Porter’s Five Forces Analysis of Johnson & Johnson
|Name||Johnson & Johnson|
|Industry||Drugs & Biotechnology|
|Headquarters||New Brunswick, New Jersey|
|Revenues||US $94.9 billion,2022|
|Profit||US $19.8 billion, 2022|
|Competitors||Unilever, Procter & Gamble, Bristol Myers Squibb, Merck, Pfizer.|
Johnson & Johnson is a holding corporation that is involved in the research and development, production, and selling of health-care goods. The corporation was founded in 1886 by Robert Wood Johnson I, James Wood Johnson, and Edward Mead Johnson Sr. and is located in New Brunswick, New Jersey. For more than 135 years, Johnson & Johnson has worked to find health-solutionsfor all age groups. In today’s, era as the world’s extensive healthcare firm, J&J isrecognized to utilize their presence for human benefit. J&J has 148,000employees across the world.Johnson & Johnson’s revenue for the fiscal year ended September 30, 2022 was $96.041 billion, a 5.02% rise year over year.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is a widely used model to evaluate companies’ strategies in reference to its industry for neutralizing the competition and increase the margins, it is developed by Professor Micheal E. Porter in 1979, at Harvard Business School.
Johnson & Johnson Rivalry among Existing Competitor
- Johnson & Johnson Business Segments: J&J operates in three segments that includesconsumer, pharmaceutical, and medical devices. The Consumer section covers goods used in the infant care, dental care, cosmetic, over-the-counter pharmaceutical, women’s health, and wound care markets.The Pharmaceutical section focuses on therapeutic areas such as immunology, infectious illnesses and vaccines, neurology, cancer, cardiovascular and metabolism, and pulmonary hypertension.The Medical Devices section provides goods used in orthopedics, surgery, cardiovascular care, diabetic care, and eye health as declared by Forbes.
- Johnson & Johnson Global Operations Year 2021: Johnson & Johnson’s annual revenue for 2021 was $93.775 billion, with an increase of 13.55% from 2020.The total assets of Johnson & Johnson for the financial quarter ended September 30, 2022 were $175.124B, a 2.29% decrease from the previous year.Total assets for Johnson & Johnson in 2021 were $182.018 billion, a 4.07% increase from 2020.Johnson & Johnson was honored with three new World Economic Forum Global Lighthouse accolades for its use of advanced manufacturing techniques in 2021.
- Unilever: Unilever is one of the world’s largest consumer products corporations, that is operation for nearly 100 years. Unilever generated US $61.39 billionrevenue in 2021with 58% in emerging markets. Unilever annual revenue for 2021 was a 7.08% increase from 2020. Unilever has 400 brands around the globe.Unilever’s total assets in 2021 were $88.845 billion, up 14.95% from 2020.
- Procter & Gamble: The Procter & Gamble Company (P&G) is a fast-moving consumer products producer and marketer. Procter & Gamble net worth as of January 16, 2023 is $359.92B. Procter & Gamble annual revenue for 2022 was $80.187B, a 5.35% increase from 2021. Procter & Gamble total assets for 2022 were $117.208 billion.
- Pfizer: Pfizer’s annual revenue for 2021 was $81.28 billion, a 95.16% increase over the previous year.For the third quarter of 2022, the firm recorded revenues of around 22.6 billion US dollars, that was mostly driven by their COVID-19 vaccine.Pfizer developed the COVID-19 vaccine in collaboration with the German company BioNTech. The net worth of Pfizer as of January 17, 2023 is $268.6B
- Investment in Research & Development-Marketing Cost and Brand Image: Due to its diverse portfolio J&J has always allocated high amount of funds for the research and development. Johnson & Johnson spending on research and development is of $15.48 billion for the fiscal year ended September 30, 2022. It shows a 10.38% rise year over year.Customers are offered numerous discounts on items by the company. It has conducted many kinds of campaigns for promotional events.
