COMPANY PROFILE PROJECT
University of North Texas
FINA 5170 Section 081
Fall 2023
Company Profile Project | 1
Company Introduction ................................................................. 2
Operating Income ......................................................................... 3
Sales & Operating Income ..................................................... 3
Discussion Topics .................................................................. 5
Effects of the Pandemic on the Firm .......................................... 6
Returns and Standard Deviations .............................................. 7
Firm’s Buy-and-Hold Return................................................... 7
Standard Deviation................................................................. 8
Sources of Firm’s Beta ........................................................... 8
Governance .................................................................................. 9
CEO of Johnson and Johnson ............................................. 10
Executive Compensation ..................................................... 11
Total Director and Officer Ownership ................................... 13
References .................................................................................. 14
Company Profile Project | 2
Company Introduction
Johnson & Johnson, a globally recognized multinational corporation, stands as a
stalwart in the healthcare industry. Renowned for its groundbreaking contributions in
pharmaceuticals, medical devices, and consumer packaged goods, the company has
dedicated itself to advancing the health and well-being of people worldwide through
innovative healthcare solutions. The following chart illustrates the primary segments
within Johnson & Johnson's portfolio:
Pharmaceuticals
Segment:
Medical Devices
Segment:
Consumer Health
Segment:
- Remicade (Rheumatoid
Arthritis)
- DePuy Synthes
(Orthopedic Devices)
- Band-Aid
- Adalimumab (Crohn's
Disease)
- Ethicon (Surgical
Equipment)
- Tylenol
- Imbruvica (Cancer
Treatment)
- Biosense Webster
(Cardiovascular Devices)
- Neutrogena
- Stelara (Skin
Treatments)
- Acuvue (Eye Care
Products)
- Lactaid
Within its diversified portfolio, Johnson & Johnson operates across three primary
segments, each addressing distinct facets of healthcare: Pharmaceuticals, Medical
Devices, and Consumer Health. These segments serve as pillars, supporting the
company's mission to offer comprehensive healthcare solutions catering to diverse
needs.
The Pharmaceuticals segment spearheads the development and distribution of cuttingedge drugs that target critical medical conditions. This segment boasts a range of
revolutionary medications, including Remicade for Rheumatoid Arthritis, Adalimumab for
Crohn's Disease, Imbruvica for Cancer Treatment, and Stelara for Skin Treatments.
These pharmaceutical marvels represent Johnson & Johnson's commitment to
combating prevalent diseases and improving patients' lives worldwide.
Company Profile Project | 3
In the realm of medical devices, Johnson & Johnson excels in delivering state-of-the-art
equipment designed to enhance healthcare outcomes. The DePuy Synthes arm
specializes in pioneering Orthopedic Devices, catering to patients' orthopedic needs
globally. Ethicon, another pivotal division, focuses on developing and providing
innovative Surgical Equipment, aiming to improve surgical procedures and patient
recovery. Additionally, Biosense Webster leads the charge in pioneering advanced
Cardiovascular Devices, while Acuvue stands out as a frontrunner in Eye Care
Products, emphasizing ocular health and vision correction.
Complementing these segments, the Consumer Health division caters to everyday
health needs, delivering products that are household names. Band-Aid, the iconic brand
known for its wound care solutions, stands as a testament to the company's
commitment to consumer well-being. Tylenol, a trusted pain reliever, addresses
common ailments, while Neutrogena offers an array of skincare solutions. Furthermore,
Lactaid provides essential support for individuals with lactose intolerance, showcasing
Johnson & Johnson's dedication to catering to diverse health needs.
Operating Income
Sales & Operating Income
Year
Net Sales
Operating Income
Operating Margin
2018
$81,581
$17,999
22.1%
2019
$82,059
$17,328
21.1%
2020
$82,584
$16,497
19.9%
2021
$93,775
$22,776
24.3%
2022
$94,943
$21,725
22.9%
Company Profile Project | 4
Percent of Total
Sales by Segment
Year
Consumer
Pharmaceutical
Medical Devices
2018
14.9%
60.1%
25.0%
2019
15.6%
59.9%
24.5%
2020
16.0%
58.9%
25.1%
2021
15.6%
55.5%
28.9%
2022
15.8%
55.5%
28.7%
Year
Consumer
Pharmaceutical
Medical Devices
2018
$3,838
$8,527
$1,868
2019
$4,015
$9,249
$2,701
2020
$4,153
$9,465
$2,826
2021
$4,442
$9,919
$3,167
2022
$4,301
$10,020
$3,351
Segment
Operating Income
·
Values reported in millions.
