strategic-management

208 TOMLIN, MILHAUSER, GIERKE, LEFEBVRE, AND MARTINEZ
EXHIBIT 6 J&J versus Three Major Rivals (2009)
Procter
J&J Eli Lilly Novartis & Gamble
Market Cap 166.23B 37.92B 104.84B 154.29B
Employees 118,700 40,500 99,000 135,000
Qtrly Rev Growth -7.40% 2.80% -2.30% -10.60%
Revenue 61.37B 20.76B 42.05B 79.03B
Gross Margin 70.92% 81.53% 73.15% 50.78%
EBITDA 18.97B 7.48B 11.19B 19.20B
Oper Margins 26.29% 30.37% 21.44% 20.40%
Net Income 12.74B -1.62B 7.57B 11.10B
EPS 4.551 -1.481 3.34 4.260
Source: Company Form 10K Reports.
power to voice their opinion regarding the company’s ventures. The expansive portfolio of
Novartis is accompanied by a division devoted to animal health. The global animal health division
provides care to both domesticated animals as well as farm animals with applications
designed to cure or treat ailments such as internal/external parasites, pain control, arthritic pain
control, heart, allergenic, renal, and illnesses related to insecticides used in agriculture. With a
growth in revenue in 2008 of over $3.6 billion in comparison to the previous fiscal year,
Novartis has shown firm financial strength and outstanding growth. In 2008, Novartis reported
total revenues of $38,947 million with a net income of $11,946 million. 8
Pfizer
Pfizer has two segments: Pharmaceutical, which develops and produces products that treat
cardiovascular and metabolic diseases, central nervous system disorders, arthritis and pain,
infectious and respiratory diseases, urogenital conditions, cancer, eye disease, endocrine
disorders, and allergies; and Animal Health, which discovers, develops, and sells products
for the prevention and treatment of diseases in livestock and companion animals. Pfizer
also operates several other businesses, such as the manufacture of empty soft-gelatin capsules,
contract manufacturing, and bulk pharmaceutical chemicals. Total revenues reported
at the end of 2008 were $48,296 million, with a net income of $8,104 million. 9
Procter & Gamble
Note in Exhibit 6 the comparison between J&J and P&G. Procter & Gamble (P&G)’s extensive
product offering includes applications for personal, home, family/baby, pet nutrition and
care, and online expert advice solutions regarding each product. Family branding includes
Tide detergent products, Charmin, Bounty, Crest dental products, Pampers baby products,
CoverGirl beauty products, Lacoste fragrances, IAMS pet nutrition and care, Vicks, and
prescription drugs such as Actonel and Didronel. P&G has also shown that it is an environmentally
friendly company. In 2008 alone, P&G reduced energy consumption by 6 percent,
carbon dioxide usage by 6 percent, and water consumption by 7 percent. This year P&G was
recognized among the “100 most-sustainable corporations” and reported that in 2008 the company
reached 60 million children through their corporate cause, Live, Learn and Thrive. P&G
reported total revenues of $83,503 million with a net income of $12,075 million in 2008. 10
Industry Issues
J&J has strived to maintain its profit margins through cost reduction programs, productivity
improvements, and periodic price increases. The company faces various worldwide
health-care changes that may continue to result in pricing pressures that include healthcare
cost containment and government legislation relating to sales, promotions, and reimbursement.
11 In turn, the currency rate fluctuations brought about by the economic
uncertainty are proving to be a challenge for the most stable companies.