Could Johnson & Johnson’s Revenue Growth Stall?

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Johnson & Johnson (NYSE:JNJ) generates its revenues from sales of pharmaceutical products, medical devices, and consumer products. The company’s revenues have grown 14% between 2016 and 2018, led by Actelion and Abbott Medical Optics acquisitions, and growth in some of its oncology drugs. However, the revenue growth could stall in the near term, as growth in some of the oncology drugs could be offset by biosimilar competition for some of the blockbuster drugs, such as Zytiga and Remicade, along with the company’s divesture of the Diabetes medical devices business. Also, the ongoing litigations, and the recent baby powder recall over asbestos concerns, could impact the consumer products sales. In this note we discuss Johns0n & Johnson’s revenue sources, its business model, revenue growth, and forecasts. You can view our interactive dashboard analysis ~ JNJ Revenues: How Does Johnson & Johnson Make Money? ~ for more details.  In addition, you can see more of our data for Healthcare companies here.

Johnson & Johnson Generates Its Revenue From Sales of Pharmaceutical Products, Medical Devices, And Consumer Products. Its Largest Segment In Terms of Revenues Is Pharmaceuticals, Which Accounted For 50% of Total Revenues In 2018.

Johnson & Johnson’s Business Model

  • What Need Does It Serve?
    • Johnson & Johnson primarily serves the pharmaceuticals, medical devices, and consumer products markets. The company discovers, develops, and sells pharmaceutical products globally. Its drugs are used for the treatment of various types of diseases, including cancer, heart-related, and infectious, among others.
    • Overall, the company’s pharmaceuticals portfolio can be divided into 6 categories, primarily on the basis of therapeutic areas: 1) Cardiovascular, 2) Oncology, 3) Anti-Infectious, 4) Immunology, 5) Neuroscience, and 6) Pulmonary.
    • Johnson & Johnson sells medical devices for Orthopaedics, Surgery, Interventional Solutions, and Vision Care. These medical devices are used primarily by various healthcare institutions in several countries.
    • Lastly, the company’s consumer products business includes its beauty products, baby care, and OTC among others.
  • Who Pays To Johnson & Johnson?
    • Chain stores (Walgreens, CVS, Rite-Aid, Walmart), clinics, long term care facilities, health maintenance organizations, federal facilities, non-federal institutions, mail order pharmacies, and retail stores.
  • What Buyers Care About?
    • Price
    • Subsidies available in the form of reimbursements
    • Availability
    • Any possible side effects
    • Brand image
  • What Are The Alternatives To Johnson & Johnson?
    • Within pharmaceuticals, other alternatives are Bristol-Myers Squibb, Roche, Pfizer, Merck, Abbvie, GlaxoSmithKline, and Teva, among others.
    • Outside of pharmaceuticals, other alternatives are acupuncture, aromatherapy, ayurvedic medicine, chiropractic care, homeopathy, and nutritional counseling, among others.
    • In Medical Devices, Johnson & Johnson competes with Boston Scientific, Medtronic, Abbott Labs, and Intuitive Surgical.

Johnson & Johnson’s Total Revenue Grew 14% Between 2016 And 2018. However, The Growth Could Stall In The Near Term, Due To Biosimilar Competition For Some of The Company’s Blockbuster Drugs.

  • Johnson & Johnson’s total revenue grew from $71.8 billion in 2016 to $81.6 billion in 2018.
  • This growth was largely led by its oncology portfolio, which added $4 billion in sales during the same period, primarily driven y multiple approvals for Imbruvica and Darzalex.
  • The acquisition of Actellion also aided the revenue growth in 2018. It added over $2.5 billion in sales in 2018.
  • However, as we look forward, the revenues could hover around the $82 to $83 billion mark, as continued growth in some of the drugs, such as Imbruvica and Darzalex, could be offset by increased competition post loss of market exclusivity for Zytiga and Remicade.

Revenue Growth Over The Next Few Years Could Be Slow, Due To Increased Competition, Divestures, And Ongoing Litigations That May Impact Consumer Products Sales.

 

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