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Johnson & Johnson

Submitted to:
Submitted by:
Date: 31st December, 2014



Introduction(about co., credo, history,
subsidiary holdings, product)
Strategic framework


or, value chain)
Business level strategy
Corporate level strategy
Strategic acquisitions
Corporate governance



Johnson & Johnson is an American multinational pharmaceutical, medical devices, and
consumer packaged goods manufacturer founded in 1886. It is headquartered in New
Brunswick, New Jersey and being listed among the Fortune 500. The corporation includes
some 250 subsidiary companies with operations in over 57 countries and products sold in
over 175 countries. Johnson & Johnson and its subsidiaries (the Company) have
approximately 128,100 employees worldwide engaged in the research and development,
manufacture and sale of a broad range of products in the health care field. The Company
conducts business in virtually all countries of the world with the primary focus on products
related to human health and well-being.

Our Credo:
Credo,a deeply held set of values that have served as the strategic and moral compass for
generations of Johnson & Johnson leaders.

We believe our first responsibility is to the doctors, nurses and patients, to mothers
and fathers and all others who use our products and services. In meeting their needs

everything we do must be of high quality.

We are responsible for our employees, the men and women who work with us

throughout the world. We must respect their dignity and recognize the merit.
We are responsible to the communities in which we live and work and to the world

community as well.
Our final responsibility is to our stakeholders by providing fair return.

Inspired by a speech by antiseptic advocate Joseph Lister, Robert Wood Johnson joined his
brothers James Wood Johnson and Edward Mead Johnson to create a line of ready-touse surgical dressings thus began the company began the company, Johnson & Johnson, in
New Brunswick ,United States in 1885. The company produced its first products in 1886
and incorporated in 1887.
A year later, J&J pioneered the first commercial first aid kits, which were initially designed to
help railroad workers, but soon became the standard practise in treating injuries. In 1894,
J&J's heritage baby business began, by the launch of maternity kits. These kits had the aim of

making childbirth safer for mother and babies. JOHNSON's Baby Powder also went on sale
during this year and was extremely successful. Between 1896 and 1897, J&J enabled a huge
step forward for women's health when it manufactured the first mass-produced sanitary
protection products.
Johnson & Johnson spread its roots into India in 1947 with the arrival of Mr. Patrick Whaley
and in 1948, started marketing Johnsons Baby Powder which was manufactured by a local
company, British Drug House, in Mumbai. In September 1957, a new company - Johnson &
Johnson Limited was created and registered with 12 employees on its roll. The company was
licensed to manufacture a broad range of consumer and hospital products.
One of J&J's subsidiaries is Ethicon, a manufacturer of surgical sutures & wound closure
device was incorporated as a separate company in 1949 so as to expand and diversify the J&J
product line. In 1959, J&J acquired McNeil Laboratories in the US and also CilagChemie,
AG in Europe. These two acquisitions enabled the company to gain a significant presence in
the field of pharmaceutical medicines for the first time. It was in 1961 that Belgium's Janssen
Pharmaceutica N.V. joined the J&J Family of Companies. Its founder, Dr Paul Janssen, is
recognised as one of the "most innovative and prolific pharmaceutical researchers of the 20th
century".Today, Janssen is one of the world's leading research-based pharma companies and
markets prescription medicines in the areas of gastroenterology, women's health, mental
health, neurology and HIV / AIDS, to name a few.
In 1987,The vision care business introduces ACUVUE Brand Contact Lenses, the first
disposable contact lenses which eliminate the need for cleaning, disinfecting solutions and
storage. During 1990-2002, Neutrogena Corporation, Kodak's Clinical Diagnostics business,
Cordis Corporation and Centocor join the Family of Companies. In 2006. Johnson & Johnson
acquires Pfizer Consumer Healthcare, which brings in heritage consumer brands such as
LISTERINE Antiseptic (first formulated in 1879), BENGAY & BENADRYL.
Johnson & Johnson celebrated 125 years of caring in 2011 and looks to the next 125 years of
transforming care for patients, consumers and communities around the world.


Subsidiary holdings


Ethicon, Inc.


Sterilization Products

Johnson Health Care


Systems Inc.



Supply Group


Johnson &
Johnson Merck


Johnson &


Pharmaceuticals Co.



Biosense Webster,




Research &


Centocor Ortho

Technology, LLC

Biotech, Inc.

