Johnson & Johnson Submitted to: Submitted by: Date: 31st December, 2014

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Index

Particulars Introduction(about co., credo, history, subsidiary holdings, product) Strategic framework

Pg.Nos . 03

Environmental analysis(PESTEL,Porter,SWOT,competit or, value chain) Business level strategy Corporate level strategy Strategic acquisitions Corporate governance References

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Introduction Johnson & Johnson is an American multinational pharmaceutical, medical devices, and consumer packaged goods manufacturer founded in 1886. It is headquartered in New Brunswick, New Jersey and being listed among the Fortune 500. The corporation includes some 250 subsidiary companies with operations in over 57 countries and products sold in over 175 countries. Johnson & Johnson and its subsidiaries (the Company) have approximately 128,100 employees worldwide engaged in the research and development, manufacture and sale of a broad range of products in the health care field. The Company conducts business in virtually all countries of the world with the primary focus on products related to human health and well-being.

Our Credo: Credo,a deeply held set of values that have served as the strategic and moral com for generations of Johnson & Johnson leaders. 

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs



everything we do must be of high quality. We are responsible for our employees, the men and women who work with us



throughout the world. We must respect their dignity and recognize the merit. We are responsible to the communities in which we live and work and to the world



community as well. Our final responsibility is to our stakeholders by providing fair return.

History Inspired by a speech by antiseptic advocate Joseph Lister, Robert Wood Johnson ed his brothers James Wood Johnson and Edward Mead Johnson to create a line of ready-touse surgical dressings thus began the company began the company, Johnson & Johnson, in New Brunswick ,United States in 1885. The company produced its first products in 1886 and incorporated in 1887. A year later, J&J pioneered the first commercial first aid kits, which were initially designed to help railroad workers, but soon became the standard practise in treating injuries. In 1894, J&J's heritage baby business began, by the launch of maternity kits. These kits had the aim of 3|Page

making childbirth safer for mother and babies. JOHNSON's Baby Powder also went on sale during this year and was extremely successful. Between 1896 and 1897, J&J enabled a huge step forward for women's health when it manufactured the first mass-produced sanitary protection products. Johnson & Johnson spread its roots into India in 1947 with the arrival of Mr. Patrick Whaley and in 1948, started marketing Johnson’s Baby Powder which was manufactured by a local company, British Drug House, in Mumbai. In September 1957, a new company - Johnson & Johnson Limited was created and ed with 12 employees on its roll. The company was licensed to manufacture a broad range of consumer and hospital products. One of J&J's subsidiaries is Ethicon, a manufacturer of surgical sutures & wound closure device was incorporated as a separate company in 1949 so as to expand and diversify the J&J product line. In 1959, J&J acquired McNeil Laboratories in the US and also CilagChemie, AG in Europe. These two acquisitions enabled the company to gain a significant presence in the field of pharmaceutical medicines for the first time. It was in 1961 that Belgium's Janssen Pharmaceutica N.V. ed the J&J Family of Companies. Its founder, Dr Paul Janssen, is recognised as one of the "most innovative and prolific pharmaceutical researchers of the 20th century".Today, Janssen is one of the world's leading research-based pharma companies and markets prescription medicines in the areas of gastroenterology, women's health, mental health, neurology and HIV / AIDS, to name a few. In 1987,The vision care business introduces ACUVUE® Brand Lenses, the first disposable lenses which eliminate the need for cleaning, disinfecting solutions and storage. During 1990-2002, Neutrogena Corporation, Kodak's Clinical Diagnostics business, Cordis Corporation and Centocor the Family of Companies. In 2006. Johnson & Johnson acquires Pfizer Consumer Healthcare, which brings in heritage consumer brands such as LISTERINE Antiseptic (first formulated in 1879), BENGAY & BENADRYL. Johnson & Johnson celebrated 125 years of caring in 2011 and looks to the next 125 years of transforming care for patients, consumers and communities around the world.

