Johnson & Johnson : advertising & marketing profile

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Best-known for 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 - and medical devices. The group flavours a highly decentralised structure with a broad portfolio of almost 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 difficult trading 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.

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Johnson & Johnson Consumer Healthcare

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Pharmaceutical

Janssen Xarelto
Remicade Renova
Procrit Simponi
Risperdal Stelara
Concerta Prezista

Medical Devices

DePuy Acuevue
Ethicon Indigo Medical
Sterrad Ethicon Endo-Surgery

Recent stories from Adbrands Weekly Update:

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.

Adbrands Weekly Update 25th Jan 2018: Johnson & Johnson seized the opportunity offered by the tax reform bill to repatriate several billion dollars of cash held outside the US, thereby incurring a massive $13.6bn charge against its 4Q results, resulting in a near-$11bn loss. It's a tactic that is being used across the board by US corporations, and therefore these one-off losses are being almost entirely disregarded by investors. The write-off accompanied strong topline growth of almost 16% for the pharma portfolio, including a 36% leap by J&J's oncology drugs. Sales of new launch Darzalex more than doubled to $1.2bn, while Imbruvica jumped over 50% to $1.9bn. For the full year, group revenues increased by over 6% to $76.5bn, with solid growth across all main divisions, ranging from 2% in consumer healthcare to 6% in medical devices and 8% in pharma. However the huge 4Q loss caused net earnings for the year to plunge by 92% to $1.3bn. Excluding exceptional items, EBITDA was up almost 7%.

Adbrands Weekly Update 23rd May 2017: Samsung isn't content to stick to electronics and consumer appliances in international markets. One of the group's fastest-expanding sidelines is in pharmaceutical development. Samsung Bioepis makes biologic copies - or "biosimilars" - of leading pharmaceuticals approaching expiry. In its most high-profile such case, it has developed a copy of Johnson & Johnson's top-selling arthritis drug Remicade. This is already available in Europe (where it is marketed as Flixabi by Biogen) and is set to debut in the US later this year under the name Renflexis, partnered by Merck & Co. The drug has already been approved by the FDA, but J&J has issued a lawsuit to block the US launch, alleging copyright infringement. Remicade - which had sales of $5bn in the US last year - already faces competition from another generic competitor, Inflectra, co-marketed by Pfizer and Celltrion.

Adbrands Weekly Update 11th May 2017: Johnson & Johnson's reputation - still fragile after a series of OTC recalls over the past decade - remains under intense pressure following the loss of another court case over alleged links between use of its talcum powder and ovarian cancer. This latest is the 4th J&J has lost, but the award of punitive damages of $110m is the steepest yet, bring total potential costs to-date of more than $300m. J&J is appealing the penalty, citing the fact that it has been cleared in three other such trials. The task ahead is daunting, though, with well over 3,000 other talc-related suits still awaiting their day in court. Meanwhile, regulators opened a new investigation into sales and marketing practises for several of the group's prescription pharmaceuticals including arthritis drugs Remicade and Simponi, hepatitis C treatment Olysio and psoriasis drug Stelara.


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Background

Free for all users | see full profile for current activities: Johnson & Johnson was formed in the early years of modern medicine, initially to combat high rates of infection among operative patients. In the late 19th century, surgical dressings were generally made from dirty cotton, swept from the floors of textile mills. But medical practice was gradually being revolutionized by Sir Joseph Lister's discovery of bacteria, and the realization that they could spread infection within the largely unhygienic theatres in which operations were performed. In 1886, brothers James and Edward Mead Johnson established a company to manufacture surgical dressings which would protect wounds from these bacteria, then a completely novel concept. However the driving force behind the business was the third brother Robert, who joined the firm in 1887, and suggested coating the inside of the dressings with an antiseptic compound to aid recovery. Despite the presence of three brothers, the business kept its original name of Johnson & Johnson. Ten years later, Edward Mead Johnson left the firm and set up his own business making nutritional products for babies. That company, Mead Johnson, is now a division of Bristol Myers-Squibb.

