Johnson And Johnson Is A Holding Company Commerce Essay

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Johnson & Johnson is top pharmaceutical firm that have used so many strategies to position themselves as the best in the market. The strategies which are merging, acquiring and taking over other companies has helped rate them as the world's leading consumer health company, world's prevalent medical devices and diagnostic company. Johnson & Johnson is a holding company that encompasses over 250 Healthcare companies which have their branches in 57 countries throughout the world. Also they are the fourth-major biologics company and the world's seventh-principal pharmaceuticals company. Johnson and Johnson is multifarious worldwide Healthcare Corporation with almost half of its revenues getting from outside the US. Established in 1886, the corporation has rewarded increasing bonuses for 47 succeeding years and therefore progressive with the excessive nobles. JNJ has diversified into three main commerce sectors: (Math, 05 March 2010)

Customer Sector

Pharmaceutical Sector

Health Equipments and Diagnostics Sector

(Math, 05 March 2010)

Customer Sector

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Johnson and Johnson's Buyer Division sells an assortment of muscular name kind merchandise embrace "Listerine, Dabao (China), Neutrogena, Band-Aid, Tylenol, Carefree, Splenda", and of course "Johnson's Baby Care". This is JNJ's greatest mounting sector. (Math, 05 March 2010)

Total Sector Returns: $16 billion

Feature

Profits

Concluded the Offset

$5.9 billion

Skin Care

$3.4 billion

Baby Care

$2.2 billion

Women's Health

$1.9 billion

Oral Care

$1.6 billion

Wound Care/Other

$1.0 billion

(Math, 05 March 2010)

Pharmaceutical Sector

JNJ's Pharmaceutical sector is the seventhlargest pharmaceuticals company of the world. This is the firm's largest but deliberate-rising sector. (Math, 05 March 2010)

Whole Sector Income: $24.6 billion. Their mass-produced goods collection is comprehensively branched out, with no outcome exceeding more than 15% of the trade in this sector. (Math, 05 March 2010)

Health Equipments and Diagnostics Sector

JNJ's machine and analytical sector has familiarity 6.4% expansion, and at present residence the planets figure 1 recommendation phone lenses, "Acuvue", as well as "diabetes" worry, bestow- health centre produces, and further.

Total Sector Profit: $23.1 billion

(Math, 05 March 2010)

Part A: Mergers and Acquisitions in J&J

Mergers of Johnson & Johnson

Essentially firms accept consequently many approaches to raise the experiment of instance and also to compete with their competitors; these approaches might be obtaining over, attaining and reunion with other corporations. "Johnson & Johnson" is pharmaceutical firm that have roughly 250 vigour firms and their offices in 57 countries. Integration and buying other firms have specified them a great market portions and competitive benefits over their competitor.

Mergers: Johnson & Johnson with ALZA

Mergers could be defined as coming together of two companies to form a new one. The company Johnson & Johnson is a big manufacturer of health care products which publicize their agreement to merge with Alza Corporation, on 27th march 2001. The estimated net equity value for the business deal was $10.5 billion. The reason behind these was that Johnson and Johnson believe that merging with Alza Corporation will help them achieve their aim in the pharmaceutical industry. (Orange County Business Journal, Dec 2008)

Johnson & Johnson with Pfizer

Johnson & Johnson merger with Pfizer will help to boost Johnson & Johnson sales in the prescription drugs market i.e. advertising their brand aid with Neosporin manufactured by Pfizer. The acquisition deal which materialize on Dec 20th, 2006 brought about Johnson & Johnson Consumer Group portfolio. William C., Weldon, Chairman and Chief Executive Johnson & Johnson concludes that " The completion of Pfizer Consumer Healthcare acquisition builds up broad base in health products and reflects our longstanding strategy of leadership within attractive health care markets". (Orange County Business Journal, Dec 2008)

ACQUISITIONS:

Johnson & Johnson and Omrix

Acquisition means a company purchasing majority of the shares of another company. Or the larger company buying over a smaller company in other to remain the leader or maintain its market share. Johnson & Johnson reach a compromise on "Nov 24th, 2008 for Johnson & Johnson acquisition of Omrix for a cash tender offer of $438 million. Omrix will be operating through ETHICON, Inc., while is expected to function as separate entity". (New Brunswick, N.J., N.Y, Nov. 24, 2008) Omrix is Biopharmaceutical Company that develops and markets bio-surgical and immunotherapy products. Reason behind this is to expand Johnson & Johnson capacity to provide innovative, gain a huge market leader in surgical care. (New Brunswich, 2009)

Johnson & Johnson and Mentor Corporation

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Johnson & Johnson and Mentor Corporation declare to the public an agreement whereby Johnson & Johnson will be acquiring Mentor on Jan 23rd 2009. Mentor Corporation deals with supplying of medical product i.e. aesthetic. (Brunswich, 2009)

Johnson & Johnson and Cougar Biotechnology

In July 16th, 2009 Johnson & Johnson announced the successful acquisition of Cougar Biotechnology; the acquisition was referred as 'short-form' merger. The strategy behind this acquisition is to strengthen Johnson & Johnson and give them advantage over the competitors. (New Brunswick, N.J. and New York, July 10, 2008)

Ethicon, Inc (Part of Johnson & Johnson company) and Accelerant, Inc,

ETHICON, Inc is a Johnson & Johnson company, a trusted worldwide leader in surgical care which includes wound closure, wound management, general surgery, and urology "announced on 16 Dec, 2009 acquiring Accelerant, Inc, for a cash deal of approximately $785 million net". (New Brunswich, 2009) The strategy behind this is for the growth of the business in some areas where there is no sufficient solution available to patients.

Strategy could be defined as a set plan aim at achieving goal. Apart from these strategies mentioned above there so many strategies behind this i.e. positioning, and (Anything Research) states four strategic by "Ansoff's" Growth Matrix which are "Market Penetration, Product Development, Market Development and diversification". (Research, 2010)

Positioning: Positioning means the way company design their product in such a way that the product will attract customer's attention. This is one of the strategies Johnson and Johnson are using to achieve a greater competitive advantage over their rival. From my investigation I found that the main of these strategies was to become the market leader. (Research, 2010)

Market Penetration: This is when a company enters a market that has been in existence with the product that has been existence and could be achieved by convincing your competitor's customers or people that has not being your product to buy through any promotional tool or word of mouth. Example Johnson & Johnson using advertisement to attract mothers that has not being using Johnson Baby Pears to start using it in UK. (Research, 2010)

Product Development: Product Development is when a company uses the existing product to develop other products in the same market. I.e. Johnson & Johnson used Johnson's Baby skin care to develop their other brands or products. (Research, 2010)

Market Development: This very strategy means twisting or rebranded a product that has been in the market to attract new customer. This helps company to achieve huge amount of sales thereby yielding to more revenue. (Research, 2010)

Diversification: This means introduction of new products in the new market. Example Consumer Products (Johnson Baby Care, Skin & Hair Care, Wound Care & Tropical's, Oral Health Care). Medical Devices & Diagnostics (Orthopaedics, Implants, Joint replacements, Sports Medicine and Trauma, Heart and Vascular Disease.) and now they have included prescription to influence and power other Johnson and Johnson brand. (Research, 2010)

Reason and Methods

Johnson and Johnson Company did amalgamation with the well-known and systematized companies Pfizer, ELAN, and ALZA to improving up their pharmaceutical business lacklustre sales in the medicine drug market on the world wide scale and increase the share profit with these companies on prescription of different diseases and grip in the market on the bases of medicines. (Research, 2010)

Part B: Joint Venture and Strategic Alliances (Johnson and Johnson)

With amplified pressures for globalisation, technological developments and firmness of time to market, companies have progressively searched their inner boundaries to emphasize their global and economical capabilities. (Yardley, PA, March 5, 2009)

Strategic Alliances are not current phenomenon, but their rate of development and multiplicity of their forms have been rising. An Alliance is an involvement amongst two or more association with the analysis of enhancing their economical advantage or creating new commerce without bringing up the rear strategic independence. According to Economist Philippe Lasserre (2007) "Strategic Alliance is a governance structure involving an incomplete contract between separate firms and in which each partner has limited control". (Yardley, PA, March 5, 2009)

With consolidation of mechanized company, the only means to sustain for long term by forming a large group to influence market control. For manufacturing company such as Johnson & Johnson, an American player, alliance was vital for expansion and sustainable growth. Finding a partner in Japan was therefore a mission for high competition with Japan OTC market.