Children With

Development, L.L.C.


Technology Services

Services, L.L.C.



&Shurtleff, Inc.


LifeScan, Inc.


McNeil Consumer


Crucell nv
DePuy, Inc.



Johnson &
Johnson, Group of


Products, L.P.

Johnson &


Diabetes, Inc.

Johnson &

Worldwide, L.L.C.

Companies, Inc.

Noramco, Inc.


Ethicon EndoSurgery, Inc.





Diagnostics, Inc.

Group Strategic




Personal Products




Pharmaceuticals, Inc.

Pharmaceuticals, Inc.

(a merge of
Neutrogena and Ortho

Marketing (PGSM)



Veridex, LLC


Corn Huskers

PriCara, Inc.

Scios Inc.






Clean & Clear













Coach Sport










Healthy Woman














Motrin Children




Simply Sleep








Tucks Pads


Tylenol Baby

Tylenol Children











Pepcid AC


Piz Buin









Baby (baby shampoo)







Strategic framework
Johnson & Johnsons senior management is fully committed to the companys diverse programs
that contribute to society in a meaningful way. The strategic leaders include Alex Gorsky
(Chairman, Board of Directors, and Chief Executive Officer) and Dominic J. Caruso (Vice
President(Finance) and Chief Financial Officer)
Johnson & Johnson is the principal management group responsible for the strategic operations
and allocation of the resources of the Company. This Committee oversees and coordinates the
activities of the Consumer, Pharmaceutical andMedical Devices and Diagnostics business
segments.In all of its product lines, the Company competes with companies both locally and
globally, throughout the world.
The Strategic Framework starts with its Credo, the guide to help us navigate the way through
challenges and opportunities. From that, Aspiration emerges by caring, one person at a time, it
help billions of people around the world live longer, healthier and happier lives.
Strategic Principles
It builds from this foundation a unique set of strategic principles. They are broadly based in
health care. The focus is on managing for the long term. It operates under a decentralized
management approach. And it does all this through a unique culture that values and fosters the
development of its people.
Growth Drivers
They are the specific areas of focus that help ensure robust growth for the future. In today's
highly competitive global marketplace, it is also essential to focus on the critical drivers of our
future growth: to create value through innovation, to extend our global reach, with local focus, to
execute with excellence in everything we do. It pursues growth drivers guided by the Leadership
Imperatives: Connect, Shape, Lead and Deliver.

Drivers for Long term growth of Johnson & Johnson co.

1) Creating Value through Innovation
At Johnson & Johnson, everything begins with innovation. For the past 5 years, theyve
consistently invested about 11 % of sales to support R&D efforts. That equated to over $8 billion
enterprise-wide in 2013, it is increasing the overall effectiveness & efficiency in the global
marketplace. Recently it announced the creation of the J&J Innovation Centers with locations in
London, Shanghai, Boston, San Francisco & San Diego. These customized collaborations are
part of enterprise-wide strategy to support an international network of scientific entrepreneurs
through access to best-in-class laboratory facilities and scientific expertise.
2) Bringing to Life Our Global Reach with Local Focus
Johnson & Johnson is truly a global company- While it is headquartered in the United States, the
mindset is globalthey are focused on new products, new technologies and new business
models that truly connect with the way their customers live. Today, 55 % of Johnson &
Johnsons business comes from outside the United States, and that number is growingas 22 %
of sales come from fast growing emerging markets such as Brazil, Russia, India and China.
3) Maintaining a Laser Focus on Excellent Execution
Nowhere is the need for excellence in execution more critical than in health care. Excellence in
execution starts with quality, a top priority at J&J by establishing a single Medical Safety
organization focused on ensuring that in-market products perform as intended & created a single
global enterprise Supply Chain organization in order to ensure the development and production
of high-quality products. This has helped to improve customer service & reliability performance.
4) Leading with Purpose to Make a Difference
Guided by Our Credo, our citizenship and sustainability priorities focus on advancing human
health and well-being, and leading a strong and responsible business: Committed to advancing
global health to fight multi-drug resistant tuberculosis by working with health authorities to

reach larger audience. Announced a first-of-its-kind pediatric HIV treatment donation program to
improve access to the companys approved HIV medicines for people failing HIV treatment in
sub-Saharan Africa.