Johnson & Johnson's antiseptic plasters were followed by absorbent gauze dressings, and in 1888 the company published the textbook Modern Methods of Antiseptic Wound Treatment, which for many years remained a standard text on antiseptic practices. In 1890, in answer to a complaint from a doctor that their plasters had caused skin irritation in one of his patients, the company began packaging Italian talcum powder with their dressings. It was soon apparent that the same powder was also invaluable for preventing skin irritation in babies, and the scented talc began to be sold separately under the name of Johnson's Baby Powder in 1892. The same year the company developed the first dressing which was not only antiseptic but also pre-sterilised, followed by zinc oxide plasters in 1899. Continued experimentation finally led to the creation of one of the company's most successful products, the Band-Aid plaster, first launched in 1921. The product is credited to Johnson Kenyon, manager of the company's textiles mill. According to company legend, his accident-prone wife had a habit of cutting her finger while preparing dinner. To save her time when bandaging the wounds, Kenyon laid out a long strip of the company's surgical tape on the table sticky side up, and placed small pads of gauze along the strip. Then he attached a separate strip of non-stick crinoline on top and rolled up the whole device, so she could just cut off a piece of the bandage each time she needed a piece.

The company expanded rapidly to market its new discoveries. Robert Johnson had died in 1910, succeeded as president by his brother James. But his sons came to play an important part in the business. International expansion began in 1919, with a Canadian affiliate, followed by the establishment of a UK division in 1924. Robert Wood Johnson Jr became president in 1932, and set in place a process of a rapid growth. As the company grew, its different divisions were established as independent operating units. In 1941, the group's suture business was separated from the rest of the group, and renamed Ethicon in 1949. Johnson & Johnson also introduced a range of birth control products under the Ortho brand. In 1959, the group acquired pharmaceutical laboratory McNeil Laboratories. The following year, McNeil launched pain reliever acetaminophen under the Tylenol brandname. The same year, the group acquired Swiss drug company Cilag-Chemie and Janssen Pharmaceutica of Belgium. The two were merged to form Janssen-Cilag. Other acquisitions included Dr Carl Hahn Company in Germany, the manufacturer of sanitary protection products for women (1974); and the Penaten Group, Germany's leading baby toiletries company (1986).

A series of other acquisitions followed during the 1980s and 1990s. Frontier Contact Lens was acquired in 1981 and became Vistakon, the leading contact lens company in the US. The business introduced Acuevue contact lenses in 1983. In 1986, Johnson & Johnson acquired LifeScan, which makes home blood glucose monitoring systems for people with diabetes. J&J claims to prefer forging partnerships with smaller, entrepreneurial businesses whose innovative products can benefit from J&J's marketing muscle. However, it also operates joint ventures with bigger partners in the industry. A joint venture was formed in 1989 with Merck to develop and market a range of non-prescription products acquired from ICI. The group was also one the first into China - Janssen Pharmaceutica entered the market in 1985, followed by Johnson & Johnson's Band-Aid business in 1990.

In 1993 and 1994, the group acquired French skincare business RoC as well as Neutrogena in the US. Other purchases included Mitek Surgical Products (1995), circulatory remedy business Cordis (1996), orthopaedic products maker DePuy (from Roche in 1998) and FemRX (1999). Also that year, Johnson acquired SC Johnson & Son's skincare business, based around the Aveeno brand, and agreed a partnership with Shiseido. Johnson launched the latter's Super Mild shampoo in Asia-Pacific outside Japan, while Shiseido marketed Neutrogena in Japan. In 1998, the company secured North American rights to Benecol, an innovative Finnish margarine product made from wood pulp which reduces cholesterol levels. The product launched in 1999 in the US.

In 1999 Johnson agreed the purchase of biotechnology group Centocor for $4.9bn, after more than six months of negotiations. The following year the group announced it would stop marketing its heartburn drug Propulsid in the US after reports of serious cardiovascular side effects. Also in 2000, the group acquired Innovasive Devices, specialising in surgical devices for sports injuries. Group subsidiary Cordis acquired Atrionix, a company manufacturing catheter-based systems for the treatment of heart conditions. In 2001 the group acquired online business BabyCenter Inc from failed dotcom retailer eToys. A few months later it announced a new partnership with Danone to produce a new range of nine skincare products under the Evian Affinity brand. The group launched another major acquisition in early 2001, agreeing to buy Alza Corporation for around $12.3bn, then its biggest ever purchase.

The group's most significant purchase in recent years was the deal to acquire Pfizer's mammoth OTC portfolio. That deal was agreed in June 2006, with a price tag of $16.6bn, and completed at the end of the year. In early 2007, J&J disclosed that it had uncovered evidence that two of its international subsidiaries in the medical devices division had made improper payments relating to sales of products. No further details were released, but the improper payments were thought to constitute bribes. Although he did not appear to have been personally involved in the matter, Michael Dormer, chairman of the group's medical devices division, accepted responsibility for the actions and resigned. See full profile for current activities


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