Johnson And Johnson Is A Holding Company Commerce Essay Example

Integration and acquisition of other companies have allowed Johnson & Johnson to gain a significant market share and competitive advantage over their competitors.

Amalgamations: Johnson & Johnson with ALZA

Amalgamations refer to the convergence of two companies for the formation of a new one. On 27th March 2001, the renowned healthcare products manufacturer Johnson & Johnson publicly announced their agreement to merge with Alza Corporation. The estimated net equity value for this business transaction amounted to $10.5 billion. Johnson and Johnson's motivation behind this merger lies in their belief that joining forces with Alza Corporation will allow them to accomplish their objectives within the pharmaceutical industry (Orange County Business Journal, Dec 2008). Moreover, Johnson ; Johnson's amalgamation with Pfizer will contribute to a sales boost in the prescription drugs market, as they will advertise their brand alongside Pfizer's product Neosporin.

The acquisition on Dec 20th, 2006 resulted in the inclusion of the Johnson ; Johnson Consumer Group portfolio. William C. Weldon, Chairman and Chief Executive of Johnson ; Johnson, believes that acquiring Pfizer Consumer Healthcare strengthens their presence in the healthcare market, aligning with their strategy of leading in attractive health care markets (Orange County Business Journal, Dec 2008).

Acquisitions: Johnson ; Johnson and Omrix

An acquisition occurs when a company purchases a majority of another company's shares or when a larger company acquires a smaller one to maintain its leadership position or market share.

On November 24th, 2008, Johnson & Johnson acquired Omrix for $438 million. The acquisition resulted in Omrix becoming a part of ETHICON, Inc., although it will continue to operate as an independent entity. (New Brunswick, N.J.)

(N.Y, Nov. 24, 2008) Omrix is a biopharmaceutical company that develops

and markets bio-surgical and immunotherapy products. The objective of this acquisition is to expand Johnson & Johnson's capabilities in providing innovative products and establish itself as a leading player in the surgical care market. (New Brunswick, 2009)

Johnson ; Johnson and Mentor Corporation

Johnson ; Johnson has announced its agreement to acquire Mentor Corporation on Jan 23rd, 2009. Mentor Corporation specializes in supplying medical products, particularly aesthetic products.

( Brunswich, 2009 )


Johnson ; Johnson and Cougar Biotechnology


Johnson ; Johnson announced on July 16th, 2009 that they successfully acquired Cougar Biotechnology. This acquisition, referred to as a 'short-form' amalgamation, aims to strengthen Johnson ; Johnson and give them an advantage over their rivals. ( New Brunswick, N.J. and New York, July 10, 2008 )


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


ETHICON, Inc, a Johnson ; Johnson company and a worldwide leader in surgical care, which includes wound closing, wound management, general surgery, and urology, announced on December 16th, 2009 that they acquired Accelerant, Inc for approximately $785 million in cash. ( New Brunswich, 2009 ) The strategy behind this acquisition is to address the lack of sufficient solutions available to patients in certain areas and contribute to the growth of the business.

Scheme can be defined as a program designed to achieve a specific goal. In addition to the mentioned schemes, there are numerous other schemes such as placement and (Anything Research) states four strategic by "Ansoff's Growth Matrix" which are "Market Penetration, Product Development, Market Development, and Diversification" (Research, 2010). Positioning: Placement

refers to how a company plans their products in a way that attracts customer attention. This is one of the strategies Johnson and Johnson are using to gain a competitive advantage over their competitors.

According to my investigation, I discovered that the main objective of these strategies was to become the market leader. (Research, 2010) Market Penetration refers to a company entering a market that already exists with its existing product and can be achieved by converting competitors' customers or individuals who have not yet purchased the company's product through various promotional means or word of mouth. An example is Johnson ; Johnson using advertising to attract mothers who have not yet used Johnson Baby Pears to start using it in the UK. (Research, 2010) Product Development is when a company utilizes its existing product to develop other products in the same market.