PESTEL Analysis

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Level of Competition
The level of competition in the health care industry is fairly high. This is because there are
several large companies that have a good hold on the current market. This includes companies
such as Johnson and Johnson, Merck, Novartis, Pfizer, and more. However, there are
organizations which may be able to enter the industry because of an already established business.
One example of this would be Wal-Marts entry into providing pharmaceuticals.
Threat of New Entry
The level of difficulty involved in entering the health care industry varies depending on the
particular business segment. Medical and Diagnostics are difficult to enter due to the high
overhead costs and the importance of investing heavily into research and development for new
advances. Pharmaceuticals are also difficult to enter due to the research and development
required for this segment as well. In addition, the current leaders in the pharmaceutical industry
have an established brand and have a certain level of customer loyalty. A new company in the
industry would have to sway customers to try their pharmaceuticals rather than the established
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brands. The easiest level of entry is in the consumer segment. This segment relies more on
marketing towards the brand recognition rather than a high level of research and development for
cutting edge medical treatment. There is a high level of competition in this segment, which is the
most difficult aspect for a new firm to overcome.
Threat of Substitutes
For the health care industry, there are few substitutes that an average consumer would have
access too, especially regarding pharmaceuticals and medical/diagnostics. Consumer products
that Johnson and Johnson offers do have close substitutes; there are generic brands which
customers may purchase, as well as alternative methods of health care, such as ayurvedic tea or
eating soup to ease headaches rather than taking a Tylenol.
Bargaining Power of Suppliers
Johnson and Johnson relies on a majority of their supplies to be provided by unique and small
suppliers. These include:
Small and large minority owned businesses
Small and large women-owned businesses
Small disadvantaged businesses
Small veteran-owned businesses
Small HUBZone businesses.
This allows Johnson and Johnson to have more power when bargaining with suppliers because
the proportion for which and individual supplier is responsible is much lower than the proportion
of business that Johnson and Johnson provides for that business.
Therefore, the supplier relies more on Johnson and Johnson than they rely on the supplier.
However, because Johnson and Johnson has been using suppliers for several years in a row, it
can be assumed that both parties have an equally beneficial stake in the success of the other.
Bargaining Power of Customers

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The amount of power that individual customers have with regard to Johnson and Johnson is
small. Because Johnson and Johnson is so diversified, customers rely on a large number of
Johnson and Johnson products on a daily basis. In addition, the medical and pharmaceutical
segments have a lower level of competition and therefore do not allow customers to have many
options. Therefore, when it is necessary for someone to use these devices, they are required to
use one of Johnson and Johnsons products or one of the few competitors.


1. .Excellent distribution network as the brand is supplied to remote villages and

faraway places.
2. Brand presence in form of advertising media and print media for a number of
3. Has an excellent product portfolio and high quality offerings.
4. Includes 250 subsidiary companies with operations in over 57 countries and
products sold in over 175 countries thereby ensuring wider reach of customers.


1. Reliance on Small Molecule Drugs

2. Maintaining a wide range of products can be problematic for retailers
3. Dependence on the Success of Launch Products.
4. Being a global brand means operations are disturbed by market fluctuations.


1. Acquisitions of other smaller companies and increasing broad brand presence.

2. Potential to Exploit Biologics Market.
3. Wide Range of Potential Cross-selling Opportunities.
4. Bringing out a range of more portable products for economy class and
increasing rural penetration.
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1. Excessive promotion of any product (Product Recall) can have a negative

2. Spurious brands with the name similar to existing brand name.
3. Availability of cheap substitutes and low
priced competitors.

Competitor analysis

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Value chain

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Business Level strategy (Pharmaceutical segment)

Johnson & Johnsons pharmaceuticals business has taken a disciplined management approach to
increasing its efficiency in order to invest in its new product launches. The pharmaceutical
market is estimated to be $850 billion globally and expected to grow to more than $1 trillion by
2015. The pharmaceuticals business has seen a significant increase in productivity over the last
two years based on the continues investment in R&D at higher rates than its competitive set. The
leaders have framed following strategies for growth of the companys pharmaceuticals business:

Deliver differentiated medicines In recent years, the pharmaceuticals business has

transformed its portfolio by expanding its leadership in immunology, deepened its
expertise in oncology and entered vaccines. The companys pharmaceuticals businesses
are in the process of launching six significant new products between 2009 and 2011,
some in multiple geographies. Two of the new products are pending regulatory review in
the European Union (EU), and two additional key compounds are in registration in key
markets. Many of these products could represent significant advances over the current
standards of care.

