Johnson and Johnson is a biotech, medical devices, and pharmaceutical American multinational company. Edward Mead Johnson, James Wood Johnson, and Robert Wood Johnson I founded the pharmaceutical company in 1886. Today, we’ll discuss the PESTLE analysis of Johnson and Johnson; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Johnson and Johnson
Some of the main political factors in the Johnson and Johnson PESTLE analysis are as follows;
I-Government Healthcare Policies
Affordable healthcare and medicines are the top priority of every government. It is the government officials and the politician wants their vote bank to be healthy in order to ensure their re-election in the upcoming five years. However, governments and politicians have introduced and set limits on healthcare products and services to ensure their affordability to end consumers. Johnson and Johnson should comply with the healthcare policies of different countries.
II-Regulatory Requirements
FDA (Federal Drug Authority) in the USA, EMA (European Medicine Agency) in Europe, and other drug regulatory departments of different countries develop policies for pharmaceutical companies. Johnson and Johnson should keep in mind the regulatory requirements, documentation, and licensing prerequisites of different countries to ensure the smooth running of their operations.
III-Trade Policies
The trade policies of different countries are relevant to the prevailing political government system and their international relations. For instance, if a nationalistic political government comes into power it would change the import-export policies, and introduce trade tariffs, bans, and restrictions on the products and goods coming from the particular country. Just like the US government has had conflicted relations with Russia and China.
Economic Factors Affecting Johnson and Johnson
Some of the main economic factors in the Johnson and Johnson PESTLE analysis are as follows;
I-Global Economy
The global economy has been going through an economic recession for the past few years due to various political and international relations issues. Many people have lost their employment and jobs; when people have limited disposable income, they would spend their income carefully. In fact, they look for cheaper sources of medical alternatives to fix their problems.
II-Pricing Pressure
Johnson and Johnson has been facing significant pressure from the production and manufacturing facilities and the insurers to increase the retail price. It is due to the increasing cost of production, increasing oil prices, expensive logistics and transportation, and other regulatory costs. Collectively, all these factors have limited the company’s profit margin on the sale of medicine and healthcare products.
III-Currency Exchange Rate
The currency exchange rate of different countries is different and it keeps fluctuating daily depending on various factors. Johnson and Johnson earn a significant amount of annual revenue and income from the international market. A small change in currency exchange rate would the raw material and supplies expensive and significantly impact the revenue and profitability of the company.
Social Factors Impacting Johnson and Johnson
Some of the main social factors in the Johnson and Johnson PESTEL analysis are as follows;
I-Aging Population
The aging and elderly population has been increasing significantly due to the improved healthcare and medical system. It presents a great opportunity for the pharmaceutical brand Johnson and Johnson to increase its sales by collaborating with various medical insurance companies and healthcare service providers.
II-Healthy Lifestyle
The consumer market has become highly cautious about their health and fitness. In fact, they are investing a significant amount of capital resources in gym membership, sports activities, healthy diet and food, buying healthcare devices to monitor their fitness, and other activities. The objective is to live a healthy lifestyle and live longer; these trends are increasing the sale of Johnson and Johnson’s products.
III-Social Attitude
The overall public and social attitude toward the healthcare and pharmaceutical industry is mixed. Some people are in favor of using medical devices and medicines when needed. On the other hand, the other type of people prefer to use herbal and natural remedies because they don’t trust modern technology.
Technological Factors Affecting Johnson and Johnson
Some of the main technological factors in the Johnson and Johnson PESTEL analysis are as follows;
I-Biotech and Healthcare Advancement
Johnson and Johnson invests a significant amount of capital resources in research and development. It allows the pharmaceutical brand to develop innovative and efficient healthcare devices, find the cure for various types of diseases, and make improvements in the existing products and production methods. Overall, the advancement in biotechnology and healthcare advancement is contributing to the company’s growth.
II-AI and ML
Johnson and Johnson is employing the latest AI and ML technology for the development of medicines. It has allowed the company to achieve efficiency in the production and manufacturing, testing, and verifying processes. Most importantly, it allowed the company to ensure the efficient utilization of resources.
III-Cybersecurity Measures
Johnson and Johnson deals with a vast variety of sensitive research data of medical formulas, patent details, customers’ private data, and other partners’ information. It makes it highly necessary for the company to protect its firewall and database from potential hacking and cybersecurity threats.
Legal Factors Impacting Johnson and Johnson
Some of the main legal factors in the Johnson and Johnson PESTEL analysis are as follows;
I-Regulatory Compliance
Johnson and Johnson should comply with the regulatory requirements of the FDA, EMA’s, and other countries. Along with healthcare regulations, the pharmaceutical should also keep in mind the trade tariffs, bans and restrictions, and import and export policies of different countries to avoid any type of potential lawsuits and penalties.
II-IPR and Patent Laws
Johnson and Johnson is operating its business in a highly competitive pharmaceutical industry. It is necessary for healthcare to protect the IPR, trademark, and formulation details by earning patents and licenses; make sure to renew them on time.
Environmental Factors Affecting Johnson and Johnson
Some of the main environmental factors in the Johnson and Johnson PESTEL analysis are as follows;
I-Sustainability Initiatives
Johnson and Johnson has made a commitment to environmental sustainability by decreasing the carbon emission rate and its impact on the environment. The company has taken various steps like reducing production waste, biodegradable packaging, sustainable sourcing of raw materials, and limiting chemical waste.
Conclusion: Johnson and Johnson PESTLE Analysis |PESTEL Analysis of Johnson and Johnson |External Environmental Analysis of Johnson and Johnson | Strategic Analysis of Johnson and Johnson
After an in-depth study of the pestle analysis of Johnson and Johnson; we have realized that Johnson and Johnson is the world’s leading pharmaceutical brand. If you are learning about the Johnson and Johnson PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
