SWOT Case Study - Johnson and Johnson

Strengths

A Substantial Marketing Arsenal

Johnson & Johnson can call upon a network of subsidiaries armed with significant sales and marketing prowess, as well as expertise in a number of therapy areas. The company possesses a global sales force which serves to attract joint venture possibilities.

Strategic Acquisitions

Johnson & Johnson has maintained a stable financial position by utilizing cash reserves to finance timely corporate acquisitions. Its’ Triple –A Credit Rating represents a company able to take advantage of opportunities that arise without being limited by burdensome levels of debt.

Product Diversification

The Johnson & Johnson pharmaceutical portfolio, and ts large Medical Devices & Diagnostics (M,D &D) and Consumer Health divisions serves to reduce dependence upon any one area. The company plans to continue this broadening through 2008-14. This diversification allows a wider range of choice when pursuing opportunities with the greatest growth prospects.

Positive Revenue Growth Projections

The potential of an impressive number of new product launches and the promise of achieving forecast sales is said to bode well for Johnson & Johnson, helping it weather the recent decline in prescription pharmaceuticals and projecting a turn-around through 2010. An increase at 1.8% CAGR across 2008–14 is believed to be achievable.

Weaknesses

Dependence on the Success of Launch Products

Many new launch products are vulnerable to the uncertainty of regulatory review and ultimate market benefits may vary substantially from forecast, therefore, a reliance upon launch products potentially represents a threat to Johnson & Johnson’s outlook.

Reliance on Small Molecule Drugs

Compared to biologics, small molecules are notably more impacted by generic competition. As such, although the Johnson & Johnson is engaged in producing new small molecule products, when coming off-patent, declines are still forecast. This is particularly the case in the US, where generic erosion rates are most aggressive. Johnson & Johnson’s small molecule drug sales declined in 2008 and are forecast to fall further into 2012. Teses issues reflect concerns expressed across the pharmaceutical industry—the necessity of finding replacements for billion dollar products as they mature represents an daunting task.

Opportunities

Wide Range of Potential Cross-selling Opportunities

Johnson & Johnson is in a position to strategically develop a myriad of cross selling opportunities. Using the disease life cycle as a base the company could exploit its product line in CV, oncology, diabetes and I&I therapy to formulate linkages between patents and care-giving resulting in greater efficiency. Maximizing its balance between Pharmaceuticals, Diagnostics, and Medical Devices could result in increased revenues.

Potential to Exploit Biologics Market

The addition of further biologics to its portfolio can serve as a buffer as mall molecule patents expiries. J&J is experienced in the development and commercialization of biologics—including the therapeutic proteins Procrit and Natrecor, and monoclonal antibodies Remicade, ReoPro, Simponi and Stelara. This represents an opportunity to gain key IP, product rights or strengthen discovery capabilities. In July of 2009 Johnson & Johnson was selected by Elan to form a joint venture for the development and commercialization of these products. In addition, J&J acquired an 18.4% equity stake in the company.

Threats

Dependence on the Success of Launch Products

Many new launch products are vulnerable to the uncertainty of regulatory review and ultimate market benefits may vary substantially from forecast, therefore, a reliance upon launch products potentially represents a threat to Johnson & Johnson’s outlook.

Negative Impact of Recent Product Recalls

Johnson and Johnson has the misfortune of having to recall of more than 40 medicines recently. FDA inspectors required the company to recall the children's medications after discovering the company had not looked into dozens of consumer complaints about "black or dark specks" in Tylenol and other products. The company stands to take a hit to its sterling reputation as congressional lawmakers are blasting the company's competence and integrity.

by Mkt Teachers