Johnson and Johnson

Company History:
One of America's most admired companies, Johnson & Johnson (J & J) is one of the largest
healthcare firms in the world and one of the most diversified. Its operations are organized into
three business segments: pharmaceutical, which generates 39 percent of revenues and 61 percent
of operating income; professional, which accounts for 36 percent of revenues and 27 percent of
operating income; and consumer, which contributes 25 percent of revenues and 12 percent of
operating income. J & J's pharmaceutical products--which are sold under such brands as Janssen
Pharmaceutica, Ortho-McNeil Pharmaceutical, and Centocor--include drugs for family planning,
mental illness, gastroenterology, oncology, pain management, and other areas. The professional
segment includes surgical and patient care equipment and devices, diagnostic products, joint
replacements, and disposable contact lenses. The company's well-known line of consumer
products includes the Johnson's baby care line, the Neutrogena skin and hair care line, Tylenol
and Motrin pain relievers, o.b. and Stayfree feminine hygiene products, the Reach oral care line,
Band-Aid brand adhesive bandages, Imodium A-D diarrhea treatment, Mylanta gastrointestinal
products, and Pepcid AC acid controller. J & J generates about half of its revenues outside the
United States, through its network of 190 operating companies in 51 countries and its marketing
organization that sells in more than 175 countries.
Early History: From Surgical Dressings to Baby Cream
J & J traces its beginnings to the late 1800s, when Joseph Lister's discovery that airborne germs
were a source of infection in operating rooms sparked the imagination of Robert Wood Johnson,
a New England druggist. Johnson joined forces with his brothers, James Wood Johnson and
Edward Mead Johnson, and the three began producing dressings in 1886 in New Brunswick,
New Jersey, with 14 employees in a former wallpaper factory.
Because Lister's recommended method for sterilization--spraying the operating room with
carbolic acid--was found to be impractical and cumbersome, Johnson & Johnson (which was
incorporated in 1887) found a ready market for its product. The percentage of deaths due to
infections following surgery was quite high and hospitals were eager to find a solution.
J & J's first product was an improved medicinal plaster that used medical compounds mixed in
an adhesive. Soon afterward, the company designed a soft, absorbent cotton-and-gauze dressing,
and Robert Wood Johnson's dream was realized. Mass production began and the dressings were
shipped in large quantities throughout the United States. By 1890 J & J was using dry heat to
sterilize the bandages.
The establishment of a bacteriological laboratory in 1891 gave research a boost, and by the
following year the company had met accepted requirements for a sterile product. By introducing
dry heat, steam, and pressure throughout the manufacturing process, J & J was able to guarantee
the sterility of its bandages. The adhesive bandage was further improved in 1899 when, with the
cooperation of surgeons, J & J introduced a zinc oxide-based adhesive plaster that was stronger
and overcame much of the problem of the skin irritation that plagued many patients. J & J's
fourth original design was an improved method for sterilizing catgut sutures.
From the beginning, J & J was an advocate of antiseptic surgical procedures. In 1888 the
company published Modern Methods of Antiseptic Wound Treatment, a text used by physicians
for many years. That same year, Fred B. Kilmer began his 45-year stint as scientific director at J
& J. A well-known science and medicine writer, and father of poet Joyce Kilmer, Fred Kilmer
wrote influential articles for J & J's publications, including Red Cross Notes and the Red Cross
Messenger. Physicians, pharmacists, and the general public were encouraged to use antiseptic
methods, and J & J products were promoted.
R.W. Johnson died in 1910 and was succeeded as chairman by his brother James. It was then that
the company began to grow quickly. To guarantee a source for the company's increasing need for
textile materials, J & J purchased Chicopee Manufacturing Corporation in 1916. The first
international affiliate was founded in Canada in 1919. A few years later, in 1923, Robert W.
Johnson's sons, Robert Johnson and J. Seward Johnson, took an around-the-world tour that
convinced them that J & J should expand overseas, and Johnson & Johnson Limited was
established in Great Britain a year later. Diversification continued with the introduction in 1921
of Band-Aid brand adhesive bandages and Johnson's Baby Cream (Johnson's Baby Powder had
debuted in 1893) and the debut of the company's first feminine hygiene product, Modess sanitary
napkins, in 1927.
1932--63: The General at the Helm
The younger Robert Johnson, who came to be known as 'the General,' had joined the company as
a mill hand while still in his teens. By the age of 25 he had become a vice-president, and he was
elected president in 1932. Described as dynamic and restless with a keen sense of duty, Johnson
had attained the rank of brigadier general in World War II and served as vice-chairman of the
War Production Board.
The General firmly believed in decentralization in business; he was the driving force behind J &
J's organizational structure, in which divisions and affiliates were given autonomy to direct their
own operations. This policy coincided with a move into pharmaceuticals, hygiene products, and
textiles. During Robert Johnson's tenure, the division for the manufacture of surgical packs and
gowns became Surgikos, Inc.; the department for sanitary napkin production was initially called
the Modess division and then became the Personal Products Company; birth control products
were under the supervision of the Ortho Pharmaceutical Corporation; and the separate division
for suture business became Ethicon, Inc. Under the General's leadership, annual sales grew from
$11 million to $700 million at the time of his death in 1968.
Following his father's lead as a champion of social issues, Johnson spoke out in favor of raising
