One of the best ways to develop a picture of any company is with the SWOT analysis -- a look at a company's strengths, weaknesses, opportunities, and threats. Today, I'd like to focus on Johnson & Johnson (NYSE: JNJ), the 124-year-old behemoth that sells everything from baby shampoo to Splenda to stents. It's been in the news recently with recalls of many medicines, but this giant will probably be around for another century.
Image source: Getty Images.
Strengths:
- Broad diversity of products. Not reliant on a sole product line for majority of revenue.
- Repeat customers. People tend to be brand-loyal. If they buy Tylenol for their headaches, they tend to repeatedly buy Tylenol.
- Strong brands. "No more tears" shampoo, Band-Aid, Tylenol, Visine, etc.
- Generally smart purchasing of companies. For instance, it didn't purchase Guidant after Boston Scientific (NYSE: BSX) had bid the price up beyond what J&J was willing to pay.
Weaknesses:
- A conglomerate of relatively independent companies. Sometimes they can go off the reservation, such as what appears to have happened with McNeil Consumer Healthcare and the making of the children's medicine now being recalled.
- Several of its big drugs have lost or will soon lose patent protection.
- Many of its products are commodities. For instance, other adhesive bandages exist, not just Band-Aid.
Opportunities:
- Development of personalized drugs that work best on specific genetic profiles, such as Gleevec from Novartis (NYSE: NVS), which works well against specific mutations in people with chronic myeloid leukemia.
- Continued smart purchasing of companies with complementary products.
Threats:
- Increasing pressure to move to generic drugs.
- Stiff competition in stents, especially from Abbott Labs (NYSE: ABT), Boston Scientific, and Medtronic (NYSE: MDT), and having to keep one step ahead of everyone else.
What parts of J&J's SWOT need more detail? Fill in the blanks by using the comments section below.