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From the article published in March 6, 2009 "issue of science" Tibotec Pharmaceuticals Research and Development Company enters Johnson & Johnson Merck Pharmaceuticals to accelerate the progress of individual investigation groups, to exploit the drug invention and consume the government authoritarian approaches and organized financial support, to achieve progress for therapeutic interventions that can eliminate HIV. According to Paul Stoffels, M.D. of Johnson & Johnson said, "A Flexible, collaborative private-public joint venture has the possibility to catalyze progress in the search for therapeutic interventions that can eradicate HIV and result in drug free remission for HIV patients". (Yardley, PA, March 5, 2009)

From M2 (Press wire) It became known on 27 October 2005 "Bayers enters joint venture with Johnson & Johnson" (Yardley, PA, March 5, 2009) Bayers AG comes across to collaborate with Johnson and Johnson to develop thrombosis drug, and promote drugs to treat blood clots. The main strategy behind this joint venture is to cover the cost of developing products as well as to share the cost and risk of entering a market.

From the news article "Good Corporate Citizenship" in Caribbean Business Newspaper 18 November 2004, "Johnson & Johnson forms alliances for common good." As we know Johnson & Johnson is good for the production of the healthcare products rather than this they also performs other initiatives for unobserved non profit organization, mainly for good corporate citizenship. Johnson & Johnson promise to their allies for their common good. "The company's credo written by Robert Wood Johnson in 1943 exhorts employees to assume responsibility towards the community." This credo specially focused on endorsement for charities, ecological defence, undertake enhancement of local communities and commune the world in general. The "Director of Johnson & Johnson Business Service Margarita Hemandez" said, "We team up with non profit organization to address the critical needs of the island's communities". The Strategy behind these alliances is to facilitate non-profit organization to become self-reliant. By this credo program, they also try to make that non-profit organization self sustain rather than depending on other people's contributions. (Yardley, PA, March 5, 2009)

On 18th January 2007 Mountain View and Diamond Bar CA - Biosense Webster Inc., a Johnson & Johnson company and Siemens Medical Solution publicize a strategic alliance to give Biosense Webster a special wide reaching right to share out Siemens' "ACUSON Acunav" ultrasound catheters to interventional cardiologists. Johnson & Johnson Biosense Webstar is an enormous performer in electrophysiology and interventional Cardiology market and Siemens is an ultrasound industry leader. This prolonged strategic alliance will facilitates both the companies to deal with the existent requirements of interventional cardiologists. The strategy behind this alliance is to bring inventive and pioneer results in the current market of electrophysiology and interventional cardiology. This concurrence can be useful for the millions of patients who are suffering from the cardiovascular disease said by Roy Tanaka, president, Johnson & Johnson Biosense Webster. (Yardley, PA, March 5, 2009)

Part C: Emerging Markets and Competition: J&J

Power of the economies is shifting towards Asia especially towards China, India and Turkey. We can see this trend in the last two years during the recession. The western countries did not cope well in recession such as in the down turn of the American economy and European economies. Due to the movement of emerging trend towards emerging economies, Johnson & Johnson expanded its operation in China, India, Turkey, Pakistan and other emerging economies. These emerging economies are growing fast rather than other economies with huge populations especially in pharmaceutical sector. According to( ) IMS Health, emerging markets growth rate is 14-17% as compared to the developed markets growth rate of 3-6%.

The high growth rate in emerging markets is one of the main reasons Johnson & Johnson have expanded their business to these emerging markets. J&J India is at the most important border of international manufactured goods. In several cases J&J India has presented modern manufactured goods in India earlier than in the US. The company have been able to make faster launches as a result of Indians doctors' capability of understanding current methods and providing new and improved methods.

