Company: Johnson & Johnson
CEO: Alex Gorsky
Founders: James Wood Johnson, Edward Mead Johnson, and Robert Wood Johnson I
Year founded: January 1886
Headquarters: New Brunswick, New Jersey, United States
Employees (Dec 2019): 126,500
Ticker Symbol: JNJ
Type: Public
Annual Revenue (Dec 2019): $82.06 Billion
Profit | Net income (Dec 2019): $15.30 Billion
Products & Services: Medical Devices | Pharmaceutical | Consumer Packaged Goods
Competitors: Reckitt Benckiser | Unilever | Procter and Gamble | Abbott | Bristol-Myers Squibb | Colgate Palmolive | Merck | Novartis | Pfizer
Fun Fact: Johnson & Johnson’s Credo has been translated into dozens of languages and dialects, from Arabic to Vietnamese with 342 words in English, 415 words in Romanian, and 607 words in the Chinese language.
Founded as a family business over a century ago, Johnson & Johnson grew steadily and survived the worst economic period to become the global powerhouse in medical services.
While it started with only 14 employees consisting mostly of friends and family, it endured all the rough periods and now employs about 126, 500 people across the world.
As entrepreneurially spirited people, Johnson & Johnson SWOT Analysis offers an invaluable opportunity to learn and build our own empires.
Here is an in-depth Johnson & Johnson SWOT Analysis.
Johnson & Johnson’s Strengths
- Global Dominance
Johnson and Johnson is the leading health care company globally and has more than 265 operating companies in over 60 countries globally. It is a leader in medical devices and diagnostics, pharmaceutical products, and consumer healthcare products.
- Highly Influential
Johnson & Johnson is one of the most influential companies in the world. It influences the economic wellbeing of many countries, including the US stocks market.
- Highly Experience
With over 130 years of experience, Johnson & Johnson understands what it takes to fulfill the needs of the target market fully. Having more experience in matters of health is a major strength and advantage over competitors.
- Extensive Product Portfolio
From Purell to Tylenol, Listerine, baby products, Destin, Visine, Clean & Clear, Neutrogena, Band-Aid, Stayfree, and Acuvue Lenses, all these products enhance the company’s stability and superiority in the market.
- Strong Community Engagement
Johnson & Johnson engages fully in international affairs as a concerned global citizen in matters that affect global health. From the Healthy Child Initiative with the UN to the malaria campaign with the AU and combating the virus with the US government, the company is always at the forefront in matters of global health.
- Robust Supply Chain
Johnson & Johnson has an extensive supply chain that ensures all raw materials are available, and finished products are distributed efficiently to retailers, outlets, and pharmacies across the world.
- Brilliant Partnerships
Most companies insist on manufacturing each profitable product themselves, which can be catastrophic. Johnson & Johnson understands the ineffectiveness of this strategy and opts to partner with leaders in specific regions and fields of expertise to deliver highly effective products.
- Effective Marketing
Johnson & Johnson’s marketing strategy focuses on exploiting the emotional connection to nurture trust and long-lasting relationships between mothers and their products. The strategy has effectively marketed the products and attracted customers globally.
- Strategic Acquisitions and Mergers
The quicker a company gets into new and lucrative markets, the faster it grows. Johnson & Johnson strategically acquires and merges with big and small companies for quick and profitable expansion.
Johnson & Johnson’s Weaknesses
- Unethical Operations
Lawsuits against the negative effects of Johnson & Johnson’s Xarelto, talc-based baby powder, opium-addictive Norman drug, and many more are projected to cost about $15 billion. Most importantly, each lawsuit erodes trust and taints its reputation.
- Lack of Diversification
Johnson & Johnson’s global revenue comes from three major divisions: pharmaceutical, medical devices and diagnostics, and consumer. There is a lack of diversification. With all its eggs in a single basket, Johnson & Johnson can incur catastrophic losses.
- Overdependence on Successful Products
Once a product is launched and risen to become a leader in the market, there is nowhere else to go but down. Johnson & Johnson’s over-dependence on $3.5 billion yearly from Zytiga until 2018 when a court allowed sales of generic versions of the drug leading to a sharp decline in sales.
Johnson & Johnson’s Opportunities
1. Rebalance Portfolio
With medical devices and pharmaceuticals bringing in over 80% of total revenue, Johnson & Johnson can focus on increasing sales of consumer health products. Rebalancing the portfolio can increase total revenue.
2. Expand through Acquisition
Johnson & Johnson’s revenue increased immensely from 2016 to 2020 with acquisitions like Tylenol. It can expand again, using acquisitions.