the minimum wage, improving conditions in factories, and emphasizing business's responsibility
to society. Johnson called for management to treat workers with respect and to create programs
that would improve workers' skills and better prepare them for success in a modern industrial
society. In 1943 Johnson wrote a credo outlining the company's four areas of social
responsibility: first to its customers; second to its employees; third to the community and
environment; and fourth to the stockholders. On the heels of the credo came the company's
change from family-owned firm to public company, as J & J was listed on the New York Stock
Exchange in 1944.
In 1959 J & J acquired McNeil Laboratories, Inc., maker of a non-aspirin (acetaminophen) pain
reliever called Tylenol--which was at that time available only by prescription. Just one year after
the acquisition, McNeil launched Tylenol as an over-the-counter (OTC) medication. Also in
1959, Cilag-Chemie, a Swiss pharmaceutical firm, was purchased, followed in two years by the
purchase of Janssen Pharmaceutica, maker of the major antipsychotic drug Haldol, which had
been introduced in 1958.
In 1963 Johnson retired. Although he remained active in the business, chairmanship of the
company went outside the family for the first time. Johnson's immediate successor was Philip
Hofmann, who, much like the General, had started as a shipping clerk and worked his way up the
ladder. During Hofmann's ten-year term as chairman, J & J's domestic and overseas affiliates
flourished. Hofmann was another firm believer in decentralization and encouraged the training of
local experts to supervise operations in their respective countries. Foreign management was
organized along product lines rather than geographically, with plant managers reporting to a
person with expertise in the field.
1960s--70s: Increased Promotion of Consumer Products
In the early 1960s federal regulation of the healthcare industry was increasing. When James
Burke--who had come to J & J from the marketing department of the Procter & Gamble
Company--became president of J & J's Domestic Operating Company in 1966, the company was
looking for ways to increase profits from its consumer products to offset possible slowdowns in
the professional products divisions. By luring top marketing people from Procter & Gamble,
Burke was able to put together several highly successful advertising campaigns. The first
introduced Carefree and Stayfree sanitary napkins into a market that was dominated by the
acknowledged feminine products leader, Kimberly-Clark. Usually limited to women's
magazines, advertisements for feminine hygiene products were low-key and discreet. Under
Burke's direction, J & J took a more open approach and advertised Carefree and Stayfree on
television. By 1978 J & J had captured half of the market. Meantime, the company expanded its
feminine hygiene line through the 1973 acquisition of the German firm Dr. Carl Hahn G.m.b.H.,
maker of the o.b. brand of tampons.
One of Burke's biggest challenges was Tylenol. Ever since J & J had acquired McNeil
Laboratories, maker of Tylenol, the drug had been marketed as a high-priced product. Burke saw
other possibilities, and in 1975 he got the chance he was waiting for. Bristol-Myers Company
introduced Datril and advertised that it had the same ingredients as Tylenol but was available at a
significantly lower price. Burke convinced J & J Chairman Richard Sellars that they should meet
this competition head on by dropping Tylenol's price to meet Datril's. With Sellars's approval,
Burke took Tylenol into the mass-marketing arena, slashed its price, and ended up beating not
only Datril, but number one Anacin as well. This signaled the beginning of an ongoing battle
between American Home Products Corporation, maker of Anacin, and McNeil Laboratories.
Sellars, Hofmann's protg, had become chairman in 1973, and served in that position for three
years. Burke succeeded Sellars in 1976 as CEO and chairman of the board, and David R. Clare
was appointed president. J & J had always maintained a balance between the many divisions in
its operations, particularly between mass consumer products and specialized professional
products. No single J & J product accounted for as much as five percent of the company's total
sales. With Burke at the helm, consumer products began to be promoted aggressively, and
Tylenol pain reliever became J & J's number one seller.
At the same time, Burke did not turn his back on the company's position as a leader in
professional healthcare products. In May 1977 Extracorporeal Medical Specialties, a
manufacturer of kidney dialysis and intravenous treatment products, became part of the
corporation. Three years later, J & J acquired Iolab Corporation, maker of ocular lenses for
cataract surgery, and effectively entered the field of eye care and ophthalmic pharmaceuticals. In
1981 the company extended its involvement in eye care through the acquisition of Frontier
Contact Lenses. The increased in-house development of critical care products resulted in the
creation of Critikon, Inc., in 1979, and in 1983 Johnson & Johnson Hospital Services was created
to develop and implement corporate marketing programs.
1980s Tylenol Tampering Tragedy
In September 1982 tragedy struck J & J when seven people died from ingesting Tylenol capsules
that had been laced with cyanide. Advertising was canceled immediately, and J & J recalled all
Tylenol products from store shelves. After the Food and Drug Administration (FDA) found that
the tampering had been done at the retail level rather than during manufacturing, J & J was left
with the problem of how to save its number one product and its reputation. In the week after the
deaths, J & J's stock dropped 18 percent and its prime competitors' products, Datril and Anacin-
3, were in such demand that supplies were back-ordered.
J & J was able to recoup its losses through several marketing strategies. The company ran a one-
time ad that explained how to exchange Tylenol capsules for tablets or refunds and worked
closely with the press, responding directly to reporters' questions as a means of keeping the