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Subsidiary holdings 

Advanced



Ethicon, Inc.



Global



Sterilization Products 

Johnson Health Care

ALZA

Systems Inc.

Pharmaceutical

Corporation

Supply Group



ANIMAS Corporation

Johnson & Johnson – Merck

(GPSG) 

Johnson &

Consumer GroupeVendôme



Pharmaceuticals Co.

SA 

BabyCenter, L.L.C.



Biosense Webster,

 

Gynecare



HealthMedia



Independence

Johnson Pharmaceutical Research &

Inc. 

Centocor Ortho

Technology, LLC

Biotech, Inc.  

Children With

Development, L.L.C. 

Pharmaceutical

Technology Services

Services, L.L.C. 

Cilag



Codman



&Shurtleff, Inc.

Janssen Pharmaceutica



LifeScan, Inc.

Janssen



McNeil Consumer

Cordis Corporation



 

Crucell nv DePuy, Inc.



Consumer

McNeil Nutritionals

Johnson & Johnson, Group of



Healthcare

Pharmaceutica Products, L.P.



Johnson & Johnson

Information

Diabetes, Inc. 

Johnson &



Mentor Worldwide, L.L.C.

Companies, Inc. 

Noramco, Inc.



OraPharma

Ethicon EndoSurgery, Inc.

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

Ortho-Clinical



Penaten



Pharmaceutical



Diagnostics, Inc. OCD

Alkaloids Group Strategic



Ortho-McNeil 

Ortho-Neutrogena

Dermatological) 

Personal Products Company

Tibotec



Transform

Peninsula

Pharmaceuticals, Inc.

Pharmaceuticals, Inc.

(a merge of Neutrogena and Ortho



Marketing (PGSM)

Pharmaceutical 

Tasmanian





Veridex, LLC



Vistakon



Corn Huskers

PriCara, Inc.



Scios Inc.



Synthes

 Products 

Acuvue



Carefree



Actifed



Clean & Clear



Aveeno



Coach

Lotion



Bactidol



Benadryl



Benecol



Bengay





Cortef



Dolormin

Band-Aid





Cortaid

Coach Professional







Coach Sport



E.P.T.



Codral



Efferdent



Combantrin



Euthymol



Compeed



First-Aid



Conceptrol



Gynol



Healthy Woman

Benylin Bonamine

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

Inadine



Nu-Gauze



Imodium



O.B.



Rembrandt toothpaste



Johnson's



   



Pediacare



Penaten

Lactaid Listerine

    



Polysporin



Ponstan

Motrin Motrin Children

    



Quantrel



REACH

Neosporin Neutrogena

Simply Sleep



Simponi



Sinutab



Sirturo



Splenda



Stayfree



Steri-Pad



Stim-u-dent



Tucks Pads



Tylenol



Tylenol Baby



Tylenol Children

Reactine

Nicoderm 



Purell

Neko



Savlon

Provin

Mylanta 



Priligy

Myadec 

RoC

Pepcid AC

Modess





Piz Buin

Lubriderm 

Risperdal

Pepcid

Listermint 



OneTouch

Jontex



Remicade

Olysio

Baby (baby shampoo) 



