstanding research and development. They also supply jobs to over 100,000 people.
Weaknesses – Pfizer
Pfizer was involved in one of the most immense healthcare frauds for marketing its drug illegally, and by doing so tarnished their brand image. There is also strong competition throughout the pharmaceutical industry, therefore it is difficult for Pfizer to increase their market share.
Opportunities – Pfizer
An opportunity for Pfizer is to increase global awareness of healthcare needs. Pfizer should also work to increase the demand for superior healthcare solutions. Working toward strategic agreements with other pharmaceutical organizations and enterprises may be beneficial for Pfizer to extend its research capabilities. By merging with and acquiring other organizations, Pfizer has the opportunity for an increase in global penetration.
Threats – Pfizer
The slowing down of the economy in the United States and Europe extends a threat toward Pfizer, and pharmaceutical companies in general. With the development of new products, Pfizer runs the risk of them being profitless. Laws and regulations are also a threat to Pfizer, due to them becoming more and more rigorous.
Strengths – Himalaya Herbal Healthcare
A strong strength for Himalaya Herbal Healthcare is that they provide an environmentally friendly herbal product while providing customers with what they want. HHH uses a natural fluoride in their products. Himalaya Herbal Healthcare focuses on target markets in both urban and rural areas, giving them an advantage over competitors. Other strengths for HHH include a having a certified staff and being financially sound.
Weaknesses – Himalaya Herbal Healthcare
A large weakness that Himalaya Herbal Healthcare faces is that their products are high in price, which can be an issue for people in rural areas who do not have a lot of income. Himalaya Herbal Healthcare has a strong competition with well-established brand names. HHH also uses Ayurveda products, which lack evidence that they are actually effective. With its product being pseudoscientific, this is most definitely a weakness for them.
Opportunities – Himalaya Herbal Healthcare
Himalaya Herbal Healthcare’s environmentally friendly products enable room for growth. The company also has the opportunity to grow by investors. Opportunities for growth exist by penetrating more of the global market, as well. Since Himalaya Herbal Healthcare’s products are daily commodities, increasing the amount of retail penetration is necessary for growth.
Threats – Himalaya Herbal Healthcare
The high-level of industrial competition presents a threat to Himalayan Herbal Healthcare due to the difficulty in obtaining market share against well-known companies, such as Johnson & Johnson. Its pseudoscientific products could put the company at risk for loss of market share. Development and release of new products could hinder profits if the product does not sell well.
Customer Characteristics/Consumer Behavior of Target Segments – Johnson & Johnson
Johnson & Johnson’s main segment is in the field of health care. Hospitals, clinics, and urban families are their focused target audience, while their positioning is a promise to healthcare. Fifty-six percent of Johnson & Johnson’s revenues come from markets outside of the United States, compared to only forty percent ten years ago. For example, China is an emerging market for J&J. Although, J&J has done business in China for the past 27 years, more and more Chinese citizens are entering the middle class, which in turn will provide more demand for health care products and solutions. This shows how much their market is changing as the world becomes more of a singular community.
For over 125 years, Johnson & Johnson has built their consumer market around trust. Many consumers do not even consider other brands due to the recognition that J&J has built-up around themselves. For instance, mothers around the world look up to Johnson & Johnson for solutions and products that will benefit their baby’s skin. Through scientific and market research, J&J works to better their products and develop new products based on the individuals needs to increase their health and well-being. Consumers will persistently use Johnson & Johnson products and solutions even throughout a recession due to the fact that people will continue the need to feel good and to be healthy.
Johnson & Johnson is working toward diversifying within the market by providing ethnic skin care. These products may help consumers who experience dry skin, stretch marks, or skin tones that are uneven that have a darker shade of skin. Between 2001 and 2006, this market had grown by 19%.
Future Outlook/Trends
For the industry as a whole, there are a few trends that may affect businesses, such as Johnson & Johnson, Reckitt Benckiser, Pfizer, and Himalaya Herbal Healthcare. Proposals have been made by the Food and Drug Administration to increase the transparency to the public in terms of regulatory information. These changes should improve the quality of the pharmaceutical industry, but companies will need to adapt to the more stringent standards. Pharmaceutical patents expire after 17 years, which can hurt companies in the industry when competition can create cheaper and generic versions. Litigation may also affect these drug companies. Johnson & Johnson, for instance, may face litigation issues in all three of its business segments. Johnson & Johnson currently just lost over $140 million in a court case where their talcum powder was linked to cancer. Depending on who wins the presidential election of 2016 will have effects on Johnson & Johnson, and the industry, as well. A democratic president may continue President Obama’s healthcare plan, which would be beneficial for Johnson & Johnson, whereas a republican president may do the opposite. A final trend that will have a positive outlook on the industry is that consumers are becoming more conscious in regards to their health, and taking a larger responsibility to live a healthy lifestyle.
In 2015, Johnson & Johnson launched the Healthy Future 2015 initiative. This is a strategic plan that will last for five years and then be renewed. The Healthy Future initiative is a set of long-term goals, which will be updated every five years, aimed on reducing the environmental footprint. Johnson & Johnson’s goals are to massively reduce carbon dioxide emissions, in addition to limiting water disposal and usage. Johnson & Johnson is striving to reduce their environmental impart, partnering with suppliers who are also committed to sustainability, making progress on community wellness by launching health initiatives, working with philanthropic partners to raise health standards, stimulating and engaging with health-conscious employees, improving global health through research and development, having affordable access to medicines, and pledging to magnify transparency.
(Future trend outlook for Johnson & Johnson)
(Future trend outlook for Pfizer)
Sources of Data
One of the first sources of data used in this paper was Johnson & Johnson’s website itself. This source was chosen mainly for the introduction of what J&J does, how they operate, and their historical information. It provided an excellent description of what Johnson & Johnson does, why they do it, and how they do it. Also, J&J’s website provided financial reports from the past few years that included sales data on all segments and subcategories of those segments. It is an accurate source of information since it is the company’s own website.
An additional secondary source of data was Nasdaq. Nasdaq provides financial and stock market information regarding Johnson & Johnson, in addition other competitors. From this website, you are able to view financial histories, the current standing, plus future trends and estimates of these companies. Although, only Johnson & Johnson and Pfizer had future trend information provided.
Cosmeticsdesign.com provided multiple articles regarding Johnson & Johnson and initiatives that they were trying to achieve. This site is focused on providing information on things relating to cosmetics, skin care, and beauty tips, etc.
Comparatively speaking, all sites used had useful and relevant information. Depending on the information being sought, some sites provided history, a few financial, and others with just general articles relating to the featured company.