public up to date. The company also placed a coupon for $2.50 off any Tylenol product in
newspapers across the country to reimburse consumers for Tylenol capsules they may have
discarded during the tampering incident and offer an incentive to purchase Tylenol in other
forms.
Within weeks of the poisoning incidents, the FDA issued guidelines for tamper-resistant
packaging for the entire food and drug industry. To bolster public confidence in its product, J & J
used three layers of protection, two more than recommended, when Tylenol was put back on
store shelves. Within months of the cyanide poisoning, J & J was gaining back its share of the
pain-reliever market, and soon regained more than 90 percent of its former customers. By 1989
Tylenol sales were $500 million annually, and in 1990 the line was expanded into the burgeoning
cold remedy market with several Tylenol Cold products; the following year saw the launch of
Tylenol P.M., a sleep aid. James Burke's savvy, yet honest, handling of the Tylenol tampering
incident earned him a spot in the National Business Hall of Fame, an honor awarded in 1990.
Litigation over the incident was finally resolved in 1991, almost a decade after the initial
tampering. McNeil Labs settled with over 30 survivors of the poisonings for more than $35
million.
In 1989 Bristol-Myers launched an aggressive advertising campaign that positioned its Nuprin
brand ibuprofen pain reliever in direct competition with Tylenol. The move compounded market
share erosion from American Home Products' Advil ibuprofen. Both products claimed to work
better than Tylenol's acetaminophen formulation.
There were a number of other important developments in the second half of the 1980s. In 1986 J
& J acquired LifeScan, Inc., maker of at-home blood-monitoring products for diabetics. That
same year, the company expanded its world leading position in baby care products through the
acquisition of Penaten G.m.b.H., the market leader in Germany. Following the acquisition of
Frontier Contact Lenses, which was renamed Vistakon, J & J introduced the Acuvue brand of
disposable contact lenses in the United States in 1988. The popularity of the Acuvue lenses
helped propel Vistakon into the number one position in contact lenses worldwide. In 1989 J & J
and drug giant Merck & Co., Inc. entered into a joint venture--Johnson & Johnson-Merck
Consumer Pharmaceuticals Co.&mdash develop OTC versions of Merck's prescription
medications, initially for the U.S. market, later expanded to Europe and Canada. One of the first
product lines developed by this venture was the Mylanta brand of gastrointestinal products.
Burke and Clare retired in 1989 and were succeeded by three executives: CEO and Chairman
Ralph S. Larsen, who came from the consumer sector; Vice-Chairman Robert E. Campbell, who
had headed the professional sector; and President Robert N. Wilson, who had headed the
pharmaceutical sector. The three men were responsible for overseeing the network of 168
companies in 53 countries.
Larsen moved quickly to reduce some of the inefficiencies that a history of decentralization had
caused. In 1989 the infant products division was joined with the health and dental units to form a
broader consumer products segment, eliminating approximately 300 jobs in the process. Over the
next two years, the reorganization was extended to overseas units. The number of professional
operating departments in Europe was reduced from 28 to 18 through consolidation under three
primary companies: Ethicon, Johnson & Johnson Medical, and Johnson & Johnson Professional
Products. In 1990, meantime, J & J formed Ortho Biotech Inc. to consolidate the company's
research in the burgeoning biotechnology field, an area J & J had been active in since the 1970s.
Dealmaking in the 1990s and Beyond
J & J was able to counter increasing criticisms of rising healthcare costs in the United States and
around the world in the 1990s due in part to the company's longstanding history of social
responsibility. The company pioneered several progressive programs including child care, family
leave, and 'corporate wellness' that were beginning to be recognized as healthcare cost reducers
and productivity enhancers. In addition, weighted average compound prices of J & J's healthcare
products, including prescription and OTC drugs and hospital and professional products, grew
more slowly than the U.S. consumer price index from 1980 through 1992. These practices
supported the company's claim that it was part of the solution to the healthcare crisis. In 1992 J
& J instituted its 'Signature of Quality' program, which urged the corporation's operating
companies to focus on three general goals: 'Continuously improving customer satisfaction, cost
efficiency and the speed of bringing new products to market.'
J & J grew at a relatively slow pace in the early 1990s, in part because of the difficult economic
climate. Revenues increased from $11.23 billion in 1990 to $14.14 billion in 1993, an increase of
just 26 percent. A series of acquisitions in the mid-1990s, however, ushered in a period of more
rapid growth, with revenues hitting $21.62 billion by 1996, a leap of 53 percent from the 1993
level. The skin care line had received a boost in 1993 through the purchase of RoC S.A. of
France, a maker of hypoallergenic facial, hand, body, and other products under the RoC name.
More significant was the acquisition the following year of Neutrogena Corporation for nearly $1
billion. Neutrogena was well-known for its line of dermatologist-recommended skin and hair
care products. J & J spent another billion dollars in 1995 for the clinical diagnostics unit of
Eastman Kodak Company, which was particularly strong in the areas of clinical chemistry,
which involves the analysis of simple compounds in the body, and immuno-diagnostics. In 1997
J & J combined its existing Ortho Diagnostics Systems unit with the operations acquired from
Kodak to form Ortho-Clinical Diagnostics, Inc. (LifeScan remained a separately run diagnostics
company.)
Another subsidiary that grew through acquisitions in this period was Ethicon Endo-Surgery, Inc.,
