Johnson & Johnson Internal and External Analysis

Improvements in health care and life sciences are an important source of gains in health and longevity globally. The development of innovative pharmaceutical products plays a critical role in ensuring these continued gains. To encourage the continued development of new drugs, economic incentives are essential. These incentives are principally provided through direct and indirect government funding, intellectual property laws, and other policies that favor innovation. Without such incentives, private corporations, which bring to market the vast majority of new drugs, would be less able to assume the risks and costs necessary to continue their research and development (R&D). In the United States, government action has focused on creating the environment that would best encourage further innovation and yield a constant flow of new and innovative medicines to the market. The goal has been to ensure that consumers would benefit both from technological breakthroughs and the competition that further innovation generates. The United States also relies on a strong generic pharmaceutical industry to create added competitive pressure to lower drug prices. Recent action by the Administration and Congress has accelerated the flow of generic medicines to the market for precisely that reason. By contrast, in the Organization for Economic Cooperation and

While this case is literally full of negative aspects, we will only focus on the main points for both arguments. Pharmaceutical companies want to be sure that the products they spend years and millions of dollars to create are not easily reproduced and sold at discount prices. The profits pharmaceuticals make of their patented products are supposed to refinance new research. So taking away their exclusive distribution rights and allowing other manufacturers to just copy the product and sell it at minimal costs also harms the innovative processes in which new and better drugs are developed [1]. Those

and Stayfree feminine hygiene products, the Reach oral care line, Band-Aid brand adhesive bandages, Imodium A-D diarrhea treatment, Mylanta gastrointestinal product s, Pepcid AC acid controller, Tylenol, Motrin, and St. Joseph pain relievers, and Benecol and Splenda sweeteners. J&J generates about 40 percent of its revenues outside the United States, through its network of 200 operating companies in 57 countries, selling products around the world.

Recently Johnson & Johnson Pharmaceutical Company have been battling law suits stemming from the sale of their transvaginal mesh. This mesh offers relief to females suffering from pelvic organ prolapse, which constitutes a number of undesirable symptoms within the bowel region. Washington and California are the two states claiming damages against Johnson & Johnson and claim the Pharmaceutical Company misrepresented the risks associated with this device. Some patients have experienced irreversible complications associated with urinary dysfunction, loss of sexual function, constipation, and severe pain.

India makes an interesting case study in this regard, where the local drug manufacturers like Biocon and Ranbaxy have had joint ventures with the pharmaceutical companies in the US and EU respectively. There is a mutual benefit for companies in both developed and developing countries (Europe Economics, 2001) i.e. developed countries could manufacture the required drugs in a ‘cheaper’ environment while developing countries could benefit from the technology, knowledge and experience transfer from the other side.

Johnson and Johnson is the largest pharmaceutical company in the United States. The World Head Quarter of the company is located at one Johnson and Johnson Plaza in New Brunswick, New Jersey, USA. The company was founded in 1886 by three Johnson bothers; Robert Wood Johnson I, James Wood Johnson, And Edward Mead Johnson. The initial business of the company was to produce antiseptic surgical dressing1. Since then the company has been pioneer in many great pharmaceutical inversions; such as: first aid kit (1888), baby powder (1896), sanitary napkin (1896), dental floss (1898), rH factor (1944) and many more. During 1800’s the company also contributed in natural disasters in Galveston, TX and San Francisco, CA. The legacies of helping community still a big part of the company1. In 1944 the company becomes public and enters the NYSE (New York Stock Exchange). Robert Wood Johnson I, was the first president of the company who served from 1887 to 1910. After that the second Johnson brother, James Wood Johnson took over the presidency of the company and served until 19321. In 1932, Robert Wood Johnson II, the son of Robert Wood Johnson I became the president and served until 1962. Robert Wood Johnson was probably the most futuristic president of the company who was responsible for establishing “The Credo” of the company in 1943 which is still followed by the company very effectively. He also initiated the decentralization of the company as well1. “The

Moreover there is fear that strong implementation of IPRs will have adverse effect on life saving drug prices and local industries. Implementation of strong IPRs law before and during the Uruguay Round was strongly opposed by developing countries. Developing countries fear that implementation of strong IPRs rules and regulation will disturb the strategies of providing new life saving drugs and medicines at low cost. Drugs and essential medicines will not be easily available if local firms do not specialize in the production of affordable generic versions of new drugs. According to Mishra, V. (2001), stronger implementation of IPRs could lead to restrict the capacity of local firms to produce generic products in domestic market as well as international market.

BioCryst Pharmaceuticals focuses on state of the art drugs to fight cancer, autoimmune diseases, and viral infections. The company is based in Durham, North Carolina. It's best selling line is Peramivir, a drug that is used to treat a drug resistant form of Influenza A subtype H1N1Virus. US sales are strong, but the company now wishes to enter into the global market. Those with an eye on the global marketplace already know that India's most recent entrance into the global economy represents the next golden opportunity in the pharmaceutical industry. This analysis will explore the potential for market entry into India,

Pharmaceutical industry is facing intense competition and enormous challenge in the recent year, mainly due to the threat from generics drugs and competitors enhance ability and adoption of new technology (Taylor, 2015). For AstraZeneca, they

Pfizer is also trying to come up with new ways to hold onto revenue that is lost to generic producers once patents have expired. Pfizer is advocating to create a new category of prescription drugs called authorized generics in which “the original manufacturer licenses exact copies of its branded drug to a generic manufacturer” in exchange for keeping some of the revenue (Business Week, 2008, para. 4). In order to fight off generic competition, Pfizer has to advertise to differentiate its products.

Economic globalization has been an important development of the past half century. Pharmaceutical companies have embraced globalization as a core component of their business models,

India’s pharmaceutical market has been developing for many decades and represents value chain beginning from research and development and continuing with animal studies, clinical trials, approval and launch, manufacturing, marketing and distribution. Biocom had opportunities to take all the links of value chain to become the strongest market player and have full cycle production.

Technological: The pharmaceutical industry has seen many modern scientific advances, this meant that in order to remain a big player a company must be constantly adapting their products in order to keep up with their competition. In order to achieve this companies must increase their investment and spending on research and development in order to encourage innovation. (McGee et al, 2005)

The Global Innovative Pharmaceutical segment focuses on developing, registering and commercializing novel, value creating medicines that significantly improve patients’ lives.

Only a small fraction of all drugs investigated for use in humans are actually approved. Those that fail part-way in this process incur high costs with virtually zero revenue in return. Capital must be invested years before revenues become realized; further increasing costs if recognizing the time value of money. Recent years have shown increases in mergers and acquisitions within the industry. Mergers and acquisitions play a crucial role in the pharmaceutical industry, largely a result of research, development, and production costs. Frequently a smaller company will develop a new drug but be without the capital needed to introduce it into the market. Larger companies often have unused capacity in their sales and marketing force, so it may be in the interest of both companies to conglomerate horizontally. Patents play another crucial role in the pharmaceutical industry. A company may apply for a patent for a new drug, thus getting exclusive rights for about 20 years. Companies use this period to recover costs of research and development. When this patent expires, competing companies release generic versions of the drug, increasing competition dramatically. Competitive Summary Competition within the pharmaceutical industry is rigorous among the industry’s leading institutions. Research and development, firm size, advertising, and productivity are the driving forces for success (The American Economist, 2006). The effects of globalization and intellectual