Detailed Company Breakdown

30-MAY-17

JNJ is made up of three sectors. Pharmaceutical, Consumer and Medical Devices. Pharmaceutical is the biggest sector, making up 46,41% of first quarter sales in 2017. Medical devices come in at second place with 35,42% of first quarter sales. Consumer goods make up the remaining 18,17% of sales. When comparing the first quarter of 2016 to 2017 all of these sectors have grown in sales. The most sizeable change being in the medical devices sector which grew sales by $184 000 000.

The business is going to keep buying different products and companies that are profitable and can boost the areas in which their footprint is currently small. When you look at Johnson & Johnson's size, they have so much distribution power, they have so many relationships with different providers of medical devices, that they're able to take these smaller companies and leverage them and make them more valuable than they would have been as stand-alone.

Pharmaceutical

JNJ's biggest sector by sales and most profitable by margin, with operating margins of 39%. The pharmaceutical sector doesn't include the OTC (over-the-counter) drugs that they make.

Remicade has the biggest sales, making up 9,41% of first quarter sales of the entire business in 2017. Remicade is used to treat many auto-immune conditions including Crohn's disease, ulcerative colitis, rheumatoid arthritis and plaque psoriasis. There are 2,5 million prescribed users worldwide. Sales have fallen between '16 and '17 due to Pfizer releasing a biosimilar. Sales in the next few years depend on how the drug is priced relative to its new competitor.

Stelara is another immunology drug that has sales amounting to $824m (4.6% of sales) in the first quarter. It is an immunosuppressant that reduces the effects of inflammation. It was approved by the FDA for usage on Crohn's disease and sales have increased further.

Xarelto, is a blood thinning drug that is given to patients to prevent or treat blood clots. Since its inception in '11 the drug has gained momentum and sales have grown. It now holds 17.1% of total market share. It continues to take market share away from Walfarin.

Imbruvica, a cancer fighting drug has grown in sales by 56,7% over the last year to $409 million for the 1st quarter. JNJ plans seven new label expansion filings, including four that could add $500 million or more to Imbruvica's annual sales

Darzalex was only launched three months ago, it has already become the most prescribed fourth-line therapy in multiple myeloma, a multibillion-dollar per year indication.

There are many filings in the JNJ pipeline that are expansions on current drugs. What this means is that they are looking to utilise drugs for different uses than they have previously been approved for. Both drugs that treat cancer are in Phase 3. Zygita treats prostate cancer and Yondelis ovarian cancer.

Consumer

This is JNJ's smallest sector and the sector with the lowest margins currently at 20%, which is still an impressive number. It showed valuable sales growth over the last year. The business comprises of a broad range of products used in baby care, oral care, skin care, women's health, wound care and over-the-counter (OTC) medicines. OTC and skin care are the largest sales for the consumer products segment. Some of these products include Tylenol and Neutrogena. JNJ has taken steps to improve the business' profitability over the last couple of years. This includes a new management team, which led it to getting OTC products back on shelves in the United States and implementing new manufacturing quality standards.

Medical Devices

The medical devices sector of JNJ is the 2nd biggest sector but is growing quicker than the bigger Pharma division. In terms of margins it also falls in second place sitting at a juicy 32%. The biomedical realm is a dynamic environment with technology developments taking place all the time. This is a business segment that is very much managed by adding on small acquisitions and getting rid of low performers.

DePuy Synthes, the orthopedic sector of JNJ is the biggest part of their medical-device sales. Hips, knees, spine. There has been some pricing pressure there. It's a highly competitive market.

The other sector that does well is the surgical equipment sector run under the company Ethicon. This is everything from tools to recovery devices.

JNJ Vision has grown significantly in the last year. They bought the medical-optics subsection of Abbott Labs. This rounded out their eye-health offering, particularly within the surgery category of vision care. They are also responsible for the contact lenses brand Acuvue. More people wanting to get laser eye surgery has created good growth for the sector. That vision-care segment was up the most of any medical devices segment, and it now counts for about 13% of medical devices.

The Diabetes care sector had 2,25% of total sales in the first quarter. LifeScan makes blood glucose monitoring systems for home and hospital. This is a sector that is struggling. JNJ is busy looking at options into how they should take this business forward. Some changes might happen in the next year.

Here are some tabled breakdowns for each division:

Pharmaceutical Division Breakdown
Medical Devices Division Breakdown
Consumer Division Breakdown
Company Breakdown