·
Source: Johnson & Johnson 10-K (Fiscal Year: 12/31/2022, Filing Date:
02/16/2023) & Johnson & Johnson 10-K (Fiscal Year: 12/31/2019, Filing Date:
02/18/2020)
Company Profile Project | 5
Discussion Topics
Johnson & Johnson (J&J) demonstrated notable progress in its business operations
from 2018 to 2022, reflecting stability and growth throughout its diverse portfolio. During
this time, the company's sales trajectory was on the rise, its operating income was
stable, and significant advancements were made in its three main business segments:
pharmaceuticals, medical devices, and consumer health.
J&J had an especially noticeable sales increase in the pharmaceutical sector. The
strong performance of in-demand goods like IMBRUVICA, DARZALEX, and STELARA
helped the segment. These goods made a substantial operational sales contribution to
the segment by addressing pressing healthcare requirements and new medical issues.
Excluding the effects of acquisitions and divestitures, pharmaceutical sales increased
by an astounding 8.4% in 2020 alone. This increase was a result of the company's
strategic response to changing healthcare demands as well as its robust product
portfolio. Despite being negatively affected by the COVID-19 pandemic at first because
of postponed medical treatments, the Medical Devices section showed a great deal of
resilience. A resurgence occurred in the second half of 2020, aided by the Interventional
Solutions division, which produces electrophysiology products. The segment's flexibility
and the gradual return of necessary medical treatments and elective surgery helped to
stabilize sales. This flexibility was essential for overcoming the obstacles posed by the
pandemic and guaranteeing J&J's continued prominence in the medical device industry.
There was additional growth in the consumer health sector, especially in the US market.
Products in this category, such as TYLENOL, PEPCID, ZYRTEC, and LISTERINE,
witnessed a spike in demand during the pandemic, indicating a rise in health
consciousness and self-care practices. This increase was a result of a wider movement
in consumer behavior toward emphasizing health and wellness, rather than just a
reaction to the current health crisis. The trends in J&J's sales over this time were
reflected in its operating income. With its steadily rising revenues, the Pharmaceuticals
division made a substantial contribution to the operational income of the business.
Successful R&D projects served as additional support for this, demonstrating J&J's
dedication to healthcare innovation. Despite early setbacks, the Medical Devices
business continued to generate a consistent operating income, taking advantage of the
market's gradual return to normalcy. In the consumer health space, the ongoing
demand for wellness and health goods guaranteed steady operating income,
demonstrating J&J's adaptability to changing customer demands.
Company Profile Project | 6
From 2018 to 2022, J&J saw an overall rise in operating income and revenue. Strong
product offerings that addressed a range of consumer and healthcare demands,
strategic flexibility in the face of market shifts—especially during the pandemic—and
continuous expenditures in R&D were credited with this encouraging trend. This rise
was largely attributed to the company's strategic focus on growing its product offerings
and acute awareness of market dynamics. Over this era, J&J's Pharmaceuticals division
was the most lucrative and fastest-growing business unit. Its main pharmaceutical items
saw strong market performance and significant demand, which was the main cause of
this. The success of the segment demonstrated J&J's strong position in the healthcare
and pharmaceutical industries as well as its capacity for innovation and effective
response to market demands.
To sum up, Johnson & Johnson's performance in all of its business segments from 2018
to 2022 was marked by resilience, strategic adaptation, and strong growth. The
company's broad portfolio, which helped it successfully handle market shifts and the
difficulties presented by the COVID-19 epidemic, is responsible for its success
throughout these years. J&J's continuous path as a top healthcare provider, supported
by its dedication to innovation, consumer health, and medical developments, underwent
a critical phase during this time.
Effects of the Pandemic on the Firm
While the global pandemic had a catastrophic effect on most of the world, it was
an opportunity for those in the medical field to advance their capabilities while offering
society some form of relief . Johson and Johnson was on the forefront during COVID as
their scientist worked countless hours to research a COVID-19 vaccine and the
employees involved in manufacturing worked just as hard to supply medicine that would
relieve the symptoms of the disease. Johnson and Johnson had a unique situation as
their portfolio is so broad that if one industry was struggling because of the pandemic,
they had enough experience in a separate market that they could makeup for that lag in
profit.
