J&J

JOHNSON &
JOHNSON

INDUSTRY
PHARMACEUTICAL
TYPE TRADED AS
MEDICAL DEVICES
PUBLIC JNJ
CONSUMER
HEALTHCARE

Websitewww.jnj.com
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Johnson & Johnson is an American holding company that leads a group of more than
250 subsidiaries around the world manufacturing drugs, sanitary and hygiene
products and medical equipment (the latter is the leader place in the world).

The story of Johnson & Johnson began with the fateful discovery of the famous
American physician Joseph Lister, who published in 1867 an article according to which
bacteria in the hands and instruments of a surgeon are the cause of most deaths on
operating tables. It was he who first began to use an antiseptic in his work, in the role
of which at that time was carbolic acid, sprayed in the operating room.

In 1885, with the support of brothers Edward and James, he founded the company,
which two years later was registered under the already well-known name - Johnson &
Johnson.

At Johnson & Johnson believe good health is the foundation of vibrant lives, thriving
communities and forward progress. That’s why for more than 130 years, they have
aimed to keep people well at every age and every stage of life. Today, as the world’s
largest and most broadly based healthcare company, they are committed to using
their reach and size for good. They strive to improve access and affordability, create
healthier communities, and put a healthy mind, body and environment within reach
of everyone, everywhere.

The company throughout the entire period of its existence had one of the most
cohesive management teams. For 131 years of the company's existence, only 9 CEOs
have been replaced.

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1 Health product

skin health products personal care products health products

Who are these products for?

These products are marketed principally to the general public and sold
both to wholesalers and directly to independent and chain retail outlets
throughout the world.

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2 Medical equipment

equipment in
equipment in surgery equipment in vision
orthopedic

Who are these products for?

Segment includes a range of products distributed to wholesalers,
hospitals and retailers, used principally in the professional fields by
physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics
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3 Pharmaceutical products

immunology infectiou
cardiova metabolic Vaccines ,
and pulmonary s
scular diseases neurology
oncology diseases

Who are these products for?

These products are distributed directly to retailers, wholesalers and

health care professionals for prescription use by the general public.
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Johnson & Johnson Worldwide total -97

and its subsidiaries have
approximately 132,200
employees worldwide.
The Company conducts
business in virtually all 32
countries of the world
with the primary focus 27
on products related to 27
human health and well-
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being. The principal
markets, products and
methods of distribution
in the international
business vary with the
country and the culture.

The locations of the manufacturing by major geographic

areas of the world
120
97
100
Number of facilities

80

60

40 32
27 27

20 11

0
United States Europe Western Africa, Asia and Worldwide total
Hemisphere, Pacific
excluding U.S.
Major geographic areas

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Healthcare takes more than 10% of the GDP of most developed countries.
As we can see, recent healthcare statistics show that it’s one of the largest and the
fastest-growing industries in the world.

Research shows that the healthcare sector will reach $10.059 trillion by 2022. Aging
and growing populations, higher rates of chronic health conditions, and exponential
but costly advances in digital technologies will continue to push global healthcare
expenditures upward. It’s expected that the healthcare industry will continue to grow.

Sales of Johnson & Johnson 2015-2019 by region

100%

80%
35687 37811 39863 41884 42097
60%

40% 15995 15770 17126 18753 18466

20% 12347 12575 13420 14831 15555

6045 5734 6041 6113 5941
0%
2015 2016 2017 2018 2019

Western Hemisphere Asia, Africa Europe United States

In 2019, Johnson & Johnson's sales in the United States came to over 42 billion U.S.
dollars. Thus, the largest part of the company’s revenue was generated in the United
States. Europe is the company's second most yielding region with nearly 19 billion U.S.
dollars in sales.

In fiscal 2019, approximately 49% of the Company’s sales occurred outside of the U.S.,
with approximately 23% in Europe, 7% in the Western Hemisphere, excluding the U.S.,
and 19% in the Asia-Pacific and Africa region.

