Johnson & Johnson is a holding company. Through its subsidiaries, Co. engages in three business segments. The Consumer segment includes products used in the baby care, skin care, oral care, wound care and women's health care fields, and nutritional and over-the-counter pharmaceutical products, and wellness and prevention platforms. The Pharmaceutical segment includes products in the areas of anti-infective, antipsychotic, contraceptive, gastrointestinal, hematology, immunology, infectious diseases, neurology, oncology, pain management, thrombosis and vaccines. The Medical Devices and Diagnostics segment includes products used principally by physicians, nurses, hospitals, and clinics.
JNJ has dug a large moat supported by intellectual property in the drug group, switching costs in the device segment, and strong brand power from the consumer group. J&J diverse operations are another strength. Johnson & Johnson's R&D efforts support its robust revenue base.
J&J’s pharmaceutical business, has delivered tremendous top- and bottom-line growth throughout the year. Both new and existing drugs contributed to the group's results, although most of the credit goes to J&J's new hepatitis C drug OLYSIO. Consumer and Medical Devices segments struggled to generate growth over the last 12 months but Pharmaceutical business ought to continue to report solid top-line figures. Longer-term total-return potential is decent, thanks in large part to the above-average dividend yield,
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Leadership position in diverse healthcare segments
Strong R&D enabling J&J to launch innovative products
Robust performance by all three business segments
Strong cash position providing J&J financial flexibility for further expansion
Manufacturing and quality issues in OTC products
Product recalls may dent J&J’s brand image
Healthcare reform in the US could negatively impact J&J's profitability
Cutbacks in healthcare spending may affect J&J's product sales growth
Lucrative distribution and collaboration agreements
Further expansion in emerging healthcare markets
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