J&J have progressed well in emerging markets and they have a plan to launch new products for its Medical Devices & Diagnostics Segment (MD&D), as stated in the website (New Brunswick, N.J., June 3, 2010) That "presentations will highlight a number of products that have either launched this year or are continuing their global rollouts in 2010". Such as 'Ethic on Endo' surgery continues to develop new surgery instruments which delivered great ultra sonic energy for the better treatment of patients. It can minimise the risk of damaging thermal tissues. One 'touch tm' provides solution for diabetic patients. According to them this would be a priority need for diabetic patients. J&J try to maintain their competitive advantage over rivals. J&J expanded its MD&D operation in the emerging markets, according to them.

"1-DAY ACUVUE® DEFINE™NATURAL SHINE™ contact lens builds on the recent success of other beauty enhancing DEFINES lenses in Asia. And, SYNSYL™ is a synthetic absorbable suture created specifically for China to compete with locally manufactured silk sutures that don't offer the same level of performance." (New Brunswick, N.J., June 3, 2010)

Most recently J&J have opened a medical training centre in Brazil. This training centre has approximately 4000 doctors and nurses training capacity in each year. (New Brunswick, N.J., June 3, 2010) The intention of the company is very clear that they have tried to produce extraordinary services and products to maintain their competitive advantage. This clearly shows how the company has been successful in the emerging economies.

The expansion of J&J in emerging markets as also had its problems. For example, during 2008 in India, Johnson & Johnson established that few consignments of the painkiller Motrin were not liquefying the means they were theoretical to, according to a Groceries and Medicine Management. The firm stopped allocation and allocation the society it would make casual verify of vendor s' abandons to spot if a recollect was justified. (FDA, 28 May 2010)

Excluding the FDA establish out that as a substitute of just inspection some Motrin bottles here and convenient, a service provider functioning for J&J was trading up all the material beneath instructions not to reveal the phrase "recollect" to the provisions. (FDA, 28 May 2010)

FDA informed J&J concerning what few call an "apparition recollect" to manuscript over the troubles, and the concern formally recollected the artificial Motrin in July 2009. We described J&J this sunrise about the accusations, but the corporation didn't have an instant retort. (FDA, 28 May 2010)

Regardless the above problem and strength of J&J, it is never be easy to maintain and enhance the competitive advantage over its rivals, because of the competition in the sector. Every company such as "Mylan Inc, Pfizer, Eli Lilly, GlaxoSmithKline and Sanofi-Aventis" are all gazing to spread out their existence in India, China, Brazil and other developing markets and try to get competitive advantage in the market.

Pharmaceutical industry is fronting a number of challenges worldwide. Companies today need to practice more efficient, cost-effective and dynamic means to conduct their tasks, whether in R&D or production. The key to a quick processing is to have drugs discovered more rapidly, developed faster, mass-produced cheaper and advertised more widely. (Jim J Zhang, president and MD, JZMed; Jiawen Shen, September 2009)

Fundamental pattern of cultural differences can be divided into four categories which are as follows

Way of Communication

Attitudes towards Divergence

Approaches to accomplishing objectives and goals

Judgment styles

The existence of J&J in most countries of the world is a proof of cross cultural diversity in their business. For example - employees in Britain are mostly, independent, frank, individualistic and open minded individuals as compared to other countries which are based on the observations of the outcome of cross cultural communication. It has created language barriers and culture shock may give serious problems in terms of cross cultural communication. (Jim J Zhang, president and MD, JZMed; Jiawen Shen, September 2009)

Table shows each Region with its relative percentage of Cross-Cultural Issues.