Johnson ; A ; Johnson utilized their Johnson's Baby skin care line to expand and promote their other brands and products. According to Research (2010), Market Development involves the process of rebranding or adapting an existing product in order to attract new customers and generate more sales revenue. This strategy contributes to overall business growth. Another strategy, Diversification, entails introducing new products into a new market. For example, Consumer Products such as Johnson Baby Care, Skin & A ; Hair Care, Wound Care & A ; Tropical's, and Oral Health Care fall under this category.

Medical Devices ; A ; Diagnostics (Orthopaedics, Implants, Joint replacements, Sports Medicine and Trauma, Heart and Vascular Disease.) have been included in the Johnson and Johnson trade name. (Research, 2010)

Reason and Methods

Johnson and Johnson Company merged with Pfizer, ELAN,

and ALZA to improve their pharmaceutical sales in the global medicine drug market and increase their profit share by prescribing medications for various diseases. (Research, 2010)

Joint Venture and Strategic Alliances (Johnson and Johnson)

With the increasing pressures of globalization, technological advancements, and time-to-market efficiency, companies have been expanding their boundaries to enhance their global and economic capabilities. Strategic Alliances have been on the rise, with companies seeking to gain economic advantages or explore new opportunities while maintaining their strategic independence.

According to Economist Philippe Lasserre, a strategic alliance is an administration structure involving an incomplete contract between separate companies where each partner has limited control. With the consolidation of a mechanized company, the only way to sustain long-term success is by forming a large group to influence market control. For manufacturing companies like Johnson ; A ; Johnson, an American participant, forming alliances is crucial for expansion and sustainable growth. Consequently, finding a partner in Japan became a mission due to high competition in the Japan OTC market.

According to an article published on March 6, 2009, Tibotec Pharmaceuticals Research and Development Company has partnered with Johnson ; Johnson Merck Pharmaceuticals. The goal of this partnership is to accelerate the advancement of single probe groups in order to exploit drug innovation and utilize government autocratic approaches and organized financial support. Their aim is to achieve progress for therapeutic interventions that can eliminate HIV. Paul Stoffels, M.D. of Johnson ; Johnson stated that a flexible and collaborative private-public joint venture has the potential to catalyze progress in finding interventions that can eliminate HIV and result in drug-free remission for patients (Yardley, PA, March 5, 2009). Additionally, it was announced

on October 27, 2005 that Bayers AG has entered into a joint venture with Johnson ; Johnson (Yardley, PA, March 5, 2009). This collaboration aims to develop thrombosis drugs and advance treatments for blood clots.

The primary goal of this collaboration is to finance the development of products and distribute the cost and risk associated with entering a market. According to an article titled "Good Corporate Citizenship" in Caribbean Business Newspaper on November 18, 2004, Johnson ; Johnson establishes partnerships for the greater good. Alongside manufacturing healthcare products, Johnson ; Johnson also takes part in various initiatives for undisclosed nonprofit organizations, primarily as an act of responsible corporate behavior. Johnson ; Johnson commits to working towards mutual benefits with their partners. The company's creed, penned by Robert Wood Johnson in 1943, underscores employee accountability towards society. This creed specifically emphasizes supporting charities, preserving the environment, enhancing local communities, and fostering global harmony.

The Director of Johnson & A ; Johnson Business Service, Margarita Hemandez, stated that they collaborate with non-profit organizations to address the important needs of the island's communities. The purpose of these partnerships is to empower non-profit organizations to become self-sustaining, rather than relying on external contributions. (Yardley, PA, March 5, 2009) On January 18th, 2007, Biosense Webster Inc. announced their collaboration in Mountain View and Diamond Bar, CA.

, Johnson ; Johnson Biosense Webstar and Siemens Medical Solution have announced a strategic alliance. As part of this alliance, Biosense Webster, a Johnson ; Johnson company, will have exclusive rights to distribute Siemens' "ACUSON Acunav" ultrasound catheters to interventional heart specialists. Both companies are leaders in their respective fields - Biosense Webster in electrophysiology and interventional

cardiology, and Siemens in the ultrasound industry. This partnership aims to meet the needs of interventional heart specialists and bring innovative solutions to the electrophysiology and interventional cardiology market. Roy Tanaka, president of Johnson & Johnson Biosense Webster, believes that this collaboration will benefit the millions of patients suffering from cardiovascular disease.