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 J&J

1 Bayer
Global life science company specializing in healthcare
and nutrition. The company operates in three segments:
Crop Science, Pharmaceuticals, and Consumer Health.
Revenue (FY 2019) – 43,5 billion evro.
Market capitalization – 44 billion evro.
2 Pfizer
Research-based biopharmaceutical company engaged
in the discovery, development, manufacture. It
operates in two business segments: Pfizer
Biopharmaceuticals Group (Biopharma) and Upjohn.
Revenue (FY 2019)– 51,8 billion evro.
Market capitalization – 204,8 billion evro

3 Procter & Gamble

Company that provides personal care products, pet
food, cleaning agents, and other consumer goods. It
focuses on various categories, including baby care,
family care, grooming, hair care, home care, personal
health care, and more
Revenue (FY 2019) – 71 billion evro.
Market capitalization – 340 billion evro
4 Unilever
Company that produces and supplies fast moving
consumer goods in food, home, and personal care
product categories. It operates through Personal Care,
Home Care, Foods, and Refreshment segments.
Revenue (FY 2019) – 52 billion evro.
Market capitalization – 117,2 billion evro
5 Colgate-Palmolive
Company that produces a consumer products company
that produces and distributes household, healthcare,
and personal care products. It manufactures and
markets oral care, personal and home care, and pet
nutrition products.
Revenue (FY 2019) – 15,7 billion evro.
Market capitalization – 67,6 billion evro.
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Inflation and Currency Devaluation Risk

The impact of currency devaluations in countries
experiencing high inflation rates or significant currency
exchange fluctuations could negatively impact the
Company’s operating results

Illegal Importation of Pharmaceutical Product

The volume of illegal imports continues to rise as the
ability of patients and other customers to obtain the
lower-priced imports has grown significantly

Foreign Currency Exchange

Changes in non-U.S. currencies relative to the U.S. dollar
impact the Company’s revenues and expenses. While
the Company uses financial instruments to mitigate the
impact of fluctuations in currency exchange rates on its
cash flows, unhedged exposures continue to be subject
to currency fluctuations
Anti-Bribery and Other Regulations
The Company is subject to various federal and foreign
laws that govern its international business practices
with respect to payments to government officials. Those
laws include the U.S. Foreign Corrupt Practices Act
(FCPA), which prohibits the U.S. publicly traded
companies from promising, offering, or giving anything
of value to foreign officials with the corrupt intent of
influencing the foreign official for the purpose of helping
the Company obtain or retain business or gain an
improper advantage

Social and Political Risks

Disruptions to markets due to war, armed conflict,
terrorism, social upheavals or pandemics

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1 Threat of New Entrants

o Entry in the industry requires substantial
capital and resource
o Oligopoly market structure
o Protracted process of building a well-known
brand
o Technology protection
o Economies of scale
2 Bargaining Power of Buyers
o Brand-sensitive customers are loyal to a certain
brand
o Price-sensitive customers have low switching
cost
o Differentiated products
o Buyers' incentives
3 Threat of Substitute Products
o Generic prescription drugs
o The health products are able to find a
replacement
o Differentiated products
4 Bargaining Power of Suppliers
o Numerous partnerships
o Suppliers are eager to cooperate with Johnson
& Johnson.
o The industry in which J&J operates is an
important customer for its suppliers
o Supplier Diversity Program

5 Rivalry Among Existing Competitors

o There are several large players of about the same
size
o There is differentiation between players and their
products, hence
o High market growth rates
o Barriers for exit are high

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USA EUROPE UKRAINE

1. The ratio of the 1. The ratio of the 1. Preferences for
price of a product to price of a product to cheaper products
its quality. its quality. 2. There is shadow
Cultural
2. There is transparent 2. There is transparent economy
distance economy economy 3. There is
3. There is value of 3. There is value of development of
ecological goods and ecological goods and values for ecological
products is developed products is developed goods and products

1. Low likelihood of 1. Low likelihood of 1. Corruption is

corruption. corruption. developed.
Administrative 2. Settlements in 2. Settlements in 2. The influence of
distance world currency world currency the world currency
(dollar) (euro) rate on the hryvnia,
leads to a decrease
in demand for the
company's products.

1. Access to the ocean 1. Access to the ocean 1. Access to the sea

2. Territorially large- 2. Free economic zone 2. The territory of
scale market within the between the EU Ukraine is large in
Geographic comparison with the
country. countries.
distance EU countries.
3. Ukraine is not
included in the free
economic zone, which
is a barrier to the free
movement of goods.

