Johnson&Johnson Internet-Based Project - Essay Example

Running head: A Johnson and Johnson internet-based research project of This is an internet-based company research project for Johnson & Johnson. This is a healthcare products manufacturer, marketer and distributor. The paper aims to study the nature of the business of Johnson and Johnson and to investigate the strategies, improvements and analyze its market shares. The paper covers various aspects of the company including a background of the company; its nature, mission and products, a description of the current financial standing; earnings or losses of the company, an overview of the problems and issues the company was subjected to, an investigation of the companys current and future business strategies, a summary and conclusions. The conclusion section summarizes the main ideas presented in the paper, and makes inferences where appropriate. Statement of Purpose This paper aims to study the nature of the business of Johnson and Johnson and to investigate the strategies, improvements and analyze its market shares. Highlights of the paper include: a background of the company; its nature, mission and products, a description of the current financial standing; earnings or losses of the company, an overview of the problems and issues the company was subjected to, an investigation of the companys current and future business strategies, a summary and conclusions. History and Mission Johnson & Johnson was established in 1886 in the New Jersey State. The company is very committed to innovative healthcare products (Johnson & Johnson, 2009). This has greatly contributed to the company’s consistent financial performance. Johnson & Johnson has enjoyed dividend increases for 47 consecutive years, adjusted earning increases for 25 consecutive years and sales increases for 76 consecutive years. Johnson & Johnson employs about 119,000 across the world and is involved in manufacturing and selling of healthcare products in a number of countries across the world. The company’s main interest, both currently and historically, is in products that are related to well-being and health (Johnson & Johnson, 2009). Johnson & Johnson strongly believes decentralized management principles, which it practices. The company’s executive committee is its principal management group, which ensures effective and efficient operations of the company. Furthermore, a number of members of the Executive Committee are also Group Operating Committee chairpersons. This committee comprises of management experts in a number of specialized functions and managers representing main operations within this group. The Committees are charged with the responsibility of overseeing and coordinating both international and domestic activities related to every Professional, Pharmaceutical and Consumer segments of business. The operating management of every company is led by Managing Director, General Manager, President or Chairman, who reports to the Group Operating Committee, either via a line executive or directly. Every international subsidiary of Johnson and Johnson is managed by that country’s citizens except for a few. Johnson and Johnson’s mission is to offer the broadest range of healthcare products in the world. It strives to be help in meeting healthcare needs in every family all over the world. The company is also built on a number of values including building strong relationships, creating shareholder value, doing the right thing, entrepreneurial spirit, excellent customer service, giving back to the community, respect everyone, and taking good care of people. Current Business Strategies Johnson & Johnson endeavors to reach a large number of people across the world through its wide range of healthcare products and its large family of companies. The company’s passion is in the well-being of the family as well as its health. In the home, the company’s products help in easing nagging headaches, adding luster to hair, and brightening smiles. The company has also developed products aimed relieving aching muscles, soothing irritating itches and keeping the baby fresh The company has also developed medical technology products targeting laboratories and operating rooms, where nurses and doctors rely on its products. The company’s products are used in performing hip replacements, implanting coronary stents, running tests for breast cancer, hence giving people hope for better quality, more active and longer life. The company also targets people with life-threatening conditions such as diabetes, colon cancer and obesity. The products help in controlling the diabetes, warding off colon cancer and conquering obesity. Johnson & Johnson’s strategy lies in its variety, with its prescription medicines treating a broad variety of medical conditions that range from rheumatoid arthritis and migraines to serious infections and cancer. The company’s strategy is take good care the health needs of the whole family. Recent Johnson and Johnson initiatives The national initiative to promote the profession of nursing The company launched a national initiative