Although its name is perhaps most widely associated with babycare and Band-Aids, Johnson & Johnson has long been one of the world's biggest healthcare manufacturers, and got even bigger in 2006 with the purchase of the consumer health division of Pfizer. Yet despite that deal, consumer products are still the group's smallest segment (see separate profile). The largest chunk of group revenues comes from pharmaceuticals, including blockbusters such as Remicade, Stelara and Invega, followed by medical devices. The group flavours a highly decentralised structure with a broad portfolio of multiple separately branded subsidiary businesses, operating as Janssen Pharmaceuticals, Depuy and Ethicon among many others, rather than under the Johnson & Johnson banner. Despite its size and standing, Johnson & Johnson has endured repeated challenges in recent years, especially in the US, as a result of a series of manufacturing problems and product recalls that tainted the reputations of several of its best-known consumer healthcare brands. In the early 2010s it was forced to withdraw several of its OTC medicines, including flagship brand Tylenol, over fears of accidental contamination. Shortly afterwards it settled a regulatory lawsuit over off-label promotions of prescription medicines and kickbacks to doctors and pharmacists for a massive $2.2bn, then third largest pharmaceutical-related settlement in US history. Currently, the group is fighting several thousand lawsuits which allege that its talcum powder - a household staple for decades - causes ovarian cancer. Another ongoing battle claims that the group contributed to the US opioid crisis through mismarketing of certain pharmaceutical painkillers. Alex Gorsky is chairman & CEO of Johnson & Johnson. Despite the group's various challenges, revenues hit a record high in 2018 of $81.6bn, with net earnings of $15.3bn. The pharmaceutical division - primarily Janssen Pharmaceuticals - accounted for half of group revenues, or $40.9bn, while medical devices contributed a further $27.0bn. This division houses a vast array of specialist firms manufacturing products including artificial hip, knee and shoulder joints, cardiovascular and other implants, all types of surgical tools, wound closure devices and countless other items. It also houses the world leading Vision Care business among whose brands are Acuevue contact lenses. Consumer healthcare supplied the remaining $13.9bn of group revenues.
Capsule checked 30th September 2019
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Adbrands Daily Update 27th Aug 2019: Johnson & Johnson suffered damage on yet another legal front when an Oklahoma judge ruled that the company had caused a "temporary public nuisance" by contributing to the nation's opioid abuse crisis. He ordered J&J to pay $572m towards the costs of substance abuse treatment programmes, public education and medical services in Oklahoma. Lawyers for the state had argued that Johnson & Johnson mis-marketed its opioid products, promoting their benefits to treat chronic pain and hiding the risks of long-term addiction. The fine was considerably less than the $17bn that Oklahoma's attorney general had demanded; yet J&J said it will appeal against the verdict: "Neither the facts nor the law support this outcome". However, this first opioid mismarketing case is likely to open the floodgates to a barrage of similar lawsuits against Johnson & Johnson and other manufacturers. The ruling prompted Purdue Pharma - makers of OxyContin - and its owners the Sackler family to propose a class settlement with state and government departments worth up to $12bn.
Adbrands Daily Update 19th Jun 2019: Johnson & Johnson was awarded the Grand Prix in Entertainment at the Cannes Lions festival for a bold 50-minute documentary produced by UM's branded content division in partnership with Highway 61 Films and prodco Saville. '5B' tells the story of the nurses who staffed San Francisco General Hospital's first dedicated ward for for newly diagnosed AIDS patients, as that epidemic spread in the early 1980s. "A brave idea, beautifully told and brilliantly executed," said the judges.
Adbrands Daily Update 26th Mar 2019: Already each facing substantial legal challenges for other products, Bayer and Johnson & Johnson tooks steps to settle a lawsuit over the anticoagulant Xarelto. The drug was developed by Bayer and is co-marketed in the US by J&J. Some 25,600 claims have been filed so far alleging that Xarelto caused severe and sometimes fatal bleeding episodes in some patients. Only six cases have come to trial so far, all of which have been won by the two companies, but they have taken the decision to settle all the remaining cases. "Bayer continues to believe these claims are without merit and there is no admission of liability under the agreement," the company said. "However, this favourable settlement allows the company to avoid the distraction and significant cost of continued litigation." A fund of $775m, split equally between the partners, will settle "virtually all" of the current caseload, allowing Bayer to focus on the legal challenges to its weedkiller Roundup and J&J to continue its defence of its talcum powder.
Adbrands Daily Update 17th Dec 2018: Johnson & Johnson's shares - and its reputation - came under renewed pressure following publication of a Reuters investigation that says the company has known for decades of occasional contamination of its talcum powder with asbestos. The minerals that constitute asbestos often occur naturally in the same locations where talcum is mined, but J&J has for years strongly denied any connection between Johnson's Baby Powder or its other talc product and ovarian or other cancers. It is currently defending itself against lawsuits from a group now numbering some 11,700 women. J&J has also been obliged to make public decades' of internal memos and reports. These show that the company has worried for years about the potential for contamination while also aggressively discrediting any public reports of its dangers. Sifting through this mammoth archive, Reuters found a small number of cases where testing laboratories reported to J&J that they had found contaminants in talcum powder samples. In one case the levels of asbestos were "rather high". The first of these reports date from the late 1950s, with others from the mid-1970s, and some are as recent as the early 2000s. Johnson & Johnson accuses plaintiffs' lawyers of "distorting historical documents and intentionally creating confusion in the courtroom". CEO Alex Gorsky told analysts he is "confident that our products do not contain asbestos and do not cause ovarian cancer." However, one of the key points raised by the Reuters report is that "J&J talc products today may be safe, but the talc at issue in thousands of lawsuits was sold and used over the past 60 years." J&J says the Reuters report is "false and misleading", and has launched a print and online ad campaign to address the errors: "J&J's baby powder is safe and does not cause cancer. Studies of tens of thousands of women and thousands of men show that talc does not cause cancer or asbestos-related disease." However, the Reuters story was enough to spook investors, causing a near-13% fall in the company's stock price, its biggest short-term decline in 16 years.
Adbrands Weekly Update 19th Jul 2018: Johnson & Johnson received the biggest blow to-date in the legal challenge over its talcum powder. A jury in St Louis awarded a staggering $4.7bn in compensation and punitive damages to a class action suit brought by 22 women who claim that asbestos dust in Johnson's talcum powder caused them to develop ovarian cancer. J&J denies the allegations and says there is no asbestos in its product. It says its talc has undergone multiple scientific evaluations over the past 50 years, including several by the Food & Drug Administration, but none has found evidence of asbestos contamination. As a result, the company is determined to defend itself on a case by case basis, rather than come to a class settlement. Yet as a result it now faces some 9,000 separate lawsuits. Of the cases to have so far reached a verdict, J&J has won two and lost three; but in the two previous losses, much lower awards of $26m and $417m were later overturned on appeal. A sixth suit ended in a hung jury and was ruled a mistrial. It is set for a new hearing.
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