Johnson & Johnson: A Brief Overview
Johnson & Johnson (JNJ) is one of the world's largest multinational corporations. Founded in 1886 by three brothers, the company is headquartered in New Brunswick, New Jersey. It operates more than 250 different subsidiaries in over 60 countries, employing over 130,000 people.
The company trades on the New York Stock Exchange (NYSE) with a share price of approximately $167 as of Dec. 2021, with a market capitalization of over $442 billion. JNJ reported $82.58 billion in revenue for the 2020 fiscal year—$43.13 billion from the United States while the remaining $39.45 billion came from international sources.
Johnson & Johnson derives its profitability from three distinct segments—pharmaceuticals, medical devices, and consumer products. In Nov. 2021, the company announced plans to split into two publicly traded companies. One will be made up of the company's pharmaceuticals and medical devices business, and the other will be comprised of J&J's consumer products business. The split is expected to be completed by the end of 2023.
Key Takeaways
- Johnson & Johnson is a giant in the health care space that was founded in 1886.
- The multi-billion market cap company has three key segments—pharmaceuticals, medical devices, and consumer products.
- The pharmaceuticals business makes up roughly over half of J&J's pretax income, medical devices almost 30%, and the consumer products division making up the rest.
- In Nov. 2021, J&J announced plans to split into two publicly traded companies—one made up of the pharmaceuticals and medical devices businesses and the other comprised of consumer products.
- Despite successfully developing the world's first single-dose COVID-19 vaccine in 2020, JNJ had some challenges because of potential side effects and quality control issues.
Pharmaceuticals
The pharmaceutical segment of Johnson & Johnson generates the majority of the company's sales. This division accounted for more than half of JNJ's revenue for the full year. At over 55% of overall revenue, pharmaceuticals drew in a total of $45.57 billion in sales. This was a growth of 8.4% from the previous year.
The company pointed to several highlights that boosted growth in the segment, including demand for some of its key biologic medications. These medications are used in the treatment of immune-mediated inflammatory diseases, cancer, psoriatic arthritis, and schizophrenia.
JNJ developed the world's first single-dose COVID-19 vaccine, which contributed to its financial success for the fiscal year. Federal authorities in the United States approved the use of the vaccine in the fight against the pandemic in February 2021. Clinical trials demonstrated that the vaccine was 85% effective against the virus.
The U.S. rollout for the JNJ vaccine was stalled, following reports of severe side effects and issues with quality control. But the company's international vaccine rollout has progressed, with the U.K. government authorizing it for emergency use in May 2021. The vaccine was approved for use in Canada for adults ages 18 and older in late 2021. Plans are in the works to expand its use in lower-income countries, most recently donating almost 100 million doses in November 2021.
J&J's profitability is not broken down by region but the company does disclose U.S. and international sales totals.
Medical Devices
This division is divided into four different areas, including:
- Orthopedics: joint reconstruction, trauma, spine, sports medicine, and power tools
- Surgery: surgical systems and instruments
- Interventional solutions: heart rhythm disorders and neurovascular care support for health care professionals
- Vision
Revenue for the medical devices segment dropped in 2020 by 10.5%. The company attributed this to the effects of the COVID-19 pandemic as well as medical procedure deferrals. Medical devices generated about $22.96 billion in sales, which represented 27.8% of total revenue for the year.
Despite the challenges, the company—and the industry—experienced during the year because of the pandemic, Johnson & Johnson said it concentrated its efforts on urgent needs by training over six million medical workers and providing personal protective equipment.
JNJ is a major innovator in the health care sector. In fact, it was the very first company to produce dental floss, feminine hygiene products, first aid kids, and maternity kits on a mass scale.
Consumer Products
Johnson & Johnson's consumer products segment offers a broad range of products used in three distinct categories:
- Skin health
- Self-care
- Essential health
These categories provide consumers with a wide range of products ranging from baby care, oral care, beauty products, women's health, wound care, to over-the-counter medicines like Tylenol, Motrin, Zyrtec, and Benadryl.
This segment was responsible for 17% of total sales, representing $14.05 billion of revenue for the full year. According to the earnings report, the division's sales grew by 3% from the previous year, fueled by demand for some of its key brand names, including Tylenol and Listerine.
The company also highlighted the launch of about 200 new product lines during the fiscal year. This included the release of a digital smoking cessation tool in the United Kingdom.