which had been spun off from Ethicon in 1992 to concentrate on endoscopic, or minimally
invasive, surgical instruments. J & J acquired Indigo Medical, which specialized in minimally
invasive technology in urology and related areas, in 1996, while Biopsys Medical, Inc.,
specializing in minimally invasive breast biopsies, was purchased in 1997. Another large
acquisition occurred in 1996 when J & J spent about $1.8 billion for Cordis Corporation, a world
leader in the treatment of cardiovascular diseases through its stents, balloons, and catheters. In
1997, in exchange for several consumer products, J & J acquired the OTC rights to the Motrin
brand of ibuprofen pain relievers from Pharmacia & Upjohn. Other important developments
during this period included the 1995 introduction of an Acuvue disposable contact lens designed
to be worn for just one day but priced at a reasonable level, and the 1995 U.S. approval of the
antacid Pepcid AC, an OTC version of Merck's Pepcid that was developed by the Johnson &
Johnson-Merck joint venture.
The company's aggressive program of acquisition continued in the late 1990s, beginning with the
1998 purchase of DePuy, Inc. for $3.7 billion in cash, J & J's largest acquisition yet. DePuy was
a leader in orthopedic products, such as hip replacement devices. J & J already marketed one of
the leading knee replacement devices in the United States, making for a nice fit between the two
companies. On the negative side, J & J was forced to initiate a restructuring in 1998 following a
number of difficulties. J & J had been a pioneer in the market for coronary stents, devices used to
keep arteries open following angioplasty, but its stent sales fell from $700 million in 1996 to just
over $200 million in 1998 after competitors introduced second-generation stents and J & J did
not. Also troubled was the firm's pharmaceutical operation, which in 1997 and 1998 had seen
nine drugs in the development pipeline fail in testing, fail to get government approval, or be
delayed. In late 1998 J & J announced that it would reduce its workforce by 4,100 and close 36
plants around the world over the succeeding 18 months. Taking $697 million in restructuring and
in-process research and development charges, J & J aimed to save between $250 million and
$300 million per year through this effort.
To bolster its drug R & D efforts, J & J completed its first major pharmaceutical deal since the
1961 purchase of Janssen Pharmaceutica. In October 1999 J & J merged with major
biotechnology firm Centocor, Inc. in a $4.9 billion stock-for-stock transaction, the largest such
deal in company history. With Centocor and Ortho Biotech under its wing, J & J was now one of
the world's leading biotech firms. Soon after the merger with Centocor was completed, the FDA
approved a key Centocor-developed drug, Remicade, for the treatment of rheumatoid arthritis.
Centocor was also developing other pharmaceuticals in the areas of cancer, autoimmune
diseases, and cardiology. Also in 1999 J & J acquired the dermatological skin care business of
S.C. Johnson & Son, Inc.--which was primarily made up of the Aveeno brand--for an
undisclosed amount.
Despite its late 1990s troubles, J & J reported record results for 1999, earning $4.17 billion on
revenues of $27.47 billion. Net earnings had nearly quadrupled since 1989, while net sales nearly
tripled over the same period. The year 2000 got off to a rough start for the company; however, as
it was forced to withdraw from the market a prescription heartburn medication, Propulsid, after
the drug had been linked to 100 deaths and hundreds of cases of cardiac irregularity. Propulsid
had nearly $1 billion in sales in 1999. Also in early 2000, J & J joined with General Electric
Company's GE Medical Systems unit, Baxter International Inc., Abbott Laboratories, and
Medtronic, Inc. in a venture to create a global Internet-based purchasing exchange for healthcare
providers.
Principal Subsidiaries: Advanced Sterilization Products; Centocor; Cordis Corporation; DePuy;
Ethicon, Inc.; Ethicon Endo-Surgery, Inc.; Independence Technology; Indigo Medical, Inc.;
Janssen Pharmaceutica Inc.; Johnson & Johnson Consumer Products, Inc.; Johnson & Johnson
Development Corporation; Johnson & Johnson Health Care Systems Inc.; Johnson & Johnson
Medical; Johnson & Johnson-Merck Consumer Pharmaceuticals Co. (50%); Johnson & Johnson
Sales and Logistics Company; Johnson & Johnson Vision Care, Inc.; LifeScan, Inc.; McNeil
Consumer Healthcare; McNeil Specialty Products Company; Neutrogena Corporation; Noramco,
Inc.; Ortho Biotech Inc.; Ortho-Clinical Diagnostics, Inc.; Ortho Dermatological; Ortho-McNeil
Pharmaceutical, Inc.; Personal Products Company; R.W. Johnson Pharmaceutical Research
Institute; Therakos, Inc. The company has additional subsidiaries in Canada, Argentina, Brazil,
Chile, Colombia, Mexico, Panama, Peru, Uruguay, Venezuela, Austria, Belgium, the Czech
Republic, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal,
Russia, Scotland, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, Australia,
China, Egypt, Hong Kong, India, Indonesia, Israel, Japan, Korea, Malaysia, Morocco, Pakistan,
the Philippines, Singapore, South Africa, Taiwan, Thailand, the United Arab Emirates, and
Zimbabwe.
Principal Operating Units: Consumer and Personal Care Group; Medical Devices and
Diagnostics Group; Pharmaceuticals Group.
Principal Competitors: Abbott Laboratories; Affymetrix, Inc.; Alberto-Culver Company;
American Home Products Corporation; Amgen Inc.; Aventis; Bausch & Lomb Incorporated;
Baxter International Inc.; Bayer AG; Beckman Coulter, Inc.; Becton, Dickinson & Company;
Bristol-Myers Squibb Company; Carter-Wallace, Inc.; Colgate-Palmolive Company; Dade
Behring Inc.; The Dial Corporation; Eli Lilly and Company; Genentech, Inc.; The Gillette
Company; Glaxo Wellcome plc; Kimberly-Clark Corporation; L'Oral USA, Inc.; Medtronic,
Inc.; Merck & Co., Inc.; Minnesota Mining and Manufacturing Company; Nestl S.A.; Novartis
AG; Perrigo Company; Pfizer Inc.; Pharmacia Corporation; The Procter & Gamble Company;
Roche Holding Ltd.; SmithKline Beecham plc; St. Jude Medical, Inc.; Unilever; United States
Surgical Corporation