3. Focus on Emerging Markets
About 57% of Johnson & Johnson’s global pharmaceutical sales come from the US. The company can focus on increasing pharmaceutical sales in Latin America, Africa, and Asia.
4. Target the Lower-Class
Johnson & Johnson can introduce a cheaper variety or offer discounts for its drugs to target the lower-class.
Johnson & Johnson’s Threats
- Stiff Competition
From Reckitt Benckiser to Unilever, Procter and Gamble, Abbott, and many more, the large number of strong global players competing against Johnson & Johnson threatens profitability. If stiff competition stiffens further, Johnson & Johnson will lose a substantial portion of its market share.
- Increase in Generics
Recently, Johnson & Johnson’s revenue dropped after the sales of generic versions of Zytiga were allowed into the market. If generic drugs increase drastically in the future, the company’s profitability and sustainability will be threatened further.
- Stringent Regulation
Since Johnson & Johnson offers its brands in different markets across the world, it has to comply with numerous regulations enacted by governments. Its record does not help the company.
- New Technologically Advanced Entrants
Innovative drug manufacturers are emerging rapidly from countries like India. If any company acquires the technological capacity to develop cheaper and more effective substitutes, retaining even most customers will be a challenge for Johnson & Johnson.
- Intensified Fight against Drug Abuse
The role of drug manufacturers in the opioid epidemic in the US can lead to the enactment of harsher laws in the future. If governments ban drugs manufactured by Johnson and Johnson, this will threaten the profitability or even the existence of the company.
References
- Channel Team. (2018, June 5). How Johnson & JohnsJNJ Team (2020, April 03). What You Need to Know About How Johnson & Johnson’s Supply Chain Is Responding to the Covid-19 Pandemic. CRS Wire.
- Kuchler, H. (2019, September 5). J&J: The next target of anger over America’s opioid crisis? Financial Times
- J&J (2020, April 9). 5 Impactful Ways Johnson & Johnson Is Helping in the Fight Against Covid-19. JNJ News
- Erman, M. (2020, March 19). J&J’s Tylenol production at maximum capacity as coronavirus boosts demand. Reuters
- Saumyadeb, C., and Nick Zieminski. (2020, March 30). J&J, U.S. government plan 1 billion doses of coronavirus vaccine. Reuters
- Wengel, K. (2019, July 8). Johnson & Johnson supply chain executive to receive CSCMP’s Distinguished Service Award. DC Velocity
- Sampath, U. (2020, April 24). J&J strikes a deal with Emergent BioSolutions on coronavirus vaccine manufacturing. Reuters
- Flagg, T. (2018, April 6). The evolution of brand storytelling: How Johnson & Johnson finds stories that connect. Clickz
- Channel Team. (2018, June 5). How Johnson & Johnson Makes Big-Little Mergers Work. Brand Channel
- Helmore, E. (2019, October 18). Lawsuits, payouts, opioids crisis: what happened to Johnson & Johnson? The Guardian
- Mikulic, M. (2020, March 9). Sales of Johnson & Johnson’s medical devices and diagnostics by franchise 2017-2019. Statista
- Pierson, B. (2019, May 15). Johnson & Johnson loses appeal to revive Zytiga’s patent. Reuters
- Tenebruso, J. (2020, April 14). Despite Coronavirus Challenges, Johnson & Johnson Boosts Dividend 6.3%. The Motley Fool
- Francis, E. (2020, April 14). J&J Producing Tylenol ‘24-7’ As US OTC Sales Jump 35% On Pandemic-Driven Stockpiling. HBW Insights
- Mishra, M., and Saumya, Joseph (2020, January 22). J&J forecasts weak annual profit misses revenue estimates. Reuters
- Rockoff, J. (2018, March 8). Johnson & Johnson Says Discounts Cut the Prices for Its Drugs, Though Revenue Rose. The Wall Street Journal
- Staff Writer (2018, April 9). Johnson & Johnson Innovation Strategy — Using Small Squads To Act Like A Startup. Bold Business
- Great Speculations (2019, January 24). Johnson & Johnson Will Likely See A Decline In Sales In 2019 Amid Generic Competition. Forbes
- Addeney, A. (2019, January 31). The Culture of Bending Rules in India Challenges US Drug Agency. Bloomberg
- Woodcock, J. (2019, October 30). Safeguarding Pharmaceutical Supply Chains in a Global Economy. The FDA
- Kuchler, H. (2019, August 25). Johnson & Johnson faces court judgment over the opioids crisis. Financial Times
- Featured image by Christina Victoria Craft on Unsplash
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