Johnson & Johnson (J&J) is engaged in research, development, manufacture and sale of products for healthcare industry. The company operates through three business segments, namely, Consumer, Pharmaceutical, and Medical Devices and Diagnostics and has a strong product portfolio throughout the world. It conducts its operations through more than 250 companies across 60 countries and a decentralized organizational structure provides for better logistics, cost controls, and lower exposure to currency fluctuations. Furthermore, the company engages in research and development for competitiveness and has numerous products in the pipeline. However, it is facing a challenging environment, especially in its pharmaceutical segment with a decline in sales of some of its products and patent expiries. Competition from ANDAs involving generic drug firms poses a significant threat to the company’s product lines.
Johnson & Johnson - Strengths
Strength - Strong Liquidity Position
The cash position of the company improved considerably since 2008. It reported cash and cash equivalents of USD 15,810 million in 2009 as compared with USD 10,768 million in 2008. The increase in cash was principally due to increase in net cash generated from operating activities, which registered an increase of USD 1,599 million. Cash flows from operations were USD 16,571 million in 2009 as against USD 14,972 million in 2008. The principal factors contributing to increase in cash flow include a positive working capital of USD 1,281 million in 2009, as against a negative working capital of USD 1,725 million in 2008, net income of USD 12,266 million, USD 3.4 billion adjusted for non-cash charges for depreciation, amortization and stock based compensation and restructuring reserves of USD 1.1 billion. Additionally, it reported an increase in liquidity ratios, which indicate an improvement in the financial position of the company in meeting short term obligations and operational needs. The cash ratio was 1.82 times in 2009 as against 1.64 times in 2008, followed by quick ratio of 1.58 times (1.40 times) and cash ratio of 0.89 times in 2009 as against 0.61 times in 2008.
Strength - Diversified Product Offerings
J&J’s diversified product portfolio enables the company to withstand any market specific downturn. The company operates through over 250 companies in 60 countries. Its family of companies comprises the world’s premier consumer healthcare company, the world’s largest and diverse medical devices and diagnostics company, and the fourth largest biologics company and the seventh largest pharmaceuticals company in the world. J&J operates through three business segments, namely, Consumer, Pharmaceuticals, and Medical Devices and Diagnostics. The company’s Consumer segment offers a wide range of health and personal care products in the beauty, oral care, baby care, women’s health and over-the-counter categories. Its products are marketed under some of the most trusted brands such as TYLENOL, JOHNSON’S Baby, NEUTROGENA, LISTERINE and AVEENO. Through its Pharmaceuticals segment, the company focuses on five therapeutic areas, including neuroscience, cardiovascular disease and metabolism, immunology, oncology and infectious disease. J&J’s Medical Devices and Diagnostics segment provide an array of products such as Cordis’ circulatory disease management products; Ethicon’s surgical care and women’s health products; DePuy’s orthopaedic joint reconstruction, spinal care and sports medicine products; Ethicon Endo-Surgery’s minimally invasive surgical products; Ortho-Clinical Diagnostics’ professional diagnostic products; LifeScan’s blood glucose monitoring and insulin delivery products and Vistakon’s disposable contact lenses.
In 2009, the company generated 38.1% of its revenues from Medical Devices and Diagnostics business, followed by 36.4% from Pharmaceuticals business, and 25.5% from Consumer...