Build transformational pipeline The pharmaceuticals business prioritized

investments in internal R&D, strategic licensing arrangements, partnerships and select
acquisitions continue to build a robust pipeline for the long-term. The companys
pharmaceuticals businesses expect to file 11 new products and over 30 important line
extensions between 2011 and 2015.

Strengthen geographic presence The pharmaceuticals business will grow its

geographic footprint and increase investments in emerging markets, evaluating market
appropriate commercial approaches and portfolios. It also remains focused on key
developed markets. Japan, the second largest pharmaceuticals market, is a key growth
market and the companys pharmaceuticals businesses have seven launches planned there
for 2011.

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Invest in talented people and organizational capabilities The companys

pharmaceuticals business is strengthening leadership capabilities locally, regionally and
globally. A key component involves rotating key talent into important roles to quickly
accelerate skills development to address a growing and complex business environment.
The pharmaceuticals business is also building R&D capabilities in new technology areas
and emerging markets

Corporate level strategy (Diversification)

Johnson and Johnsons corporate structure is based on a decentralized management philosophy.
The company works on Related diversification strategy (Involves diversifying into businesses
whose value chains possess competitively valuable strategic fits with the value chain(s) of the
present business) by operating in three segments: Consumer Products, Pharmaceuticals, and
Medical Devices and Diagnostics which accounted for 22%, 37%, and 41% of the companys
revenues, respectively. The companys central Executive Committee allocates resources and sets







include Ethicon (Medical

Devices); McNeil Laboratories, Inc., Cilag, and Janssen Pharmaceutica (Pharmaceuticals). The
company is into High diversification category with 25%-Primary care 11% Biologicals 64%others (Non-drug).
Following are the segments:

The Pharmaceuticals business segment is dedicated to addressing and solving the most important
unmet medical needs of our time, including oncology (e.g., multiple myeloma and prostate
cancer), immunology (e.g., rheumatoid arthritis, irritable bowel disease and psoriasis),
neuroscience (e.g., schizophrenia, dementia and pain), infectious disease (e.g., HIV/AIDS,
Hepatitis C and tuberculosis), and cardiovascular and metabolic diseases (e.g., diabetes). These
products are distributed directly to retailers, wholesalers and health careprofessionals for
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prescription use .Driven by the commitment to its patients, they develop sustainable, integrated
healthcare solutions by working side-by-side with healthcare stakeholders, based on partnerships
of trust and transparency. With $28.1 billion in worldwide sales in 2013, it is the seventh-largest
pharmaceuticals business in the world and the sixth-largest biotech business. Also it is the
fastest-growing top 10 Pharmaceutical Company in the United States, Europe and Japan and
recorded 15 consecutive quarters of operational sales growth in this segment.

Consumer Healthcare
The Consumer segment includes a broad range of products used in the baby care, skin care, oral
care, wound care and womens health care fields, as well as nutritional and over-the-counter
pharmaceutical products, and wellness and prevention platforms. These products are marketed to
the general public and sold both to retail outlets and distributors throughout the world. With
$14.7 billion in worldwide sales in 2013, Consumer segment is the sixth-largest health care
consumerbusiness in the world and achieved operational sales growth of 2.8 percent.

Medical Devices & Diagnostics

The Medical Devices & Diagnostics business segment produces a broad range of innovative
products and solutions used primarily by health care professionals in the fields of orthopaedics,
neurological disease, vision care, diabetes care, infection prevention, diagnostics, cardiovascular
disease, and aesthetics. These products are distributed to wholesalers, hospitals and retailers,
used principally in the professional fields by physicians, nurses, hospitals and clinics. With $28.5
billion in worldwide Medical Devices and Diagnostics (MD&D) sales for 2013, our MD&D
segment is the largest medical devices and diagnostics business in the world. This segment is
comprised of our Global Medical Solutions, Global Orthopaedics and Neurological, and Global
Surgery Groups.
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Johnson & Johnson uses both Operational and Corporate relatedness:

