strategic-management

21
Johnson & Johnson — 2009
Sharynn Tomlin, Matt Milhauser, Bernhard Gierke,
Thibault Lefebvre, and Mario Martinez
Angelo State University
JNJ
www.jnj.com
When we hear the name Johnson & Johnson (J&J), we think of infants and the clean, fresh
smell of baby powder. The company has certainly worked to maintain that image, but J&J
sells a much wider scope of products and operations. Based in New Brunswick, New
Jersey, J&J is one of the world’s leading providers of health-care products and services
encompassing the globe with 147 facilities in over 50 countries. J&J grossed over $63.7
billion in total revenue in 2008.
J&J offers a wide variety of products and services to hospitals, retailers, and families
and continues to hold some of the most well-known titles in medicine and medical technologies
such as K.Y., LifeScan, Band-Aid, Tylenol, Listerine, Zyrtec, Acuvue, Ortho
birth control options, and a host of medical device and diagnostic applications. In the realm
of pharmaceuticals, J&J offers prescription drugs for some of the world’s most serious illnesses.
These drugs range from cardiovascular treatment to advancements in reproductive
health, with ongoing developments into drugs geared toward the treatment of HIV and
continued advancement in the field of cancer treatment.
In July 2009, J&J purchased an 18.4 percent stake in Irish biotech company Elan
Corp. in order to gain access to the $3 billion market for Alzheimer’s disease treatments.
The Elan purchase gives J&J access to Bapineuzumab, a late-stage in development potential
Alzheimer drug. In the United States alone, more than 4.5 million people suffer from
Alzheimer’s, which slowly destroys a person’s memory. If Bapineuzumab could actually
halt progression of Alzheimer’s, some analysts say the drug would be worth $25 billion in
annual sales worldwide.
J&J also just in mid-2009 acquired the small cancer drug-developer Cougar
Biotechnology for about $894 million in cash. Cougar has an excellent drug for late stage
prostate cancer. J&J’s purchase price of $43 a share was a 16 percent premium over
Cougar’s closing stock price.
J&J reported second quarter 2009 net income of $3.21 billion and sales of $15.24
billion. During that quarter, sales of J&J’s Remicade treatment for rheumatoid arthritis
rose 24 percent to $1.1 billion.
History
J&J started with a simple idea to create clean and sterile dressings. Robert Johnson and his
two brothers, James and Edward, created J&J in 1886 with the production of sterile dressings
and medical plaster. In 1887, just one year after being founded, Johnson & Johnson
was incorporated. Through the end of the nineteenth century, J&J continued its rise in the
health-care sector with the introduction of baby powder. In 1921, Band-Aid was created by
Earle Dickson, an employee of J&J. After having to bandage his wife numerous times,
Earle lined the company’s medical gauze with an adhesive tape and Band-Aid was born;
this simple preparation allowed for self-application. With continuing success, J&J looked
abroad and in 1924 established J&J Limited in the United Kingdom; this was the beginning
of what was to become one of the largest multinational companies in the world.