Annual Report And Position Case Study

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Johnson & Johnson Pharmaceutical Division: Value Proposition Quality Metrics

The quality metrics of Johnson and Johnson's Pharmaceutical division indicate the company is moving forward in an innovative direction that is in line with the industry's future-looking direction. As David Norton, chairman of Johnson and Johnson's Global Pharmaceutical division stated, "We're currently a consumer, diagnostic and medical device and a pharmaceutical business" -- and in the future the business will be "about managing schizophrenic patients, ensuring that they have appropriate access to care, to provide them with access to medications, not only ours but in general..." (Smith, 2016, p. 110). In short, in terms of quality, Johnson and Johnson looks to advance the pharmaceutical division towards "something more akin to a disease management program" (Smith, 2016, p. 110). Thus, by a quality metric, Johnson and Johnson is leading the industry towards a new concept of consumer demand and need-meeting, taking the pharmaceutical industry to a new level of comprehensive care that is about more than just providing a drug: it is about helping patients through an entire system of therapy as they battle specific diseases.

Financial Metrics

Financially,...

...

ft of property devoted to the divison's manufacturing, and sales in 2015 of $31.4 billion (Annual Report, 2016, p. 13). This was a year-over-year decrease of 2.7% alongside an operational growth of 4.2%. Negative currency impact of 6.9% played a significant role in this decline (Annual Report, 2016, p. 13).
Sales in the U.S. totaled $18.3 billion -- 5.2% more than in 2014. International sales, however, declined by 12% to $13.1 billion -- largely because of competitive products introduced to the market.

12.9% of sales is used to fund research and development for the division (Annual Report, 2016, p. 18). Cash and cash equivalents for the company stood at $13.7 billion, down from $14.5 in 2014.

The company does hedge currency fluctuations by investing in both fixed rate and variable rates of interest. In 2015, the company borrowed $19.9 billion, up $1.1 billion from 2014. The company's total debt is 21.8% of total capital (Annual Report, 2016, p. 22).

According to these financial metrics, Johnson and Johnson's Pharmaceutical division is leveraged quite highly and depends to a great deal on continued financing. This is not a favorable position to be, as international competition has cut into its market share and a weakening economy verging on recession could further…

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