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Johnson & Johnson Brand Equity Case

Group 2 Harsh Arora 201048

Kapil Goyal 201057


Manuj Khurana 201073 Mohit Gupta 201079

3rd largest (volume)

14th largest (value)


Its size reached US$ 10.04 billion in July 2010 (report by IMS Health India)

CAGR of 9% to 10 % annually
The domestic Indian pharmaceutical market is likely to reach US$ 20 billion by 2015

About 67 Million Indians are expected to reach the age of 67 years by 2011

People of this age group spends around 3 to 4 times more on drugs than people in younger age groups

Incomes of people in rural India is on a rise

Distribution network of drugs is also very strong


Budget for R&D has increased

Forms of drugs

Ministry of Health & Family Welfare (MoHFW)


Central Drugs Standard Control Organization (CDSCO): Its an agency works both at the Central and the State level and is responsible for ensuring safety, efficacy and quality of drugs supplied to the public Drugs Controller General of India (DCGI): governing issues

Product approval and standards

Clinical trials
Introduction of new drugs Import licenses for new drugs

New Drug Approval application must be submitted to Drugs Controller General of India (DCGI), along with the documents

Drug's regulatory status in other countries Restrictions of use in approved countries Free sale certificate from the country of origin Sample of the marketing information, including draft labels and cartons

Sample of the pure drug substance along with testing protocol for analysis at the Central Drugs Laboratory (CDL) in Calcutta

R&D Department

Manufacturin g unit

Testing Department

Internal units of company

Chemist
Regulators

Pharma Company
Patients

Distributors

Medical Representative

Doctors

Sales & Distribution

Value chain

Diagnosis component of disease

Manufacturing of medicine

Packaging in different concentrations

Designing of the chemical

Decide different routes for intake

Distribution

Testing of Chemical

Pharmacokinetic analyze research and decide concentration

Risks in Value Chain

Diagnosis component of disease


Wrong diagnosis Same diagnosis in other company

Designing of the chemical


Could not be designed Complex structure Out of scope Technology not available Human expertise not available Time constrains

Testing of Chemical

Require further testing Chemical fails Test are not showing proper results

Pharmacokinetic analyze Analysis is wrong Decide different routes for intake


Could not be convertible in proper form of intake

Drug may lost its affect

Manufacturing Stage

Higher cost as per the forecast Availability of resources(chemicals, specialist)

Packaging

Not complying with the regulations as prescribed by

DCI

Not doing proper packaging changes the property of chemical

Distribution

Counterfeiting Substitution Delay in reaching Expired material delivered Copying the formula

Johnson & Johnson


Medical device and diagnostics

Ernst & Young


Customer

Has more than 250 companies Located in 57 countries around the world

JOHNSON & JOHNSON

MEDICAL DEVICES AND DIAGNOSTICS

CONSUMER HEALTH CARE

PHARMACEUTICALS

Counterfeit

products

are

products

that

are

deliberately and fraudulently mislabeled with


respect to identity or source

Both branded and generic products are subject to

counterfeiting

All kinds of medicines have been counterfeited, from medicines for the treatment of lifethreatening conditions to inexpensive generic versions of painkillers

Counterfeit medicines may include products with the correct ingredients without or with the wrong with

ingredients,

active

ingredients,

insufficient or too much active ingredient, or with fake packaging

Counterfeit medicine

Country/Year

Report

Anti-diabetic traditional China, 2009 medicine (used to lower blood sugar) Metakelfin (antimalarial)

Contained six times the normal dose of glibenclamide (two people died, nine people hospitalized) United Republic of Tanzania, Discovered in 40 pharmacies: 2009 lacked sufficient active ingredient Smuggled into Thailand from an unknown source in an unknown country of America, Contained no active ingredient and sold via Internet sites operated outside the USA Detected in the legal supply chain: lacked sufficient active ingredient

Viagra & Cialis (for erectile Thailand, 2008 dysfunction) Xenical (for fighting obesity) United 2007 States

Zyprexa (for treating bipolar United Kingdom, 2007 disorder and schizophrenia)

Genuine producers find themselves in direct competition with counterfeiters suffer a direct loss in sales

Creates a loss of goodwill as ultimately the consumers blame the genuine producers for faulty products

Involves expenditure in protecting and enforcing intellectual property rights - costly investigations and litigation when combating counterfeiters

