Running head: DISCUSSION BOARD ONE 1
BUS1 530
March 25, 2017
Discussion Board One: Johnson & Johnson
Dr. Wrangle
Liberty University
DISCUSSION BOARD ONE 2
Discussion Board One: Johnson & Johnson
Founded in 1881, Johnson & Johnson is a leading global manufacturing firm that sells
pharmaceuticals, medical devices, and a large variety of consumer packaged products. The
company’s brand is highly recognized as a household name of medications, first-aid supplies,
and health and beauty products. Among those well-known brands are Band-Aid adhesive
bandages, Johnson's baby products, Neutrogena skin and hair care products, and Tylenol. The
company sells their products worldwide through over 250 operations (Net Advantage, 2017).
Industry Conditions
According to Net Advantage (2017), big players in the pharmaceutical industry have been
experiencing pressures from patent expirations on many top-selling drugs that bottomed in 2015.
However, there is an expansion in sales and margin improvements due to the creation of new
drug therapies, industry mergers, and cost restructuring. Gautam and Pan (2015) asserted, “The
big pharma model is transitioning to a leaner, more focused enterprise.” Although the Affordable
Care Act has had its negative effects on the industry margin, it also benefited from an increased
demand from a larger insured population. Net Advantage (2017) suggests that even with the
negative effects from patent expirations and regulatory pressures on high drug pricing, the
outlook for the industry is still favorable.
Financial Position
Currently, the firm’s dividend rate per share is 3.2 and the shares outstanding are 2713.35
million. The average daily volume is 7.8 million with 162,000 shareholders and a market capital
of 340470.78. From 2013 to 2016, there was a steady increase of net income except within the
year of 2015. Their net income at the end of the fiscal year 2016 was 16,540 million which was
an increase from 15,409 million in the prior year of 2015. That year the net income was lower
DISCUSSION BOARD ONE 3
than the prior year of 2014 which yielded a net income of 16,323 million. This is likely due to
the patent expirations that bottomed in 2015 as stated earlier (Net Advantage, 2017).
Economic Outlook
According to Gautam & Pan (2015), the demand for new therapies will continue to yield
steady growth which is a favorable trend for long-term pharmaceutical companies. The major
challenges these companies will have to face are continued patent expiration, regulatory
pressures, access, pricing and reimbursement, and R&D productivity (Gautam & Pan, 2015).
Conclusion
In summary, Johnson & Johnson would be a good investment company as it has had steady
increasing revenues for the past decade, and it has been around since 1881 which represents
longevity in the industry. Also, drugs and healthcare products are going to be needed for the long
run. Thus, the company has been able to revise their strategies to remain competitive in this new
business environment.
DISCUSSION BOARD ONE 4
References
Gautam, A. & Pan, X. (2015). The Changing Model of Big Pharma: Impact of Key Trends. Drug
Discovery Today, 21(3), 379-384. Retrieved on March 25, 2017, from
http://www.sciencedirect.com/science/article/pii/S1359644615003797
Net Advantage (2017). Coca-Cola Co. Retrieved March 25, 2017 from
http://www.netadvantage.standardandpoors.com.ezproxy.liberty.edu/NASApp/NetAdvantage/
SNP500Companies.do
