Johnson & Johnson (JNJ)

Johnson & Johnson is an American company widely known for its involvement in healthcare and body care products. Its involvement in this sphere covers research and development, manufacture and sales. Johnson & Johnson conducts its business globally through several subsidiary firms, which are found in three segments:

  1. Pharmaceutical
  2. Consumer
  3. Medical Devices.

Johnson & Johnson has been in business for close to 130 years and its products are seen in countries on all continents.

  1. Pharmaceutical

Johnson & Johnson’s pharmaceutical business has churned out products which are focused on treatment of cancers, infectious diseases, immune system related ailments, the neurosciences and cardiovascular ailments. These are mostly products which are available via prescriptions. Some of the most important medications produced by Johnson & Johnson’s pharmaceutical arm include drugs used to treat hepatitis C, HIV, inflammatory ailments, attention-deficit disorders, prostate cancer and diabetes. Johnson & Johnson also makes drugs used in treating deep vein thrombosis and stroke preventive medication. Considering that the incidence of the diseases treated by these medications are quite high, sales of the products from the pharmaceutical division of Johnson & Johnson account for a large chunk of its revenues.

  1. Consumer Segment

Products churned out by the consumer segment of Johnson & Johnson includes a wide baby care, oral care, skin care, wound care and beauty products. The popular JOHNSON’S Baby line of products, Listerine, Clean & Clear; Neutrogena, Tylenol, Band-Aid bandages and Neosporin are products which readily come to mind and are used by millions of people around the globe.

  1. Medical Devices

This is the least known of Johnson & Johnson’s line of products. Products from the Medical Devices division are regularly used in orthopedics, surgery, diagnostics, diabetes, eye care, etc. and are principally used by medical professionals.

What can investors in Johnson & Johnson stock look forward to?

While the company’s products are used by millions of people globally, Johnson & Johnson underperformed in 2015. For instance, while its pharmaceutical and consumer business segments grew, its medical devices division declined considerably. This was not helped by the underwhelming performance of its anti-hepatitis C drug Olysio, in terms of sales as Gilead Science’s competing drug Harvoni claimed market share. The stock was also hurt by currency fluctuations in 2015 and the company’s 2015 revenues fell by about 5.7%.

The company has decided to let the bad figures roll of its shoulders and have started to make strategic alliances to get back its market share. Johnson & Johnson has announced 5 key collaborations which will see it get involved in producing medication against Hepatitis C, Human Papilloma Virus (HPV, which has been implicated in cervical cancer in women), diabetes and Ebola, capturing a market populated by about 650 million patients. Johnson & Johnson was also able to secure the approval of 8 new drugs in 2015 and will look to build on this in 2016.

The company has to move fast to forestall more loss of revenue, especially as it is set to lose patents for some of its medications by 2020. Estimated revenue decline as a result of loss of patents on some of its neuroscience, anti-infective drugs as well as the patent on Remicade could reach $8m. The company looks to forestall this by pushing forward with development of new drugs and overall boost of sales of products from the pharmaceutical division. It is pertinent to state the pharma division’s sales has helped the company’s revenues.

2016 may not be a very stellar year for Johnson & Johnson. Indeed, we may see prices stuck in a band, unless something dramatic were to occur in sales from its consumer and pharma divisions. Investors must therefore be aware that the company is in a process of rebalancing its product lines and financials and must therefore exercise patience when trading this company’s stock.