Regaine



Nicorette



Visine



Nizoral



Zyrtec

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Strategic framework Johnson & Johnson’s senior management is fully committed to the company’s diverse programs that contribute to society in a meaningful way. The strategic leaders include Alex Gorsky (Chairman, Board of Directors, and Chief Executive Officer) and Dominic J. Caruso (Vice President(Finance) and Chief Financial Officer) Johnson & Johnson is the principal management group responsible for the strategic operations and allocation of the resources of the Company. This Committee oversees and coordinates the activities of the Consumer, Pharmaceutical andMedical Devices and Diagnostics business segments.In all of its product lines, the Company competes with companies both locally and globally, throughout the world. Foundation The Strategic Framework starts with its Credo, the guide to help us navigate the way through challenges and opportunities. From that, Aspiration emerges – by caring, one person at a time, it help billions of people around the world live longer, healthier and happier lives. Strategic Principles It builds from this foundation a unique set of strategic principles. They are broadly based in health care. The focus is on managing for the long term. It operates under a decentralized management approach. And it does all this through a unique culture that values and fosters the development of its people. Growth Drivers They are the specific areas of focus that help ensure robust growth for the future. In today's highly competitive global marketplace, it is also essential to focus on the critical drivers of our future growth: to create value through innovation, to extend our global reach, with local focus, to execute with excellence in everything we do. It pursues growth drivers guided by the Leadership Imperatives: Connect, Shape, Lead and Deliver. 8|Page

Drivers for Long term growth of Johnson & Johnson co. 1) Creating Value through Innovation At Johnson & Johnson, everything begins with innovation. For the past 5 years, they’ve consistently invested about 11 % of sales to R&D efforts. That equated to over $8 billion enterprise-wide in 2013, it is increasing the overall effectiveness & efficiency in the global marketplace. Recently it announced the creation of the J&J Innovation Centers with locations in London, Shanghai, Boston, San Francisco & San Diego. These customized collaborations are part of enterprise-wide strategy to an international network of scientific entrepreneurs through access to best-in-class laboratory facilities and scientific expertise. 2) Bringing to Life Our Global Reach with Local Focus Johnson & Johnson is truly a global company- While it is headquartered in the United States, the mindset is global—they are focused on new products, new technologies and new business models that truly connect with the way their customers live. Today, 55 % of Johnson & Johnson’s business comes from outside the United States, and that number is growing—as 22 % of sales come from fast growing emerging markets such as Brazil, Russia, India and China. 3) Maintaining a Laser Focus on Excellent Execution Nowhere is the need for excellence in execution more critical than in health care. Excellence in execution starts with quality, a top priority at J&J by establishing a single Medical Safety organization focused on ensuring that in-market products perform as intended & created a single global enterprise Supply Chain organization in order to ensure the development and production of high-quality products. This has helped to improve customer service & reliability performance. 4) Leading with Purpose to Make a Difference Guided by Our Credo, our citizenship and sustainability priorities focus on advancing human health and well-being, and leading a strong and responsible business: Committed to advancing global health to fight multi-drug resistant tuberculosis by working with health authorities to 9|Page

reach larger audience. Announced a first-of-its-kind pediatric HIV treatment donation program to improve access to the company’s approved HIV medicines for people failing HIV treatment in sub-Saharan Africa.

PESTEL Analysis

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PORTERS MODEL

Level of Competition The level of competition in the health care industry is fairly high. This is because there are several large companies that have a good hold on the current market. This includes companies such as Johnson and Johnson, Merck, Novartis, Pfizer, and more. However, there are organizations which may be able to enter the industry because of an already established business. One example of this would be Wal-Mart’s entry into providing pharmaceuticals. Threat of New Entry The level of difficulty involved in entering the health care industry varies depending on the particular business segment. Medical and Diagnostics are difficult to enter due to the high overhead costs and the importance of investing heavily into research and development for new advances. Pharmaceuticals are also difficult to enter due to the research and development required for this segment as well. In addition, the current leaders in the pharmaceutical industry have an established brand and have a certain level of customer loyalty. A new company in the industry would have to sway customers to try their pharmaceuticals rather than the established 11 | P a g e