COUNTRY

RESULTS IN PERCENTAGE

JAPAN

12

FRANCE

12

MIDDLE EAST

12

CHINA

11

GERMANY

9

USA

2

S.E.ASIA

4

SPAIN

5

ITALY

6

KOREA

3

OTHERS

20

(Stepehn Hagen, 2009)

Part D: Analyse Key Threat for Johnson and Johnson in 2010

Key threats for Pharmaceuticals

The foremost confronts for medicine corporations approach from four parts. First, they should transaction with antagonism from contained by and lacking. Second, they should administer within a planet of cost manipulates that command a spacious range of costs from situate to position. Third, concerns should be invariably on sentinel for copyright contraventions and ask for official safety in new and budding inclusive souks. Conclusively, they should supervise their invention cylinders so that exclusive rights finishing do not disappear them without fortification for their outlay. (Larry Davidson and Gennadiy Greblov, Summer 2005)

Recent Threat for JOHNSON & JOHNSON

Food and Drug Administration (FDA) suspended the industrialized of the fluid drugs in "Johnson & Johnson". The firm might not begin development until it resolves all the issues. Parents were advised to provide their kids ordinary substitute drug by FDA. (Associated Press, June 2010)

The main problem for "Johnson & Johnson" is due to the recollected items. As on may 24, no any kid being hurt by receiving one of the evoked items. Autonomous staff on the "House Omission and Government Restructure Committee" in an article published on May 24 testified that the "Food and Drug Administration" does not judge the testified measures. There is no apparent and correct prototype concerning the issues representing the reasons of the recollected goods. One of the statements said numerous hundred convoluted circumstances which consist of seven deaths, have been description to "Food and Drug Administration". Enquiry is still being completed by "Food and Drug Administration" to establish the events were associated to a child consuming one of the recollected medicines manufactured by such as "Johnson & Johnson".(Associated Press, June 2010)

Actions on JOHNSON & JOHNSON

About Johnson & Johnson an U.S senator is seeking more information and widespread recall regarding the counter children's medicines which leads to the Congress investigation on the company's actions. Johnson & Johnson is being warned over manufacturing lapses at its Ethicon unit's Advanced Sterilization Products Division. The reference id of this division is ID: N25126916. The warning is delivered to Johnson & Johnson by U S Health Regulators. (FDA, 28 May 2010)

Food and Drug Administration officials reported that the chance of getting sick from the recalled product was "remote". On may 25 the committee conducted a meeting for both the FDA and Johnson & Johnson over the manufacturing lapses which led to the contamination. A nationwide recall of liquid children's versions of Tylenol pain reliever and other medications were also called to this meeting. (Larry Davidson and Gennadiy Greblov, Summer 2005)

At Fort Washington, Pennsylvania Johnson & Johnson has shut down manufacturing medicines of the liquid non-prescription. This shut down will continue until the company gets clearance from the Food and Drug Administration to resume production.

Impacts on Customers and Market Values

Due to this threat, company faced a lot of problems with customers and decrease market value because of competitors. This threat was not big threat but according to customer satisfaction it was very worst and company faced a big lose. FDA checked and examines the products, same time competitors raised the points in the market just for reducing the market value in pharmaceutical sectors.

Financial Impact on JOHNSON & JOHNSON due to Recall

By the recall to Johnson & Johnson it shaves the sales by $300 million this year. JP Morgan analyst on behalf of Johnson & Johnson said that Weinstein projects in 2010 sales of nearly $62.3 billion. Weinstein expects the recall made by Food and Drug Administration to Johnson & Johnson will hurt earnings of the company by 3 cents per share during this year. This impact will be more if remediation costs are higher than the expected level. Share price of Johnson & Johnson were already down by 1.7 percent. The share trade price of Johnson & Johnson was $ 59.54 at the New York Stock Exchange. (Larry Davidson and Gennadiy Greblov, Summer 2005)

How J&J can deal with the recent recall on their products

In my view, instead of producing many reports to FDA or any other committees regarding the recent issue with J&J, company should look forward to fulfilling the FDA checks like the basic rules must be followed in the production area, must taken care on equipments which participate in medicine manufacture which may leads less quality of outcome!, should destroy the incomplete ingredients which are ready to produces the recalled products and must follow the exact percentage of mixture on ingredients which must give the best result when people consume it, company should concentrate on manufacturing lapses which brings the standard quality down, (Larry Davidson and Gennadiy Greblov, Summer 2005)