Johnson & Johnson
Johnson & Johnson, incorporated in November 1887, is a holding company. The Company is
engaged in the research and development, manufacture and sale of a broad range of products in
the health care field. The business of Johnson & Johnson is conducted by more than 275
operating companies located in 60 countries, including the United States, which sell products in
virtually all countries throughout the world. In March 2013, Johnson & Johnson's Cordis
Corporation announced the acquisition Of Flexible Stenting Solutions, Inc.
The Companys primary focus has been on products related to human health and well-being. The
Company is organized into three business segments: Consumer, Pharmaceutical and Medical
Devices and Diagnostics. The Company's subsidiaries operate 146 manufacturing facilities
occupying approximately 21.6 million square feet of floor space.


















Consumer
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.


.






Baby Care
With a legacy of over 100 years, Johnsons

Baby is a market leader in its category, driving the

trends and developments in the baby space.

Johnsons

Baby aspires to touch every baby in India with brands operating in the widest
consumer spectrum. From premium products like Johnsons

Baby Top-To-Toe

Wash- the first

ever liquid bath product for babies, Johnsons

Baby Skincare Wipes to low cost outlay packs of

soaps and powders that are more accessible to consumers at the bottom of the pyramid, our
offerings cover an entire range.
Womens Health
India has the largest Womens Health business in Asia Pacific and the 3rd largest napkin market
for Johnson & Johnson globally. Womens Health Division in India markets the popular brands
Stayfree

, Carefree

and O.B.

Tampons.

Stayfree

offers multiple variants at varied price points that cater to consumer needs spreading
across different consumer needs. A strong market player, Stayfree

drives market trends and

developments in the sanitary health category.
Beauty
The Beauty business in India comprises of 2 big brands - Neutrogena

and Clean & Clear

.

Neutrogena

is the biggest of our beauty brands worldwide, It promises to improve the health of
your skin to give you really beautiful, healthy, glowing skin that you always desired. Thats why
dermatologists and skin-care experts the world over recommend it.

The brand has an extensive range of products from Facial Cleansing, Moisturizing, Sun
Protection as well as Body care products.

Clean & Clear

operates in the teen skincare segment and has undiluted focus on products that
are used by teens those that fight acne, oil, dirt and blackheads.
Oral & Wound Care
Our Oral & Wound care segment sports power brands like BAND-AID

, LISTERINE

and
Savlon

. BAND-AID

is one of our leading products in this space and has become a generic
name in the wound care space. LISTERINE

is a market leader* in the mouthwash category;

