Highlights • Dominant Position in Industry: Johnson and Johnson is a leading company in healthcare industry. It is one of the world largest pharmaceutical and medical devices company. The high reputation and “AAA” credit rating enhanc the confidence of investors.
• Strong Financial Results: Johnson and Johnson has an outstanding ability to generate large amounts of profits with the lower level of leverage.
• New Product Launches and Regulatory Approvals: J&J is highly innovative by increasing investments in R&D departments. The company received a lot of regulatory approvals over the world, and it launches several important drugs and medical devices which will fuel its internal growth.
• Strategic merge and Acquisitions: J&J enhanced …show more content…
Johnson and Johnson is assumed to keep a 4% growth in sales by the end of 2017, which is mainly due to the enhanced product pipelines recently. According to the historical performance, this conservative growth will decline because of the appearance of biosimilar and market saturation. Therefore, after 2017, this model assume J&J will maintain its 5-year average sales growth of 2.71% which is below the industry average growth. Also, some of important patents and approvals will expire by the beginning of 2018. After discounting the per share value, our one-year forward price target for J&J is $129.00, this offers in excess of a 12.03% …show more content…
The industry has pretty high requirement on capital that needs to be invested in research and development and in building extensive manufacturing capabilities. In addition, the regulations of patent, quality, and approvals of the products also are tough challenges for the new entrants.
Suppliers Power
Johnson sells highly differentiated products. Suppliers are not very treatable. Also, the cost of materials is the medical and electrical equipment manufacturing industry’s largest expense item. In addition, companies purchase faked products and electronic components. A rise in the price of raw materials in recent years will be largely offset by this industry 's pricing actions. The power of supplier will still be stable unless it finds substitutes for its manufacturing.
Power of Buyers
For Johnson, the threat of buyers is low. No individual customer accounts for more than 10% of its total revenue. The industries primary customers are hospitals, clinics, third party healthcare providers/insurance, and governmental health care programs. Also, as the aging population is booming, the need for medical devices grows every day. Products and services provided by Johnson affect thousands of
• Strong Financial Results: Johnson and Johnson has an outstanding ability to generate large amounts of profits with the lower level of leverage.
• New Product Launches and Regulatory Approvals: J&J is highly innovative by increasing investments in R&D departments. The company received a lot of regulatory approvals over the world, and it launches several important drugs and medical devices which will fuel its internal growth.
• Strategic merge and Acquisitions: J&J enhanced …show more content…
Johnson and Johnson is assumed to keep a 4% growth in sales by the end of 2017, which is mainly due to the enhanced product pipelines recently. According to the historical performance, this conservative growth will decline because of the appearance of biosimilar and market saturation. Therefore, after 2017, this model assume J&J will maintain its 5-year average sales growth of 2.71% which is below the industry average growth. Also, some of important patents and approvals will expire by the beginning of 2018. After discounting the per share value, our one-year forward price target for J&J is $129.00, this offers in excess of a 12.03% …show more content…
The industry has pretty high requirement on capital that needs to be invested in research and development and in building extensive manufacturing capabilities. In addition, the regulations of patent, quality, and approvals of the products also are tough challenges for the new entrants.
Suppliers Power
Johnson sells highly differentiated products. Suppliers are not very treatable. Also, the cost of materials is the medical and electrical equipment manufacturing industry’s largest expense item. In addition, companies purchase faked products and electronic components. A rise in the price of raw materials in recent years will be largely offset by this industry 's pricing actions. The power of supplier will still be stable unless it finds substitutes for its manufacturing.
Power of Buyers
For Johnson, the threat of buyers is low. No individual customer accounts for more than 10% of its total revenue. The industries primary customers are hospitals, clinics, third party healthcare providers/insurance, and governmental health care programs. Also, as the aging population is booming, the need for medical devices grows every day. Products and services provided by Johnson affect thousands of