brands. The easiest level of entry is in the consumer segment. This segment relies more on marketing towards the brand recognition rather than a high level of research and development for cutting edge medical treatment. There is a high level of competition in this segment, which is the most difficult aspect for a new firm to overcome. Threat of Substitutes For the health care industry, there are few substitutes that an average consumer would have access too, especially regarding pharmaceuticals and medical/diagnostics. Consumer products that Johnson and Johnson offers do have close substitutes; there are generic brands which customers may purchase, as well as alternative methods of health care, such as ayurvedic tea or eating soup to ease headaches rather than taking a Tylenol. Bargaining Power of Suppliers Johnson and Johnson relies on a majority of their supplies to be provided by unique and small suppliers. These include:  Small and large minority owned businesses  Small and large women-owned businesses  Small disadvantaged businesses  Small veteran-owned businesses  Small HUBZone businesses. This allows Johnson and Johnson to have more power when bargaining with suppliers because the proportion for which and individual supplier is responsible is much lower than the proportion of business that Johnson and Johnson provides for that business. Therefore, the supplier relies more on Johnson and Johnson than they rely on the supplier. However, because Johnson and Johnson has been using suppliers for several years in a row, it can be assumed that both parties have an equally beneficial stake in the success of the other. Bargaining Power of Customers

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The amount of power that individual customers have with regard to Johnson and Johnson is small. Because Johnson and Johnson is so diversified, customers rely on a large number of Johnson and Johnson products on a daily basis. In addition, the medical and pharmaceutical segments have a lower level of competition and therefore do not allow customers to have many options. Therefore, when it is necessary for someone to use these devices, they are required to use one of Johnson and Johnson’s products or one of the few competitors.

SWOT ANALYSIS Strengths

1. .Excellent distribution network as the brand is supplied to remote villages and faraway places. 2. Brand presence in form of advertising media and print media for a number of products. 3. Has an excellent product portfolio and high quality offerings. 4. Includes 250 subsidiary companies with operations in over 57 countries and products sold in over 175 countries thereby ensuring wider reach of customers.

Weakness

1. Reliance on Small Molecule Drugs 2. Maintaining a wide range of products can be problematic for retailers 3. Dependence on the Success of Launch Products. 4. Being a global brand means operations are disturbed by market fluctuations.

Opportunity

1. Acquisitions of other smaller companies and increasing broad brand presence. 2. Potential to Exploit Biologics Market. 3. Wide Range of Potential Cross-selling Opportunities. 4. Bringing out a range of more portable products for economy class and increasing rural penetration. 13 | P a g e

Threats

1. Excessive promotion of any product (Product Recall) can have a negative impact. 2. Spurious brands with the name similar to existing brand name. 3. Availability of cheap substitutes and low priced competitors.

Competitor analysis

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Value chain

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Business Level strategy (Pharmaceutical segment) Johnson & Johnson’s pharmaceuticals business has taken a disciplined management approach to increasing its efficiency in order to invest in its new product launches. The pharmaceutical market is estimated to be $850 billion globally and expected to grow to more than $1 trillion by 2015. The pharmaceuticals business has seen a significant increase in productivity over the last two years based on the continues investment in R&D at higher rates than its competitive set. The leaders have framed following strategies for growth of the company’s pharmaceuticals business: 

Deliver differentiated medicines – In recent years, the pharmaceuticals business has transformed its portfolio by expanding its leadership in immunology, deepened its expertise in oncology and entered vaccines. The company’s pharmaceuticals businesses are in the process of launching six significant new products between 2009 and 2011, some in multiple geographies. Two of the new products are pending regulatory review in the European Union (EU), and two additional key compounds are in registration in key markets. Many of these products could represent significant advances over the current standards of care.



Build transformational pipeline – The pharmaceuticals business’ prioritized investments in internal R&D, strategic licensing arrangements, partnerships and select acquisitions continue to build a robust pipeline for the long-term. The company’s pharmaceuticals businesses expect to file 11 new products and over 30 important line extensions between 2011 and 2015.



Strengthen geographic presence – The pharmaceuticals business will grow its geographic footprint and increase investments in emerging markets, evaluating market appropriate commercial approaches and portfolios. It also remains focused on key developed markets. Japan, the second largest pharmaceuticals market, is a key growth market and the company’s pharmaceuticals businesses have seven launches planned there for 2011.