Savlon

Antiseptic Liquid and Soap are common household names in this space.
OTC
Globally, OTC is the largest contributor to the Consumer business of Johnson & Johnson. In
India OTC franchise is present in various segments with strong brands.
Pharmaceutical
The Pharmaceutical segment includes products in areas, such as anti-infective, antipsychotic,
contraceptive, gastrointestinal, hematology, immunology, infectious diseases, neurology,
oncology, pain management, thrombosis and vaccines. These products are distributed directly to
retailers, wholesalers and health care professionals for prescription use. Key products in the
Pharmaceutical segment include: REMICADE (infliximab), a treatment for a number of
immune-mediated inflammatory diseases; STELARA (ustekinumab), a treatment for adults with
moderate to severe plaque psoriasis; SIMPONI (golimumab), a treatment for adults with
moderate to severe rheumatoid arthritis, active psoriatic arthritis, and active ankylosing
spondylitis; VELCADE(bortezomib), a treatment for multiple myeloma; ZYTIGA (abiraterone
acetate), a treatment for metastatic castration-resistant prostate cancer; PREZISTA (darunavir),
INTELENCE (etravirine) and EDURANT (rilpivirine), treatments for HIV/AIDS; INCIVO
(telaprevir), for the treatment of hepatitis C; NUCYNTA ER (tapentadol) extended release
tablets, a treatment for moderate to severe chronic pain in adults and neuropathic pain associated
with diabetic peripheral neuropathy in adults; INVEGA SUSTENNA (paliperidone palmitate),
for the acute and maintenance treatment of schizophrenia in adults; INVEGA (paliperidone)
extended-release tablets, for the treatment of of schizophrenia and schizoaffective disorder;
RISPERDAL CONSTA (risperidone), a treatment for the management of Bipolar I Disorder and
schizophrenia; XARELTO(rivaroxaban), an oral anticoagulant for the prevention of thrombosis
following total hip or knee replacement surgery, for the prevention of stroke in patients with
atrial fibrillation, for the treatment of pulmonary embolism (PE) or deep vein thrombosis (DVT)
or to reduce the risk of recurrence of DVT or PE following an initial six months of treatment for
acute venous thromboembolism; PROCRIT (epoetin alfa, sold outside the United States (U.S.) as
EPREX), to stimulate red blood cell production; LEVAQUIN (levofloxacin) for the treatment of
bacterial infections; CONCERTA (methylphenidate HCl) extended-release tablets CII, a
treatment for attention deficit hyperactivity disorder; ACIPHEX/PARIET, a proton pump
inhibitor co-marketed with Eisai Inc.; and DURAGESIC/ (fentanyl transdermal system) CII, sold
outside the U.S. as DUROGESIC, a treatment for chronic pain that offers a novel delivery
system.

Medical Devices and Diagnostics
The Medical Devices and Diagnostics segment includes a broad range o1f products used
principally in the professional fields by physicians, nurses, hospitals, and clinics. These include
products to treat cardiovascular disease; orthopaedic and neurological products; blood glucose
monitoring and insulin delivery products; general surgery, biosurgical, and energy products;
professional diagnostic products; infection prevention products; and disposable contact lenses.
These products are distributed to wholesalers, hospitals and retailers both directly and through
surgical supply and other distributors.




Turnover of the company





J ohnson and J ohnson
Strengths
Worldwide sales have grown 14% indicating a strong position for the global group.
The business model adapted by Johnson and Johnson fundamentally uses the adaptation of
entrepreneurial values in order to retain an edge within the market place.
Working with intensive scientific notions Johnson and Johnson utilise a varied expanse of
problem solving techniques in order to challenge the standard practice and capitalise on growth
through emerging markets which enables associated growth.
The use of independent offices working as standalone units provides the opportunity to develop
concepts with cultural considerations which can prove important when taking a product to global
markets.

Weaknesses
There is increasing pressure within pharmaceutical markets to reduce prices in line with medical
budgets and maintain patent expirations to ensure generic programmes are updated within critical
path movements.
Challenges have been faced within Johnson and Johnson where a reduction in the market
demand for key products has been identified; some of these products were branded and have
been replaced by generic programmes at the end of patent time lines.
Internal weakness across the industry and not isolated to Johnson and Johnson would be the level
of theft and counterfeiting of drugs managed through internal personnel.

Opportunity
Whilst the recent acquisition of Pfizer Consumer Healthcare will act as an opportunity in its own
right to promote growth for the organisation through alternative routes there is the added value
capitalised through the return on investment which will be realised 12 months before plan
releasing funds back into the bottom line.
Johnson and Johnson have highlighted new developments in pharma products with five
undergoing regulatory review which provides the opportunity to grow the existing product
portfolio.
Development into new functions of medical devices and diagnostics will provide new markets to
entry which will result in business growth.
With the development of WTO rules to prevent the availability of cheap generic drugs there is
the opportunity to reduce the level of lost profit due to generic introduction as patents run out.
Whilst this will aid Johnson and Johnson where they own the brand where they are looking to
capitalise on introducing generic drugs to market this ruling will become a hindrance.

Threats
Generally within the main pharmaceutical companies there is a high level of competition for the
generics markets where patents finish and it is the first to entry where success will generally be
determined.
Technological developments with bio-tech concepts will potentially move the traditional
pharmaceutical methods out of the market place in the long term although there is an economical
argument that this form of development can be segregated to run alongside traditional methods
and complement as opposed to replace.