aimed at promoting the nursing profession. The company developed ads aimed at promoting the nursing profession. This campaign was a national initiative aimed at recruiting new nurses and training them, courtesy of Johnson and Johnson sponsorship (Highbeam, 2009). The company counts this campaign as among its greatest accomplishments. The campaign was also aimed at expanding the future of nursing and therefore attracting more facilities and boost the number of new recruits into the profession. This would go a long way in reducing the shortage of nurses currently experienced nationally. The Diabetes Institute Johnson & Johnson established a diabetes institute, JJDI. The institute was aimed at transforming diabetes care through the provision of all-inclusive training on the latest diabetes tools and diabetes latest practice standards. The institute was also intended to reimburse solutions to diabetes educators, physician assistants, nurses and physicians across the world. The company appointed a former US Acting Surgeon General, who is also an expert in public health, as the chairman of the institute (Bio-Medicine, 2009) JJDI is part of an effort aimed at addressing the rapidly growing diabetes pandemic, which affects over 180 million people all over the world. By the year 2030, the diabetes pandemic is estimated to affect 360 million people. To help in addressing the growing pandemic, the company’s affiliates invested enormous resources in opening and operating numerous similar facilities across the world. The first such facility was started in 2007 in Japan, followed by others in France and China in 2008. Johnson & Johnson acknowledges the fact that the cost of diabetes has reached a crisis proportion across the world, both in terms of the money on healthcare and the human suffering due to the condition. It further realized that the worldwide direct healthcare costs annually are about $232. It therefore saw the need to develop new strategies to improve the quality of healthcare given to people with diabetes. This includes stepping up hands-on training and education among health professionals who work at the local very local level. Business issues and problems Anemia drug deaths There was a reported increase in the number of patients using an anemia drug made by Johnson & Johnson and going by the name Eprex. According to a German study, 16 per cent of those treated with Eprex lived for only three months from the beginning of the study. On the other hand, only nine per cent of those who took a placebo died (New York Times, 2009) This study was carried out to test whether or not Eprex was capable of improving the functioning of the brain among stroke patients. The 522 patients had been given slightly higher Eprex doses for a three day period or a placebo. In addition to this drug, the company also sells Procrit, whose generic name is epoetin Alfa. These drugs are part of those known as erythropoiesis stimulating agents, which are used to treat patients with cancer and kidney diseases. The safety of these drugs became a subject of scrutiny after it was discovered that some patients who were given higher doses of the drug either had a shorter survival or tumors. These findings are likely to have a negative impact on the company’s performance in the future. Financial overview Fiscal year 2008 financial highlights Johnson and Johnson saw a 14 per cent rise in profits in fiscal year 2008 although it predicted weaker results for the year 2009. The company saw a $2.71 billion in earnings, representing 97 cents for every share. This was an improvement compared to last year’s $2.37 billion, which represented 82 cents per share (New York Times, 2009) However, revenue for fiscal year 2008 were 15.18 billion, a 4.9 per cent decrease the 2007’s revenue of $15.96 billion. In total, the company earned 94 cents per share excluding all gains and charges. Analysts had earlier expected 92 cents per share in profits on $15.93 revenue. The company also got an after-tax gain of $225 million from litigation settlements. Johnson & Johnson recently acquired Mentor Corporation, a breast implant and cosmetic product maker. This move is likely to dilute its earnings by between three and five cents. Johnson & Johnson’s drop in revenue is a very rare occurrence for the company. It was occasioned by an 11 per cent drop in pharmaceutical sales. The decline was partly due to a 41.4 per cent decrease in antipsychotic Risperdal sales, which has faced stiff competition. The sale of medical equipment fell to $5.6 billion, a two per cent decrease. On the other hand, consumer sales increased to $3.9, representing a 1.2 per cent increase, mainly occasioned by the company’s move to introduce an off-the-shelves treatment known as Zyrtec. For the whole year the company’s net income rose to $12.95, 22 per cent rise. At the same time, its revenue increased to $63.75 billion, representing a 4.3 per cent increase compared the previous year. Fiscal year 2008 financial highlights Johnson & Johnson is listed on the New York Stock Exchange, where it is traded as NYSE: JNJ. The company announced