J&J aspired to not only have relatedness within the major business, but also to have corporate
relatedness across all of its business units. The integrated approach aims to harness expertise
from various units and operate more effectively than other competitors in the market. Besides
innovation where the expertise of previously decentralized business is combined, J&J is seeking
to pursue corporate relatedness in regard to marketing by completing a massive consolidation of
its contracted media and advertising agencies. The purpose for this strategic change is to create a
more unified brand and decrease the high costs that are associated with each business units
handling its own media and advertising concepts. Apart from this it would also help in the
following ways:
1) Sharing of Skills/ Technology of acquired companies would enhance efficiency.
2) Using existing brands distribution network would increase sales.
3) Sharing of facilities and resources would reduce cost
4) Collaboration and knowledge sharing would create competitive advantage over other
pharmaceuticals companies.
Thus, J&J has strived to achieve better coordination, innovation and management of regulatory
process across all its business.

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Top Strategic acquisitions

1) Johnson & Johnson Acquired Janssen Pharmaceuticals, Inc

Janssen Pharmaceuticals, Inc., a pharmaceutical company provides medicines for an array of

health concerns in several therapeutic areas, including: attention deficit hyperactivity disorder
(ADHD), general medicine mental health, neurologic, pain management, and womens health.
Headquartered in Titusville, New Jersey, Janssen is named after Dr. Paul Janssen, a leading
Belgian researcher, pharmacologist, and general practitioner. Janssen Pharmaceutica, joined
the Johnson & Johnson family of companies in 1961.
United under the common name of J&J, Janssen is now split into three different businesses
Janssen Research & Development, Janssen Healthcare Innovation and Janssen Diagnostics. The
spirit of innovation, and the belief that science done well can benefit humanity, has been an
integral part of the last 50 years of pharmaceuticals within the Johnson & Johnson family of
companies and continues to live on at the Janssen companies.
In early 2014, Johnson & Johnson announced, through its subsidiary Janssen Research &
Development LLC, a clinical trial data sharing agreement with Yale School of Medicines Open
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Data Access (YODA) Project to extend its commitment to sharing clinical trials data to enhance
public health and advance science and medicine. This is the first time any company has
collaborated with a completely independent third party to review and make decisions regarding
every request for pharmaceutical clinical dat

2) Johnson & Johnson Acquired Synthes : Combination Creates the World's Leading
Orthopedics Business

Johnson & Johnson announced the completion of the acquisition of Synthes, Inc. for a total
purchase price of $19.7 billion in cash and stock on June 14,2012. Synthes Holding AG is
a multinational medical device manufacturer based in Solothurn. It is the world's largest maker
of implants to

mend bone

fractures,[2] and


produces surgical power

tools and

advanced biomaterials. Synthes got integrated with the DePuy franchise to establish the DePuy
Synthes Companies of Johnson & Johnson. The completion of the Synthes acquisition creates the
world's most innovative and comprehensive orthopedics business and reflects its long-standing
strategy of leadership within attractive health care markets. The combination of these two
respected leaders -- Synthes and DePuy -- will enable to better serve clinicians and patients
worldwide, bring new innovations to the marketplace in orthopedics and neurologic, and
strengthen its ability to compete in developing markets. Operational sales growth in medical
devices segment of 6.1 percent included the impact of the acquisition of Synthes, net of the
divestiture of the DePuy Trauma business since it is primed to offer new, value-added solutions
that will help transform health care delivery.
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Corporate Governance:
Johnson & Johnsons management is responsible for timely, accurate, reliable and objective
financial statements and related information. As such:

Accounting controls:Maintaining a well-designed system of internal accounting controls

through monitoring by professionally trained internal auditors .Our internal controls also include
self-assessments and internal and external audit reviews of our operating companies.

To encourage strong and effective corporate governance from our Board of Directors.

To continuously review our business results and strategic choices:It reviews financial
results and develops strategies and initiatives for long-term growth. The Committee's intent is to
ensure objectivity in business assessments, constructively challenge the approach to business
opportunities and issues, and monitor business results and related controls.

To focus on financial stewardship

PricewaterhouseCoopers LLP, an independent registered public accounting firm,

performs an integrated audit of our consolidated financial statements and internal control over
financial reporting.

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Michael A.Hitt, R.Duane Ireland, Robert E. Hoskisson,S. Manikutty(2012). Strategic

Management. Cengage Learning India (P) Ltd.

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