Published on 22.03.2024

Johnson & Johnson Stock

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Johnson & Johnson stock price

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Johnson & Johnson’s initial public offering (IPO)

On September 24, 1944, Johnson & Johnson made its debut on the New York Stock Exchange (NYSE) at a price of $37.50 per share. Johnson & Johnson is also included in the Dow Jones Index and trades under the ticker symbol JNJ.

Corporate strategy and future

During and after the Covid-19 crisis, Johnson & Johnson had to rethink its strategy and reorganise the company in order focus on driving profitability. For example, around the end of 2021, Johnson & Johnson announced that it intended to divest its consumer division. With a revenue share of 17%, it was the smallest division within the company, and it included consumer products such as baby care items, Listerine mouthwash, skincare products and bandages. After the divestiture, Johnson & Johnson continued with the pharmaceutical division, Janssen Pharmaceutical Companies and their medical device division.

According to its CEO, Alex Gorsky, the divestiture was not related to the numerous claims surrounding the potentially carcinogenic talcum powder that was sold within the consumer division. The decision to sell was driven by the division’s slow growth and low profitability. The separation was completed within two years, the entity was named Kenvue and received a separate listing on the stock exchange. Johnson & Johnson still holds 91.9% of the capital.

Other sector peers such as Pfizer, Merck and Novartis are also primarily focusing on their pharmaceutical divisions, which generate higher profit margins. After the divestiture of the consumer division, Johnson & Johnson still remains one of the largest healthcare companies in the world, with an annual revenue of nearly $80 billion.

Dividend of Johnson & Johnson

Johnson & Johnson is known as a reliable dividend payer. Dividend payments are made quarterly.

Major acquisitions

Johnson & Johnson has significantly strengthened itself through several major acquisitions. In 2006, the company acquired Pfizer's consumer healthcare division for $16.6 billion, gaining well-known brands such as Listerine mouthwash and Nicorette nicotine patches. With the acquisition of the Swiss company Actelion for $30 billion in cash in 2017, Johnson & Johnson made its largest takeover ever. Actelion specialises in rare diseases and has two highly promising products in their portfolio, with revenue expected to reach several billion dollars in the coming years after the purchase. These are two medications for pulmonary arterial hypertension (PAH), which is a condition that causes abnormally high blood pressure in the arteries of the lungs.

In 2020, Johnson & Johnson’s acquired biotech company Momenta Pharmaceuticals for $6.5 billion. Through the deal, the American company gained access to promising treatments developed by the biotech company. Momenta is currently working, among other things, on a treatment for the rare muscle disease myasthenia gravis, which involves the improper transmission of signals from the nerves to the muscles.

Large pharmaceutical companies like Johnson & Johnson are increasingly focusing on rare diseases due to the potential for higher profit margins. Like other pharmaceutical companies, Johnson & Johnson also embarked on the development of a Covid-19 vaccine. However, Johnson & Johnson's coronavirus vaccine did not become a big success. The Janssen vaccine, developed in Leiden, was found to have more side effects than the competing vaccines from Pfizer and Moderna and was shown to be less effective. The company also faced production issues with its Covid-19 vaccines.

History of Johnson & Johnson

Johnson & Johnson is one of the largest pharmaceutical companies in the world. The company was founded in 1886 in New Brunswick, New Jersey, by the brothers Robert Wood Johnson, James Wood Johnson and Edward Mead Johnson. They started with the production of ready-to-use sterile surgical dressings. The brothers were reportedly inspired by a speech in 1885 by the antiseptic advocate Joseph Lister. Robert Wood Johnson was the first CEO of Johnson & Johnson and under his leadership, the company worked to improve hygiene practices in hospitals throughout the rest of the 19th century.

In 1888, Johnson & Johnson pioneered the first commercial first aid kit, originally designed to help railway workers but soon became a standard for injury treatment. In 1894, the company introduced maternity kits to make childbirth safer for mothers and babies. Johnson & Johnson baby powder was also launched that year, becoming a highly profitable product.

Between 1896 and 1897, Johnson & Johnson produced the first mass-produced sanitary napkins, significantly promoting and advancing women's healthcare. One of Johnson & Johnson's subsidiaries is Ethicon, a manufacturer of surgical sutures and wound closure devices. It was established as an independent company in 1949 to expand and diversify Johnson & Johnson's product line. After World War II, Ethicon's global market share for surgical sutures increased from 15% to 70%. In 1959, Johnson & Johnson acquired McNeil Laboratories in the US and Cilag Chemie in Europe, establishing a significant position in the pharmaceutical market for the first time.

In 1961, Belgian company Janssen Pharmaceutica joined the Johnson & Johnson family. The founder, Dr. Paul Janssen, is widely regarded as one of the most innovative and productive pharmaceutical researchers of the 20th century. Today, Janssen is one of the world's leading pharmaceutical companies, marketing prescription drugs in the fields of gastroenterology, women's health, mental health, neurology and HIV/AIDS. Some of their more well known Janssen medications include: the anti-diarrheal Imodium, the antipsychotic Risperidone and the Alzheimer's drug Reminyl.

Controversies of Johnson & Johnson

Risperdal became known for the controversy in the US following its launch in 1994. Johnson & Johnson had to pay $8 billion in compensation to a man who developed female breasts during his teenage years. A court in Philadelphia ruled that the company did not adequately warn about the side effects of the Risperdal medication for schizophrenia.

This is not the only controversy that Johnson & Johnson has faced in recent years. The reputation of the healthcare company has also been damaged by allegations that Janssen played a role in the emergence of the US opioid addiction epidemic. Additionally, the company has been accused of selling talcum powder that can cause cancer.

The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks (e.g price volatility, currency or liquidity risk). You can lose your invested funds. Consider your knowledge and experience when making investment decisions. Past performance is not a reliable indicator of future results. Markets are volatile and can fluctuate significantly due to economic, political, regulatory, or other developments.

Sources: Johnson & Johnson, Pharmaphorum, Reuters, PwC.

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