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

Invest in talented people and organizational capabilities – The company’s pharmaceuticals business is strengthening leadership capabilities locally, regionally and globally. A key component involves rotating key talent into important roles to quickly accelerate skills development to address a growing and complex business environment. The pharmaceuticals business is also building R&D capabilities in new technology areas and emerging markets

Corporate level strategy (Diversification) Johnson and Johnson’s corporate structure is based on a decentralized management philosophy. The company works on Related diversification strategy (Involves diversifying into businesses whose value chains possess competitively valuable “strategic fits” with the value chain(s) of the present business) by operating in three segments: Consumer Products, Pharmaceuticals, and Medical Devices and Diagnostics which ed for 22%, 37%, and 41% of the company’s revenues, respectively. The company’s central Executive Committee allocates resources and sets strategic

priorities

for

these

divisions.

Key

subsidiaries

include Ethicon (Medical

Devices); McNeil Laboratories, Inc., Cilag, and Janssen Pharmaceutica (Pharmaceuticals). The company is into High diversification category with 25%-Primary care 11% Biologicals 64%others (Non-drug). Following are the segments:

Pharmaceuticals The Pharmaceuticals business segment is dedicated to addressing and solving the most important unmet medical needs of our time, including oncology (e.g., multiple myeloma and prostate cancer), immunology (e.g., rheumatoid arthritis, irritable bowel disease and psoriasis), neuroscience (e.g., schizophrenia, dementia and pain), infectious disease (e.g., HIV/AIDS, Hepatitis C and tuberculosis), and cardiovascular and metabolic diseases (e.g., diabetes). These products are distributed directly to retailers, wholesalers and health careprofessionals for 17 | P a g e

prescription use .Driven by the commitment to its patients, they develop sustainable, integrated healthcare solutions by working side-by-side with healthcare stakeholders, based on partnerships of trust and transparency. With $28.1 billion in worldwide sales in 2013, it is the seventh-largest pharmaceuticals business in the world and the sixth-largest biotech business. Also it is the fastest-growing top 10 Pharmaceutical Company in the United States, Europe and Japan and recorded 15 consecutive quarters of operational sales growth in this segment.

Consumer Healthcare The Consumer segment includes a broad range of products used in the baby care, skin care, oral care, wound care and women’s health care fields, as well as nutritional and over-the-counter pharmaceutical products, and wellness and prevention platforms. These products are marketed to the general public and sold both to retail outlets and distributors throughout the world. With $14.7 billion in worldwide sales in 2013, Consumer segment is the sixth-largest health care consumerbusiness in the world and achieved operational sales growth of 2.8 percent.

Medical Devices & Diagnostics The Medical Devices & Diagnostics business segment produces a broad range of innovative products and solutions used primarily by health care professionals in the fields of orthopaedics, neurological disease, vision care, diabetes care, infection prevention, diagnostics, cardiovascular disease, and aesthetics. These products are distributed to wholesalers, hospitals and retailers, used principally in the professional fields by physicians, nurses, hospitals and clinics. With $28.5 billion in worldwide Medical Devices and Diagnostics (MD&D) sales for 2013, our MD&D segment is the largest medical devices and diagnostics business in the world. This segment is comprised of our Global Medical Solutions, Global Orthopaedics and Neurological, and Global Surgery Groups. 18 | P a g e

Johnson & Johnson uses both Operational and Corporate relatedness: J&J aspired to not only have relatedness within the major business, but also to have corporate relatedness across all of its business units. The integrated approach aims to harness expertise from various units and operate more effectively than other competitors in the market. Besides innovation where the expertise of previously decentralized business is combined, J&J is seeking to pursue corporate relatedness in regard to marketing by completing a massive consolidation of its contracted media and advertising agencies. The purpose for this strategic change is to create a more unified brand and decrease the high costs that are associated with each business units handling its own media and advertising concepts. Apart from this it would also help in the following ways: 1) Sharing of Skills/ Technology of acquired companies would enhance efficiency. 2) Using existing brands’ distribution network would increase sales. 3) Sharing of facilities and resources would reduce cost 4) Collaboration and knowledge sharing would create competitive advantage over other pharmaceuticals companies. Thus, J&J has strived to achieve better coordination, innovation and management of regulatory process across all its business.