Governments lose out on unpaid tax and incur large costs in enforcing intellectual property rights

Social costs - Ultimate victims of unfair competition are the


consumers as they receive poor-quality goods at an excessive price and are exposed to health and safety dangers

It undermines the credibility of national health and enforcement authorities

Counterfeit medicines pose a public health risk because their content can be dangerous or they can lack active ingredients

Can result in treatment failure or even death

Could have threatened the safety of the patients


The revenue was affected nearly 3 times the companys original estimation

The company loses its brand integrity

The more complex the path through the supply chain, the easier it is for a counterfeit product to enter the system

Medicine would not reach the consumers timely Problem of substitution Revenues will be affected No proper flow of information

Investigation by Ernst & Young

To investigate, quantify the scope of the problem and determine the causes for these problem

To expand the investigation to regions around the world (Europe, Asia Pacific, Latin America, etc.)

Executives in the companys financial, legal, risk and quality operations were also involved

1.

Business Culture

2.

Business Design & Practices

3.

Information & Reporting

Highly Decentralized Business

Each of its regional and operating companies was tackling with counterfeiting and gray market issues with different strategies

They were developing their own anti-counterfeiting and anti-grey market solutions

There was no uniformity in the procedures followed

No single person or group was held responsible for the


protection of the brand or its product

Review of companys third party suppliers, manufacturers

and distributers was incomplete

Company did not have robust supply chain strategy

How to negotiate standardized terms of sale such as

authorized distributers, the right to audit and the right to


data in places outside the United States

Little Worldwide Pricing Transparency


Company did not have a proper handle on where its product went after it left its plant & distribution centers

In US, there were primary distributers, but not elsewhere

A parallel market trade of a commodity through distribution


channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer

A black market is the trade of goods and services that are illegal in themselves and distributed through illegal

channels, such as the selling of stolen goods, certain drugs or unregistered handguns.

In 2001, J&J suspected that they have grey market problem


as some legitimate products did not make to its intended market and were instead sold though unauthorized dealers

They started 2 investigations to confirm this:


Investigation to confirm suspicion towards gray market Estimate the revenue loss to arbitrage

In 2003, a returned product was sent for quality assurance process to determine that it was fake

The company appointed E&Y to validate its findings, quantify the scope of its problems, and determine the companys vulnerable points

MD&D asked E&Y to expand the investigation to regions around the world

E&Y with the companys executives help found out the nature, scope and size of gray market

The counterfeiting incidents, the industry and business practices that lead to gray market were all analyzed

Steps taken by MD&D to combat counterfeiting

1.

Policy design Organizational design

2.

3.

Market enforcement

monitoring

and

Made clear cut policies and procedures. Developed brand


protection policy which included:

Protection of intellectual property Accountability issues Protection of products Supply chain standards Incident reporting and

Enforcement protocols

Roles and responsibilities were defined for product protection, supply chain management and incident reporting and enforcement

Brand protection executives- operating and regional worked


together

Had consistent communication with the employees for

organizational design. The policy was changed several


times due to feedback and real-life implementation

Operating companies kept control of counterfeit

verification and investigation but report to corporate security


in case of suspicion

Development of product protection plans for at-risk products


which includes:

In-depth analysis of companys various products

Risk of counterfeiting and gray market on these


products

For High risk products: develop product protection plans

Market monitoring program- keep a tab on the products


actually being sold

Do you think response was appropriate?

Determine major counterfeiters of products through targeted

investigations, litigation, prosecution, and use of technology

Partner with Government/Non-Government Organizations and Trade

Associations to strengthen, enact, and enforce anticounterfeiting laws

and to raise public awareness

Buy from authorized distributors and limit buying from brokers or independent distributors

Implement an inspection and testing on all broker-acquired

parts

Adopt new anti-counterfeiting technologies and markings

Non-clonable ID nanotag has been proposed which can be affixed on the strip of medicine.

Pharma Secure (Started in 2010 in Hyderabad): Uses a track

and trace system deployed through an SMS authentication of


unique codes on mobile phones used by consumers.

2D bar code and a UID (mandatory)

Name of the drug


Correct statement of the net content of the drug Content of active ingredients Name and address of the manufacturer Batch or lot number Manufacturing license number (if applicable) Number of the license under which the drug is imported (if applicable)

Date of manufacture and expiration date, which must not exceed 60 months.