Marketing Strategy
Sound marketing is critical to the success of every organization. The goal of marketing is to
create customer satisfaction with a product or service, while generating profits for the company.
Based on information gathered in marketing research, a company formulates a market strategy
that follows along with their overall objective. The following is an analysis of the marketing
strategies used by a leading health care provider, Johnson and Johnson (J&J).
In the credo, the overarching philosophy driving J&J in the health industry is clearly mapped
out. The credo specifically outlines their four responsibilities. The first responsibility is to
provide high quality products for doctors, nurses, patients and parents. This includes striving to
keep products at reasonable prices and serving customers promptly and accurately.
The second responsibility is to their employees. Each employee is treated as an individual, with
equal opportunities for development and advancement. They also try to be fair, and maintain
clean, orderly and safe working conditions.
The third responsibility is to the community. Johnson and Johnson supports good works and
charities. On April 24th, J&J are supporting a special Newsweek issue on critical importance of
early childhood development. They also excel towards being a "good citizen" in every
community by protecting the environment and natural resources.
The fourth responsibility is to the stockholders. This means making a sound profit, while
continuing with research and development.
The specific criteria for evaluation are listed below.
Is J&J first in the minds of their consumers?
Does J&J use The Law Of Focus when marketing products?
Is "The Law Of Acceleration" helping J&J to maintain their global contention?
Does J&J fully tackle the needs of their consumers, creating higher levels of Satisfaction?
The more mature products with the largest percent of market share are, Band-Aid adhesive strips,
Tylenol and Baby care items.
Band-Aid
Johnson and Johnson is a successful health care product provider because they satisfy customer
needs. In the early 1920s, J&J recognized a need for antiseptic wound treatment and developed
Band-Aid Brand Adhesive Bandages. Today when someone asks for a Band-Aid, they may not
necessarily mean the brand, but an adhesive bandage. This type of name reference is known as
The Law Of Focus in The 22 Immutable Laws of MARKETING by Ries and Trout. The Law
Of Focus is using simple words to "burn" a path in the mind by compressing the focus to a single
word or concept. Johnson and Johnson's word choice of Band-Aid is now synonymous for
adhesive strip.
In order to compete with variations of adhesive strips, J&J began extending their Band-Aid line.
Some of the line extensions are, Sheer, Flexible Fabric, Endangered Species design, Sesame
Street Design, and Space Design. The Law of Line Extension also in The 22 Immutable Laws
of Marketing by Ries and Trout, warns that the expansion of a product line is not always for the
best. The reasoning behind this is, instead of focusing all resources on one product, resources are
spread thin while developing expansion products. Consumers no longer have cut and dry
decisions on what to purchase, they now have choices. Inevitably choices within a line may end
up competing against one another and reducing the impact of a narrower focus. According to
Ries and Trout, The leader in any category is the brand that is not line extended.
When interviewing consumers, 20 out of 20 people refer to Band-Aids with any first aid
supplies. When asked what style of Band-Aids they purchased, given a choice with previously
mentioned designs, 15 said sheer and 5 said Flexible Fabric. None of the people interviewed
would purchase those specific designs, even for their children.
Based on our Johnson and Johnson consumer survey, J&J could either drop the design
extensions or market it more toward young children. Band-Aids with designs are found at
doctors' offices, when shots are given. Since Band-Aids are a mature product, Johnson and
Johnson should try to capture a larger market share by more effectively introducing new designs.
Some of the personal care products used to target children use Disney cartoon designs. Johnson
and Johnson could use these same designs on Band-Aids. Placing the designed Band-Aids at a
child's eye level will help attract more attention to the younger consumer.
Tylenol
Acetaminophen has been around on the market for 60 years. Johnson and Johnson decided to call
their generic acetaminophen, Tylenol. Since the product debut, Tylenol has always been known
as "gentle on your stomach." Meanwhile, competitors have been known as either harsh on the
stomach or liver.
One campaign that has been running for years, which everyone in the United States should be
able to recognize is, "My doctor recommended Tylenol for all of my aches and pains." Other ads
that our group remembered were similar to, "Most doctors recommend," or "Nine out of ten
doctors recommend Tylenol."
Since the cyanide poisonings of Tylenol capsules in 1982, Johnson and Johnson have taken
many precautions, so similar accidents will not happen again. Today, there is no longer any
capsule products on the market, except in prescription form. J&J may have taken away all of
their capsule products from over the counter drugs, but they introduced new items as well. Some
of the expansions of the Tylenol line are, Children's Tylenol, Tylenol Cold and Tylenol Gel
Caps.
The creation of a child version for pain medication was brilliant. Before Children's Tylenol, there
wasn't any over the counter medication to relieve fevers. Children's Tylenol was first, and also
became first in the minds of consumers. After years of marketing Tylenol as a gentle product,
The Law of Focus came into play. Now when anyone says Tylenol, people think gentle. By
responding to demand with children's Tylenol, customers' needs and wants were satisfied. Thus,
a higher level of satisfaction with Johnson and Johnson was accomplished.
During interviews with Johnson and Johnson consumers, our group found that 3 out of 5 people
would choose Tylenol to relieve minor aches and pains. When asking what type of child
medication a parent would use, 4 out of 5 people said Children's Tylenol or Tylenol Cold.
Based on the consumer survey and marketing tactics for Tylenol, Johnson and Johnson are doing
an excellent job with this product line.
Baby Care Products
Johnson and Johnson target a specific segment for each of their products. For example, the baby
