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Pharmaceutical Industry in United States - Assignment Example

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Johnson & Johnson and its subsidiaries (the Company) have approximately 127,600 employees worldwide engaged in the research and development, manufacture and sale of a broad range of products in the health care field…
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Pharmaceutical Industry in United States
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Download file to see previous pages The Company conducts business in virtually all countries of the world with the primary focus on products related to human health and well-being. The paper presents the financial ratio analysis of Johnson & Johnson for the past three financial years and highlights its financial outlook. The ratios presents the company’s financial outlook is strengthened and is able to manage its finances prudently. The ratio analysis shows that the company has enough liquid assets through which it can pay off its liabilities and also can finance its operation for the foreseeable future. Moreover, the company is efficient enough, as represented by the ratios, to reduce its cash operating cycle and convert its sales into money quickly. The analysis shows that it would be prudent to invest in the company as the shareholders can earn significant return through capital gain, by disposing the shares later, and also through dividend. Introduction to the Pharmaceutical Industry in United States The top of the worldwide pharmaceutical market is the US and it is expected to hit almost $345 billion in 2014. The second largest market is the Japanese market and then the European market including Germany France, and Chinese market (Market line industry guide, 2012). However, the International Federation of Pharmaceutical Wholesalers (IFPW) shows that growth rates in developed and developing markets based on their capability to recover from the economic crisis is significantly inconsistent. According to the research of Urch Publishing (2012), the global pharmaceutical industry in 2014 is expected to be worth over $1 trillion with a 5% compound annual growth rate. The pharmaceutical industry becomes more competitive. Major competitor companies Company HQ location Pharmaceutical Segment Sales Total revenue Share of pharmaceutical segment $Million $Million % Johnson & Johnson US 25,400 67,224 38% Pfizer US 51,214 58,986 87% Novartis Switzerland 32,153 56,673 57% Merck US 40,601 47,267 86% Roche Switzerland 35,200 45,500 77% Sanofi-Aventis France 39,940 42435 94% AstraZeneca UK 43,143 43,143 100% GlaxoSmithKline UK 27,758 40,722 68% Eli Lily US 19,934 22,603 88% Source: 2012 Annual Report of the companies As Table5 shows, the majority of the largest pharmaceutical companies not only focused exclusively on pharmaceutical products such as AstraZeneca and Sanofi-Aventis but also developed and manufactured other health care products. However, they still regard pharmaceutical partitions as the core of their business that offer over 50% of their incomes. However, Johnson & Johnson is an exception because its sales of pharmaceutical products are 38% of total sales. I will analyze GlaxoSmithKline firstly because it is significant competitor of AstraZeneca in the UK. GlaxoSmithKline (GSK) is a science-led global healthcare corporation researches and develops a wide range of innovative products. GSK is Britain’s biggest drug maker (Hirschler, 2012). A balanced synergistic business, with multiple growths, drivers supporting a core pharmaceutical R&D operation (2010 Annual report, p3). It has three primary areas of business including Pharmaceuticals, Vaccines and Consumer Healthcare. It has created more diversified business for past five years. Moreover, delivery of sustainable growth across portfolios is GlaxoSmithKline’s objective. It has 87 manufacturing sites and R&D centers in the UK, USA, Spain, Belgium and China. Its purpose of R&D is to improve its pipeline products safely and efficiently to produce new medicines, which deliver improved treatments that ...Download file to see next pagesRead More
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