SWOT Analysis of Johnson & Johnson

Introduction 

Swot analysis of Johnson & Johnson. J&J (Johnson & Johnson) is a US pharmaceutical and medical devices producing multinational company. Edward Mead Johnson, James Wood Johnson, and Robert Wood Johnson were the founders of the company. They laid the foundation of Johnson & Johnson in January 1886. The headquarter of the brand is in Johnson & Johnson Plaza, New Brunswick, New Jersey, USA.

Acuvue Contact Lenses, facial wash, clean air, Band-Aid bandages, Neutrogena skin & beauty products, Johnson’s baby products, Tylenol medications, first aid, and various household and other medications are some of the major products and services of the company.

Johnson & Johnson works with roundabout 265 subsidiary companies in 60 countries across the world. Approximately more than 132,200 people are working for the company in more than 175 countries worldwide.

According to an estimate, the annual revenue of Johnson & Johnson in 2020 was 80.865 billion dollars and it has decreased by 1.04%. Out of which the net profit of the pharmaceutical company was 16.986 billion dollars and it has increased by 20.03% in 2020.

Pfizer, Reckitt Benckiser, Novartis, Unilever, Merck, Colgate Palmolive, Procter & Gamble, Bristol-Myers Squibb, and Abbott are some of the major competitors of Johnson & Johnson.

Today, we’ll study the swot analysis of Johnson & Johnson. Here we’ll focus on the key internal and external factors that impact the multinational pharmaceutical company. Here’s the swot analysis of Johnson & Johnson as follows;

Strengths of Johnson & Johnson 

Merger & Acquisition

J&J is very well familiar with the fact that the only way to succeed is to quickly enter the new markets without wasting any more time. That’s why the company merges and acquires big and small types of companies in different countries worldwide. It has always helped the brand to increase its growth and profitability.

Advanced Marketing Strategies

J&J follows the personalized marketing approach to establishing a long-term relationship with customers with the company’s products. The focus of the brand is to develop an emotional connection to build trust with the target market. This marketing strategy has attracted the attention of the global market.

Partnerships

J&J knows very well that you can’t be perfect in the production of everything. The company doesn’t waste resources in the manufacturing of all the products. Instead, the brand partners up with some of the best manufacturers of different products in different regions worldwide. It has helped the company to minimize the cost and risk factors.

Fast Supply Chain System

J&J has a very efficient supply chain management system. It makes sure that the manufacturing plants have all the basic raw material. The brand makes the distribution of finished products to all the retail outlets and pharmacies in different countries.

Active in Global Affairs

J&J cares about the welfare of society and it takes a deep interest in global health issues. Whether it’s the development of the covid-19 vaccine, malaria campaign, or the UN’s program of healthy child initiative; the brand is always there to promote the healthy cause.

Product Portfolio

J&J has a rich portfolio of products and services and it increases the company’s stability in the market. Some of its prominent products are Acuvue lenses, Stayfree, band-aid, Neutrogena, clear & clear, Visine, Destine, baby products, Listerine, Purell, and Tylenol.

Well-Experienced

J&J has been in the medicine and pharmaceutical industry for the past 130 years. The company has a long history to satisfy the needs of customers and resolving various health issues. The experience in the health and medicine industry is one of its major strengths.

Influential

J&J is one of the world’s most influential companies. The company has got a great influence on the stock market and the country’s economy. According to Fortune, the brand ranks at 26th position of all current star rank in 2020.

Market Dominance

J&J has a network of more than 265 subsidiary companies in over 60 countries. The company is providing medical products and services in more than 170 countries worldwide. The company is dominating the healthcare industry in the production of consumer health products, pharmaceutical products, and medical devices and products.

Weaknesses of Johnson & Johnson 

Reliance on Limited Products

J&J relies on the sale of some of its best selling products. If a product becomes the market leader and achieves popularity, then the company would keep on pushing its sales. For instance, Zytiga, the medical product of Johnson & Johnson, had an annual sale of 3.5 billion dollars up to 2018. Finally, the court intervened and permitted the sale of the generic version of the drug. It has decreased its sales since then.

Less Diversified

Consumer diagnostics, medical devices, and pharmaceuticals are some of the major sources of revenue of J&J. It seems that the company has put all of its eggs in only 3 baskets. Low diversification of the company’s product portfolio is a very risky strategy for the company.

Negative Effects

Some of the products of J&J like opium addictive Norman drug, talc baby powder, and J&J Xarelto have caused negative effects after using it. The lawsuits about the negative effects of the company’s products have cost the brand 15 billion dollars. Most importantly, every lawsuit has reduced the company’s reputation.

Opportunities available to Johnson & Johnson 

Focusing the Lower Class

J&J has been producing expensive products. Now it’s time that the company should offer economical products to lower-middle-class people. Lowering the prices would help the company to increase the market share of the company.

Developing Markets

Approximately more than 57% of J&J’s revenue is from the US market. Now the brand should shift its focus on the Asian, African, and Latin American markets.

Expansion

J&J made some of the major acquisitions like Tylenol from 2016 to 2020. Its sale and revenue have also increased to a great extent at the same time. The brand should also follow the same acquisition strategy in the upcoming years for expansion.   

Health Products

Approximate 80% of J&J’s total revenue is from pharmaceutical products and medical devices. The company should amplify the sale of consumer health products. If the brand rebalances the sales of its product, it would increase the company’s profitability.

Threats Johnson & Johnson has to face

Drug Abuse

Opioids are pain-relieving medicines and pharmaceutical companies claim that they’re non-addictive. Recent studies have shown that they’re highly addictive. If the US government imposes a ban on the manufacturing of opioids, it would jeopardize the revenue stream and the existence of the brand.

Advanced Technology

India is developing new tech manufacturing processes that are cost-effective and efficient. If any pharmaceutical company gets its hands on cost-effective manufacturing technology, it would be a huge competitive edge. In other words, it would become difficult for J&J to retain its customers.

Regulations

J&J is a multinational brand and the company is operating its business in different countries worldwide. The pharmaceutical company has to follow rules and regulations of different governments. The poor record of the brand makes things difficult.  

Increasing Generic Drugs

The court has recent permitted the generic version of the sales of J&J’s product, Zytiga. If the sales of generic drugs keep on increasing, it would become difficult for the brand to sustain its profitable position in the market.

Competitors

The pharmaceutical industry has become very competitive. The competitors like Abbott, Procter & Gamble, Unilever, and Reckitt Benckiser are growing their customer market share. In such a competitive environment, J&J would start losing its market share.

Conclusion

After an in-depth study of the swot analysis of Johnson & Johnson, we’ve realized that J&J is indeed a market leader in the pharmaceutical industry. The increasing sale of generic products, opioids, and tough competition are serious issues that the company has to face. J&J should use its experience to develop technology and offer economical products to strengthen its market share.