care products use popular cartoons such as Winnie the Pooh and Pals, Pocahontas, and The Little
Mermaid. The cartoon characters used by J&J appeal to both boys and girls.
Johnson and Johnson apply other tactics to attract more attention from children. For example, the
use of shelf space at the grocery store. The colorful cartoon packaged products are placed at a
child's eye level and within reach, so a child will be able to get the product themselves and ask
mommy or daddy to buy it. At Costco, Winnie the Pooh and Pals Products are sold in groups of
three (shampoo, conditioner and bubble bath), at a quantity discount. The discount appeals to
parent's pocket books and satisfies the wants of a child, all in one sweep. According to the U.S.
Census Bureau, 51 million children under the age of 12 draw more than $700 million dollars in
the personal care market. 50 percent of the personal care market is in child care, which J&J
dominates with a 40 percent share.
During interviews with Johnson and Johnson consumers, our group found that 20 out of 20
adults think of No More Tears Shampoo for a child. When asking children ages 10 and under
what type of shampoo they use, 12 out of 15 said a cartoon character that is used on a J&J
product.
To instill name brand recognition among young mothers, hospitals give Johnson and Johnson
created care packages which hospitals give out. The packages are filled with baby care products
and a few items for mom. There are also coupons for additional savings on J&J purchases. When
the items in the care package are used with the newborn child, the mother is more apt to use
those recommended products in the future. An upcoming special issue of Newsweek, "Reports
on new research proving that the time from birth to age three is more critical to setting patterns
for life than we ever knew," states Ralph S. Larsen CEO of Johnson and Johnson.
When mothers were asked what type of products they used to take care of their infants, 17 out 20
used a majority of Johnson and Johnson products. Some of the products mentioned were, Baby
Bath and Lotion, No More Tears Shampoo and Conditioner, Baby Powder, Baby Cream and
Health Flow baby bottles and accessories.
Based on this information, Johnson and Johnson is effectively marketing their baby care products
to the correct consumer, the mother and the young child. The products mentioned in the above
paragraph are first in the minds of the consumer, and have helped to maintain J&J as the world
leader in personal care products. The capture of the largest market share in the child care
segment was also a key influence on our decision.
Product, Place, Promotion, and Price
Most firms make a point of meeting the advertised prices of their competitors, and Johnson and
Johnson is no exception. J&J price strategy is not to lower prices below those of their
competitors, but instead to stimulate sales through special promotions. For example, 400 million
.50 cent off coupons have been distributed recently to homes and outpatient care units. Although
aggressive marketing promotes market share, aggressive advertising campaigns can backfire.
Johnson and Johnsons latest Tylenol advertisement counters an ad by Advil, which pointed out
the potential danger of taking Tylenol. TV networks have declined to air either ad, so both
parties didnt gain any market share for their actions.
Johnson and Johnsons sales reinforce the companys position as the largest and most prominent
health care organization in the world. J&J is committed to high quality standards and achieves
success despite intense competition from other health care product producers. In 1996, $1.91
billion was reinvested in research and development to achieve advances in new products.
Innovative advances are the driving force to become first in the market and in the minds of
consumers. In fact, J&J received the National Medal of Technology for the highest science and
engineering achievement in 1996. To develop products that improve the quality of life, J&J is
currently forming alliances with other companies through joint ventures, acquisitions, and co-
marketing agreements.
To stay as the number one health care provider, J&J must concentrate on creating products that
are necessary now and will continue to be necessary. Referring to "The Law Of Acceleration," (a
fad doesn't last long enough to strengthen a company.) Ries and Trout discuss the importance for
corporations to build trends, not fads. This means that companies need to concentrate on building
long-term demand for their products. Johnson and Johnson have been very successful in this by
creating products for the long-term such as Band-Aid adhesive strips, Tylenol, and Baby care
items. These three products are J&J's heart and soul for maintaining their competitive global
edge. Johnson and Johnson have 150 locations worldwide, and their products are sold in a 155
countries.
With mature products like Band-Aid adhesive strips, Tylenol, and Baby care items, J&J has built
a financial cushion which allows them to experiment with new products such as Neutrogena,
Clean & Clear, Mylanta, and Nicatrol. These new product lines represent the current tactics by
J&J to ensure continued domination in the personal health care industry.
Conclusion
Johnson and Johnson met each of our group's criteria,
Is J&J first in the minds of their consumers?
Johnson and Johnson's No More Tears are first in the consumer mind when it comes to
children's shampoo.
Does J&J use The Law of Focus when marketing products?
Johnson and Johnson created the marketing word Band-Aid for their adhesive strips.
Is "The Law of Acceleration" helping J&J to maintain their global contention?
Johnson and Johnson show, using their mature products such as Band-Aid adhesive
strips, Tylenol, and Baby care items, that they produce long-term "trend" products.
Does J&J fully tackle the needs of their consumers, creating higher levels of satisfaction?
Johnson and Johnson meet the needs of their consumers by further research and
development.
Effectively proving they are the leader in the personal care industry.
Johnson and Johnson's Credo is given to their employees, ensuring their vision is shared by all.
This Credo states:
Provide high quality products for doctors, nurses, patients, and parents.
Treat employees as individuals with opportunities for development and advancement.
Support good works and charities in each community.
Meet the responsibility to the stockholders by making a sound profit, while continuing
research and development.