1. Development of 1. Development of 1. The fortieth largest

logistics logistics
Economic 2. Largest economy in economy in the world
2. The second largest
distance the world economy in the world 2. This is the 111 place
3. This is about 15% of 3. This is about 22% of in the world by
world GDP in terms of world GDP in terms of purchasing power
purchasing power purchasing power
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COVID-19 vaccine
The main aspect of innovations of Johnson & Johnson is
COVID-19 vaccine. Since January, Johnson & Johnson has
been working directly with governments, health
authorities and a range of companies and other
stakeholders to mitigate and ultimately end the COVID-
19 pandemic.
Supporting global efforts to end TB and combat
AMR.
Johnson & Johnson supports global efforts to eradicate
tuberculosis and combat AMR. Johnson & Johnson has
announced the key areas of a new 10-year initiative:
• Improve case detection and strengthen health
systems to reach thousands of people with
undiagnosed tuberculosis and MDR-TB and connect
them to care, including by improving diagnostic
capacity, training health workers and raising public
awareness.
• Accelerating TB research and development (R&D) to
unlock the next generation of innovative therapies
that will be needed to achieve the global goal of
ending TB.
Skin Health QuickFire Challenge
The challenge offers an opportunity for U.S.-based Black
innovators working on potential skin and scalp health
solutions to receive grant funding and mentorship to
advance their science. In the United States, only 3% of
dermatologists are Black, and skin health industry
research skews towards light categories. As a result,
Black patients face dermatologic disparities, in part due
to the lack of specific knowledge around how to treat
skin of color.
The first long-acting Regimen for the treatment of HIV
CABENUVA™, a co-packaged kit with two separate injectable medicines – Janssen’s
rilpivirine and ViiV Healthcare’s cabotegravir – offers people living with HIV a new
approach for maintaining viral suppression.

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STRENGTHS
• Johnson and Johnson is the leading health care
company globally and has more than 265
operating companies in over 60 countries
globally.
• Marketing model has led to numerous
innovative medical devices, pharmaceuticals,
and other consumer healthcare product
releases, further differentiating the company
from its competitors.
• Successful track record of integrating
complimentary firms through mergers &
acquisition. The entire history of the company
is built on successful M&A deals.
• Johnson & Johnson have strong presence
within each product categories. They have
deep assortments & large number of brands to
choose from which is helping them to occupy
large shelf space of the stores resulting into
high visibility in the market.
• High consumer confidence gained through
years of successful stay in the market.

WEAKNESSES
• High prices for medical products lead to the
fact that some levels of the population do not
have enough money to buy these products.
• Johnson & Johnson’s global revenue comes
from three major divisions: pharmaceutical,
medical devices and diagnostics, and
consumer. There is a lack of diversification.
• The marketing of the products left a lot to be
desired. Even though the product is a success
in terms of sale but its positioning and unique
selling proposition is not clearly defined which
can lead to the attacks in this segment from
the competitors.

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OPPORTUNITIES
• New M&A deals will help the company
develop existing products and capture
new market niches. They can also
increase income as a result.
• Johnson & Johnson can introduce a
cheaper variety or offer discounts for
its drugs to target the lower-class.
• 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.

THREATS
• The company's success with any
product release, including medical
devices, pharmaceuticals, and
healthcare products are often tied to
regulatory approval more so than
market acceptance. This can also vary
from country to country, which further
complicates the potential for success
with new products.
• Stable profitability has increased the
number of players in the industry over
last two years which has put downward
pressure on not only profitability but
also on overall sales.
• 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.

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 J&J

Tax preferences
Johnson & Johnson have a strong balance sheet, and
they are not seeking special tax incentives during this
time. They think that is very appropriate for industries
in crisis due to Covid.

But what company are very interested in on behalf of

their suppliers and all of our stakeholders is good tax
policy, so that employment, and the economy, and the
entire ecosystem for innovation, which includes not
only large companies with strong balance sheets, but
also universities and think-tanks and small companies,
and a whole network that leads to strong innovation, so
that all of that continue

They are most interested in preserving what

already exists—these sort of incentives for
innovation

COVID-19 vaccine
In January 2020, COVID-19 began to spread around the globe, so the Janssen
Pharmaceutical Companies of Johnson & Johnson started researching potential vaccine
candidates.