Emerging Markets and Competition: J & A ; J Yardley, PA, March 5, 2009

The economic power is shifting to Asian countries, particularly China, India, and Turkey. This shift has become more apparent in the past two years during the recession. The American and European economies experienced downturns and did not handle the recession well. Johnson & Johnson recognized this emerging trend and expanded its operation in China, India, Turkey, Pakistan, and other emerging markets. These markets are experiencing rapid growth in the pharmaceutical sector due to their large populations.

According to IMS Health, emerging markets are experiencing a growth rate of 14% to 17%, while developed markets have a growth rate ranging from 3% to 6%. Johnson & Johnson has expanded its business into these emerging markets due to their considerable growth potential. J&J India is crucial in the company's global manufacturing operations and often introduces new products in India before launching them in the US.

The company has been able to achieve faster launches because Indian physicians have the ability to understand current methods and provide new and improved methods. J;J has made significant progress in emerging markets and has plans to introduce new products for its Medical Devices ; Diagnostics Segment (MD;D), as stated on the website (New Brunswick, N.J., June 3, 2010). The website mentions that "presentations will showcase several products that have

either been launched this year or are undergoing global rollouts in 2010". For example, 'Ethic on Endo' surgery continues to develop new surgical instruments that provide excellent ultrasonic energy for the better treatment of patients, while minimizing the risk of damaging thermal tissues.

One 'touch thulium ' is offering a solution specifically designed for diabetic patients. According to them, this is a crucial need for diabetic patients. J;J is striving to maintain their competitive edge against competitors. J;J has extended its MD;D operation in emerging markets, as they have stated. The 1-DAY ACUVUEA® DEFINEa contact lens builds upon the recent success of other beauty enhancing DEFINES lenses in Asia.

SYNSYL; is an artificial absorbable suture designed for China to compete with domestically produced silk sutures, which do not provide the same level of performance.
(New Brunswick, N.J., June 3, 2010) Recently, J;J has inaugurated a medical training center in Brazil, which trains approximately 4000 doctors and nurses each year.

( New Brunswick, N.J. , June 3, 2010 ) The company's objective is evident - to provide exceptional services and products to maintain their competitive edge. This demonstrates the company's success in emerging economies. However, J ; A ; J's expansion in emerging markets also faced challenges. For instance, in 2008, it was discovered in India that certain batches of the pain reliever Motrin were not dissolving as intended, according to the Groceries and Medicine Management.

The House halted and monitored the society's allotment to verify the seller's actions and determine if a recall was justified. The FDA discovered that instead of simply reviewing some Motrin bottles, a service provider working for J&A;J was secretly selling all the products without

revealing the term "recall." The FDA informed J&A;J about this "phantom recall" to address the issues, and the company officially recalled the counterfeit Motrin in July 2009. When contacted about these allegations, J&A;J did not respond immediately. Despite the challenges and weaknesses faced by J&A;J, maintaining and improving their competitive advantage over rivals in the industry will be difficult due to increasing competition. Companies such as Mylan Inc, Pfizer, Eli Lilly, GlaxoSmithKline, and Sanofi-Aventis are all expanding their presence in India, China, Brazil, and other developing markets in an attempt to gain a competitive edge.

The pharmaceutical industry is facing numerous challenges globally. Companies today need to adopt more efficient, cost-effective, and dynamic approaches to their operations, whether in R & D or production. The key to expediting the process lies in discovering drugs more quickly, developing them faster, producing them at a lower cost, and marketing them more extensively. The presence of J & J in many countries around the world serves as evidence of their ability to navigate diverse cultural backgrounds in their business. For example, employees in Britain tend to be independent, candid, individualistic, and open-minded compared to employees in other countries. These observations are a result of cross-cultural communication.

It has created barriers in linguistic communication and cultural shock may cause significant issues in terms of cross-cultural communication.

