strategic-management

204 TOMLIN, MILHAUSER, GIERKE, LEFEBVRE, AND MARTINEZ
changes. Tylenol.com is not used as an advertising platform; rather it has been positioned
to be used as a repository for information, not just selling the products. Tylenol looks to
control its image and continue to add value to the brand.
Research and Development
Research and development (R&D) is the lifeblood of health-care companies. The industry
experiences above average R&D expenses required in the development of new pharmaceuticals
and medical equipment. At the end of 2008, J&J reported $7.6 billion in research and developments
expenditures, which was a slight decrease from 2007. These expenditures relate to the
development of new products, improvement of existing products, technical support of products,
and compliance with governmental regulations for the protection of consumers and patients.
The reduction in the pharmaceutical research and development spending was primarily due to
increased efficiencies in pharmaceutical research and development activities. 2
Business Segments
J&J has three segments representing the operations of the company: Consumer Products,
Medical Devices and Equipment, and Pharmaceuticals. J&J’s 2008 performance by product
category is provided in Exhibit 3. The location of J&J’s facilities by product category
is provided in Exhibit 4.
EXHIBIT 3 J&J’s 2008 Performance by Product Category
2008 Sales
% Change
from 2007
Consumer Health Care $ 16.0B up 10.8
Skin Care 3.4 up 11.0
Baby Care 2.2 up 12.0
Women’s Health 1.9 up 6.0
Wound Care/Other 1.0 up 1.0
Oral Care 1.6 up 9.0
Over-the-Counter Drugs and Vitamins 5.9 up 15.0
Medical Devices and Diagnostics 23.1B up 6.4
Ethicon 1 4.3 up 12.0
Depuy 5.0 up 9.0
Ethicon 2 3.9 up 7.0
Cordis 3.1 up 9.0
Vision Care 2.5 up 13.0
Ortho-Clinical 1.8 up 8.0
Diabetes 2.5 up 7.0
Pharmaceuticals 24.6B down 1.2
Aciphex 1.2 up 15.0
Duragesic 1.0 up 11.0
Levaquin 1.6 up 3.0
Topamax 2.7 up 11.0
Remicade 3.7 up 13.0
Procrit 2.5 up 15.0
Risperdal 1 2.1 up 38.0
Risperdal 2 1.3 up 16.0
Concerta 1.2 up 21.0
Other 7.3 up 11.0
Source: J&J’s 2008 Annual Report.