COVID-19. clinical trials, and the development of all investigational products across Johnson
& Johnson, are guided by protocols and standards that help ensure our trials are conducted
professionally, ethically, and responsibly. 23 September the Company announced the launch
of its large-scale, pivotal, multi-country Phase 3 trial for its COVID-19 vaccine candidate.

Johnson & Johnson remains on track to meet its goal of providing one billion doses of a
vaccine each year. The Company is committed to bringing an affordable vaccine to the
public on a not-for-profit basis for emergency pandemic use and anticipates the first batches
of a COVID-19 vaccine to be available for emergency use authorization in early 2021, if
proven to be safe and effective

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Political
Government policies and regulations have a direct impact on
business revenues and profitability. Since Johnson & Johnson
operates all over the world it has to take care of political
scenarios of all the countries it has its presence in. If
anywhere there is a chance of military invasion by rival
country, then it will cause Johnson & Johnson to divest from
the same. The company must adhere to all rules of NATO as
well as immediately implement any changes to the trade
agreement. Just like laws and regulations within the United
States, Johnson & Johnson must followthe laws and
regulations of the more than 250 other countries it operates
in.
The company should investigate the following factors:risk of
military invasion;level of corruption; taxation product labeling
and other requirements in Drug Manufacturer. The company
enhances its business in the developed and developing
countries, where the political strong and they face less
resistance against their products.

Economic
Economic factors impact businesses directly. The world
market has grown more interconnected and poor economic
situation in one nation can affect that in the other. If the
economy is flourishing then the customers’ purchasing power
will be higher. This will result in better revenue and profits for
any company including Johnson & Johnson. Operating in the
European Union and larger European community means that
Johnson & Johnson has felt the effects of the current
economic crisis. Aware of the crisis, the company has been
able to plan for its impact, and fortunately, the effects on
Johnson & Johnson have not been severe, as medical
products remain necessities even in periods of economic
downturn. Johnson & Johnson can use country’s economic
factor such as growth rate, inflation & industry’s economic
indicators such as major industry growth rate, consumer
spending etc to forecast the growth trajectory of not only
healthcare sector but also that of the organization.
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Social

Social and cultural factors too can have a direct

impact on the businesses and their revenues
and growth. Businesses cannot stand divorced
from these forces.
Major social factor affecting Johnson &
Johnson is the phenomenon of surging rates of
various health problems, especially in
developed societies but spreading worldwide,
from obesity and diabetes to cancer and
mental disorders. People these days are more
health conscious and want to live a healthy life.
They are willing to spend on products that help
them stay healthy. So the products by Johnson
& Johnson should look into economic
stratification of the public. Not every one can
prefer to buy premium products. They have to
have a mix of products for everyone.
.

Tehnological

Technology is very important for

medicine.The company should have products
changing with demand. For this Research and
development is very much essential. R&D with
latest technological advancements is extremely
important to have competitive edge over others.
The Johnson & Johnson strong emphasis on
research and development and its leadership in
the medical devices and diagnostics segment put
it in an excellent position to become a
frontrunner in making new discoveries in these
promising new technological fields/
.

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Environmental
Environmental factors have grown to
become increasingly important for companies
in the 21st century. The growing
environmental pollution coupled with
technological advancement has compelled
business organizations to adopt innovative
recycling and waste management practices.
Johnson & Johnson conducting their business
in an environmentally sound manner. The
company no way produce and dispose waste
in water that pollutes water bodies since the
population staying nearby may be affected by
consuming that water. The same is the case
with air pollution.

Legal
Legal factors are another major force
which can have a deep impact on business.
Law is virtually everywhere and for businesses
a legal tussle can mean a big loss. Johnson .
must follow the employee/labor health and
safety laws as some countries have strict
regulations to ensure labor safety. Also the
company need to study data protection
regulations to protect the customer data. In
number of countries, the legal framework and
institutions are not robust enough to protect
the intellectual property rights of an
organization. A firm should carefully evaluate
before entering such markets. Inability to
protect intellectual property rights can result
in losing competitive advantage, which may
weaken the positioning of Johnson . against
other market players

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