Analyze Key Threat for Johnson and Johnson in 2010

Key threats for Pharmaceuticals

The primary challenges for medical companies stem from four areas. Firstly, they must deal with internal and external hostility. Secondly, they must navigate a world of cost controls that dictate a wide range of prices from location to location.

Third, it is important for concerns to

constantly be vigilant for copyright disputes and seek official safety in new and emerging markets. Ultimately, they should carefully oversee their innovative efforts to ensure that their exclusive rights are not taken away without any recourse for their investment. (Larry Davidson and Gennadiy Greblov, Summer 2005)

Recent Threat to JOHNSON & JOHNSON

The Food and Drug Administration (FDA) has halted the production of liquid drugs by Johnson & Johnson. The company cannot resume production until it resolves all the issues. Parents have been advised by the FDA to provide their children with alternative drugs. (Associated Press, June 2010) The main problem for Johnson & Johnson is due to the recalled products.

As of May 24, no children have been harmed by any of the points mentioned. In an article published on May 24, the House Omission and Government Restructure Committee's autonomous staff testified that the Food and Drug Administration (FDA) does not evaluate the steps mentioned. There is no clear and definitive example regarding the issues representing the reasons for the recalled products. One of the statements mentioned numerous complicated cases, including seven deaths, that have been reported to the FDA. The FDA is still conducting an investigation to determine if these events were linked to a child consuming one of the recalled medications produced by companies like Johnson ; Johnson.

( Associated Press, June 2010 )

Actions taken against JOHNSON ; JOHNSON

A U.S senator is seeking more information and widespread recall regarding Johnson ; Johnson's children's medicines. This has led to a Congress probe on the company's actions. Additionally, Johnson & Johnson is being warned about manufacturing oversights at its Ethicon unit's Advanced

Sterilization Products Division. The reference ID for this division is N25126916. The warning was issued to Johnson ; Johnson by U.S Health Regulators (FDA, 28 May 2010). Officials from the Food and Drug Administration have stated that the chance of getting sick from the recalled product is "remote."

On May 25, both the FDA and Johnson ; Johnson participated in a meeting conducted by the commission to address the manufacturing oversights that resulted in contamination. This meeting also included a nationwide recall of liquid children's versions of Tylenol pain relief medication and other drugs. Johnson & Johnson has temporarily closed down its manufacturing facilities for over-the-counter liquid medications at Fort Washington, Pennsylvania. The production will resume once the company receives clearance from the Food and Drug Administration.

Impacts on Customers and Market Values The company faced numerous problems with customers and a decrease in market value due to this threat from rivals. Although this threat may not have been significant, it had a disastrous impact on customer satisfaction and caused the company to suffer significant losses. The FDA inspected and examined the products, while at the same time, competitors exploited the situation to diminish the market value in the pharmaceutical sector.

Fiscal Impact on JOHNSON & JOHNSON due to Recall The recall of Johnson & Johnson's products resulted in a $300 million decrease in sales this year. A JP Morgan analyst projected that Weinstein would have achieved sales of approximately $62.3 billion in 2010 on behalf of Johnson ; Johnson.

Weinstein anticipates that the call-back initiated by the Food and Drug Administration for Johnson ; Johnson will adversely affect the company's profits by 3 cents per share this

year. The impact will be even greater if the costs of compensation exceed the projected level. The stock price of Johnson & Johnson had already declined by 1.7 percent. The trading price for Johnson & Johnson shares was $59.54 at the New York Stock Exchange.

(Larry Davidson and Gennadiy Greblov, Summer 2005)

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

In my opinion, instead of producing many reports to FDA or any other commissions regarding the recent issue with J & A; J, the company should focus on meeting FDA checks. The basic rules must be followed in the production area and attention should be given to equipment used in the pharmaceutical industry, as it may affect the quality of the results. In addition, any incomplete ingredients that are ready to produce the recalled products should be destroyed. The exact percentage of mixture of ingredients should be strictly followed to ensure the best outcome when consumed by people. The company should also address manufacturing oversights that lower the standard quality. (Larry Davidson and Gennadiy Greblov, Summer 2005)