a $ 15 billion sales revenue in 2009’s first quarter, representing 7.2 per cent decrease compared to a similar period in 2008 (Pharm Alive, 2009). The company’s operational results declined by slightly more than one per cent while currency had a six per cent negative impact on its performance (Pharm Alive, 2009). There was a five per cent and 9.6 per cent decline in decline in domestic and international sales respectively. This reflects a three per cent operational growth and a 12.6 per cent negative currency impact. Johnson & Johnson’s 2009 first quarter earnings were $3.5 billion, which represents a 2.5 per cent decrease compared to a similar period last year. The company announced a $4.45 to 4.55 earnings for each share for 2009, excluding any special items impact. Worldwide consumer sales declined by 8.7 per cent to $3.7 billion compared to a one per cent decline over a similar period last year. Currency negatively affected the sales by slightly less than eight per cent. There was a 5.1 per cent and 11.6 per cent decline in domestic and international sales respectively. Johnson & Johnson financial highlights for fiscal year 2009 Consumer sales Consumer sales declined by 8.7 per cent to $3, 711,000 compared to 2008 Operations declined by one per cent compared to 2008 Negative impact of currency was 7.7 per cent compared to 2008 Pharmaceutical sales Pharmaceutical sales declined by 10.1 per cent to $5,780,000 compared to 2008 Operations declined by 5.1 per cent compared to 2008 Negative impact of currency was five per cent compared to 2008 Medical devices and diagnostics sales Medical devices and diagnostics sales declined by 2.9 per cent to $5,535,000 compared to 2008 Operations declined by 3.1 per cent compared to 2008 Negative impact of currency was six per cent compared to 2008 Sales by region Sales to US customers declined by five per cent to $8, 052,000 compared to 2008 Sales to European customers declined by 14.8 per cent to $1, 471,000 compared to 2008 Sales to the Western Hemisphere with the exception of the US declined by 14.7 per cent to 1,062,000 compared to 2008 International sales declined by 9.6 per cent to $6,974,000 compared to 2008 Worldwide sales declined by 7.2 per cent to $15,026,000 compared to 2008 Earnings Net earnings declined from $3,598,000 in 2008 to $3,507,000 in 2009 Diluted earnings per share were $1.26 for each share, the same as 2008. Average diluted outstanding shares declined to 2,789.8 compared to 2,866.3 in 2008 Effective tax rate improved to 24.5 per cent compared to 24.2 per cent in 2008. Summary and conclusion Johnson & Johnson is the most diversified and largest healthcare company in the world. The company has grown tremendously since its establishment in 1886. Johnson & Johnson has undertaken a number of initiatives aimed at reaching out to its target market. The company employs about 119,000 across the world and is involved in manufacturing and selling of healthcare products in a number of countries across the world. The company’s main interest, both currently and historically, is in products that are related to well-being and health. The company has three divisions namely the consumer, diagnostics and medical devices and pharmaceutical divisions. The pharmaceutical division comprises of 40 per cent of the company’s sales. The remaining divisions take up the other 60 per cent of the company’s sales. The operating management of every subsidiary is led by Managing Director, General Manager, President or Chairman, who reports to the Group Operating Committee, either via a line executive or directly. Every international subsidiary of Johnson and Johnson is managed by that country’s citizens except for a few. Johnson & Johnson profits have experienced a sharp decline in 2009 compared to the year 2008. Earlier on in 2008, the company had seen a 14 per cent rise in profits in fiscal year 2008 before the weaker results for the year 2009. Sources Bio-Medicine, “Johnson & Johnson Launches Global Diabetes Institute,” retrieved from http://www.bio-medicine.org/medicine-news-1, on May 2, 2009 Highbeam, “Johnson and Johnson Launches National Initiative,” retrieved from http://www.highbeam.com/doc/1G1-86504994.html, on May 2, 2009 Johnson & Johnson, “Company Overview”, retrieved from http://www.investor.jnj.com/company-overview.cfm, on May 2, 2009 Johnson & Johnson, “Company Products”, retrieved from http://www.jnj.com/connect/healthcare-products/?flash=true, on May 2, 2009 New York Times, “Profit Rises but Johnson & Johnson Expects a Weak Year,” retrieved from http://www.nytimes.com/2009/01/21/business/21drug.html, on May 2, 2009 New York Times, “Research Center Tied to Drug Company” retrieved from http://www.nytimes.com/2008/11/25/health/25psych.html, on May 2, 2009 New York Times, “FDA Reviewing Deaths In Anemia Drug Study,” retrieved from http://query.nytimes.com/gst/fullpage.html?res=9D02EED6103DF934A1575AC0A96E9C8B63, on May 2, 2009 Pharm Alive, “Johnson & Johnson Reports 2009 First-Quarter Results,” retrieved from http://www.pharmalive.com/News/index.cfm?articleid=618443, on May 2, 2009 Read More