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Top Strategic acquisitions 1) Johnson & Johnson Acquired Janssen Pharmaceuticals, Inc

Janssen Pharmaceuticals, Inc., a pharmaceutical company provides medicines for an array of health concerns in several therapeutic areas, including: attention deficit hyperactivity disorder (ADHD), general medicine mental health, neurologic, pain management, and women’s health. Headquartered in Titusville, New Jersey, Janssen is named after Dr. Paul Janssen, a leading Belgian researcher, pharmacologist, and general practitioner. Janssen Pharmaceutica, ed the Johnson & Johnson family of companies in 1961. United under the common name of J&J, Janssen is now split into three different businesses – Janssen Research & Development, Janssen Healthcare Innovation and Janssen Diagnostics. The spirit of innovation, and the belief that science done well can benefit humanity, has been an integral part of the last 50 years of pharmaceuticals within the Johnson & Johnson family of companies and continues to live on at the Janssen companies. In early 2014, Johnson & Johnson announced, through its subsidiary Janssen Research & Development LLC, a clinical trial data sharing agreement with Yale School of Medicine’s Open 20 | P a g e

Data Access (YODA) Project to extend its commitment to sharing clinical trials data to enhance public health and advance science and medicine. This is the first time any company has collaborated with a completely independent third party to review and make decisions regarding every request for pharmaceutical clinical dat

2) Johnson & Johnson Acquired Synthes : Combination Creates the World's Leading Orthopedics Business

Johnson & Johnson announced the completion of the acquisition of Synthes, Inc. for a total purchase price of $19.7 billion in cash and stock on June 14,2012. Synthes Holding AG is a multinational medical device manufacturer based in Solothurn. It is the world's largest maker of implants to

mend bone

fractures,[2] and

also

produces surgical power

tools and

advanced biomaterials. Synthes got integrated with the DePuy franchise to establish the DePuy Synthes Companies of Johnson & Johnson. The completion of the Synthes acquisition creates the world's most innovative and comprehensive orthopedics business and reflects its long-standing strategy of leadership within attractive health care markets. The combination of these two respected leaders -- Synthes and DePuy -- will enable to better serve clinicians and patients worldwide, bring new innovations to the marketplace in orthopedics and neurologic, and strengthen its ability to compete in developing markets. Operational sales growth in medical devices segment of 6.1 percent included the impact of the acquisition of Synthes, net of the divestiture of the DePuy Trauma business since it is primed to offer new, value-added solutions that will help transform health care delivery. 21 | P a g e

Corporate Governance: Johnson & Johnson’s management is responsible for timely, accurate, reliable and objective financial statements and related information. As such: 

ing controls:Maintaining a well-designed system of internal ing controls through monitoring by professionally trained internal auditors .Our internal controls also include self-assessments and internal and external audit reviews of our operating companies.



To encourage strong and effective corporate governance from our Board of Directors.



To continuously review our business results and strategic choices:It reviews financial results and develops strategies and initiatives for long-term growth. The Committee's intent is to ensure objectivity in business assessments, constructively challenge the approach to business opportunities and issues, and monitor business results and related controls.

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To focus on financial stewardship

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PricewaterhouseCoopers LLP, an independent ed public ing firm, performs an integrated audit of our consolidated financial statements and internal control over financial reporting.

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References: http://www.2013annualreport.jnj.com http://www.jnjindia.com http://www.janssenpharmaceuticalsinc.com https://www.depuysynthes.com

Michael A.Hitt, R.Duane Ireland, Robert E. Hoskisson,S. Manikutty(2012). Strategic Management. Cengage Learning India (P) Ltd.

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