Johnson & Johnson Threat of New Entrants
- Global Drugs & Biotechnology Industry: Numerous smaller biotech firms, previously unknown, have recently emerged due to the development of COVID-19 vaccines.Revenue is predicted to rise at a 5.39% annual rate (2023-2027), resulting in a market value of US$1,435.00 billion by 2027. It will occur worldwide due to rise in global aging population and economic expansion but it depends on investment and government funding.
- High Capital Investment- Trained Human Resources:In this research and innovation driven industry the high cost and effectiveness of research funding is dependent on human expertise and superficial knowledge. The average R&D cost on each employee is US$195,907.
- High Research & Development Cost: According to current data, the average drug development expenditure in USA is $2.6 billion.These estimates include the costs of both laboratory research and clinical trials for successful new drugs, as well as expenditures on drugs that do not progress beyond the laboratory-development stage.
- Technological Advancement: The growing use of data science and artificial intelligence in medical research and drug development has significantly accelerated the efficiency.
Johnson & Johnson Bargaining Power of Suppliers
- Supplies Industry Influencer: J&J has about 50,000 suppliers contributing to three business segments. Ethicon, a Johnson & Johnson MedTech company, consistently supplied the instruments for cancer removal and other crucial surgeries.
- Suppliers Collaboration: Even through the pandemic and extreme supply chain disruptions, the firm spent $5.2 billion with diverse and small suppliers in 2021, reaching their Health for Humanity 2025 objective in just one year.
Johnson & Johnson Bargaining Power of Buyers
- High Product Differentiation: The product differentiation is created by innovation in this business that has less public intervention.Almost 21.2% of revenue is spent on research and development.
- Customer Satisfaction:After Sales Services: For the 20th year in a row, the company is ranked first on the worldwide corporate reputation list. Also for the ninth year in a row, the company was placed first on the Pharmaceutical Industry list.
- Government Rules & Regulations: Only around 12% of medications that undergo clinical trials are eventually cleared for distribution by the Federal Drug Authority in the United States.
Johnson & Johnson Threat of Substitute Products or Services
- Pharmaceutical and Hygiene Products:The FDA approves certain kinds of drugs for sale in the U.S.A based on clinical-trials results.In worldwide comparison, the United States will create the largest income (US$624.10 billion in 2023) for pharmaceuticals.
- Brand Loyalty: J&Jwas making considerable efforts due to the ongoing coronavirus epidemic and the need for safe and effective vaccinations and treatments in order to return to normal life.Government and public showed massive participation for their laboratory trails.
- Post-COVID 19 Market The pharmaceutical sector was observed by the entire globe, especially in 2020-2021.Medical biotech businesses which were previously rarely noticed, turned to be the focus of worldwide interest, demonstrating the importance of this technology- and innovation-driven industry.
- Forbes, Profile, Johnson & Johnson
- Statista (February 2022) Johnson & Johnson’s expenditure on research and development from 2005 to 2021(in million U.S. dollars) | Statista| Statista.Availableat.Statista
- Statista, Pharmaceutical Products & Market. Statista.Availableat.Statista.
- About Johnson & JohnsonAbout
- Johnson & Johnson-2021 Health for Humanity Report. Johnson&Johnson
- Unilever at a glance. Unilever
- Statista (February 2020) Revenue of the Unilever Group worldwide from 2012 to 2021 (in billion U.S. dollars) | Statista. Statista.Availableat Statista
- Statista (9 November 2022) |Medical biotechnology – Statistics & Facts| Statista. Statista.Availableat Statista
- Congressional Budget Official (April 2021) | Research and Development in the Pharmaceutical Industry. AvailableatCBO
- Statista (February 2022) Sales of Johnson & Johnson’s top pharmaceutical products from 2018 to 2021(in million U.S. dollars) | Statista| Statista.Availableat.Statista
- Pfizer 2021 Annual Review, Financial Performance 2021.Available at Pfizer