They do have three different core segments known as consumer health, medical
devices, and pharmaceuticals, all of which were affected differently according to Joe
Wolk ( CFO and Vice President of Johnson and Johnson) in his interview with Liz
Ozaist. When observing their products for medical devices there was a decline because
most of their products are used in elective procedures, all or most of which were put on
hold due to the pandemic, although they are now recovering well in this sector with
Company Profile Project | 7
physicians coming back into the office to perform the requested surgeries. The next
segment is consumer health which fortunately for them saw a large increase as trends
in the community demonstrated that consumers were wanting to stock up and be
prepared in case they needed items such as tylenol or listerine. The final segment,
pharmaceuticals, maintained a steady pace as most of these procedures were lifesaving or life-enhancing and had to be continued.
I think that now that we are post pandemic, Johnson and Johnson will see more
of a steady increase or possibly even a platue instead of such a prominent jump in
growth, as more people are electing to get procedures since there are no more
restrictions and from trends we know that people have learned to maintain a stock of
medicines in their homes for easy access.
Returns and Standard Deviations
Firm’s Buy-and-Hold Return
The buy-and-hold return measures the overall return of an investment over a specific
period, encompassing both capital appreciation and dividends. A positive buy-and-hold
return signifies a profit on the investment, while a negative buy-and-hold return indicates
a loss. The buy-and-hold return for Johnson & Johnson (JNJ) has been positive over
the past 1, 3, and 5 years. This means that investors who have purchased and held JNJ
stock over these periods have made money. The buy-and-hold return for JNJ has been
particularly strong over the past 5 years, with a return of 81.62%. This suggests that
JNJ has been a good long-term investment.
Period
Buy-and-Hold Return
Past 1 Year
11.17% (Increase)
Past 3 Years
33.23% (Increase)
Past 5 Years
81.62% (Increase)
Period
Total Dividends
Dividend per Share
Company Profile Project | 8
Past 1 Year
$24.00
$12.00
Past 3 Years
$57.60
$12.00
Past 5 Years
$109.60
$12.00
Standard Deviation
Standard deviation is a measure of the volatility of a stock price. It tells you how much
the stock price has fluctuated over time. A high standard deviation indicates that the
stock price is more volatile, while a low standard deviation indicates that the stock price
is less volatile. In the case of Johnson & Johnson, the daily standard deviation is 6.94%
and the annualized standard deviation is 110.18%. This means that the stock price has
fluctuated by an average of 6.94% per day over the past 5 years.
Daily Standard Deviation
Annualized Standard Deviation
6.94%
110.18%
The standard deviation for Johnson & Johnson is relatively low. This means that the
stock price is less volatile than the overall market. This is a good thing for investors, as
it means that the stock price is less likely to experience large swings. Overall, the
standard deviation suggests that Johnson & Johnson is a relatively stable investment.
The stock price is not overly volatile, which makes it a good choice for investors who are
looking for a less risky investment.
Sources of Firm’s Beta
Source
Beta
Yahoo Finance
0.65
The Motley Fool
0.66
Finbox Inc.
0.65
Company Profile Project | 9
Source: finance.yahoo.com, fool.com, finbox.com
Beta is a measure of a stock's sensitivity to the overall market. A beta of 1 means that
the stock price moves in line with the overall market, while a beta of less than 1 means
that the stock price is less volatile than the overall market, and a beta of more than 1
means that the stock price is more volatile than the overall market. The beta for
Johnson & Johnson (JNJ) is 0.65. This is slightly higher than 1, which indicates that the
stock price is slightly more volatile than the overall market. However, the beta is still
relatively low, which means that the stock price is not overly volatile.
Governance
Johnson and Johnson consists of a declassified board of directors, totally with 11
members that come up for voting annually. The graph below lists all members along with
background experience, tenure and which committee they are a member of.
Members
Background
Tenure
Committee Membership
Mary C. Beckerle
CEO and Director Huntsman
Cancer Institute; Professor
at University of UTAH
Former Chairman and CEO
Xerox Corporation
1
Science, Technology and
Sustainability
7
Lead Director; Audit;
Nominating, and Corporate
Governance; Finance
CEO; chairman of the board;
(Chairman) Finance
Anne M. Mulcahy
Alex Gorsky
D. Scott Davis
Ian E. L. Davis
Susan L. Lindquist
Chairman, Board of
Directors; CEO Johnson and
Johnson
Chairman and Former CEO
United Parcel Service INC.
4
Chairman Rolls-Royce
Holdings plc; Former
Chairman and Worldwide
Managing Director McKinsey
and Company
Member and Former
Director Whitehead Institute
6
2
12
(Chairman) Audit; Regulatory,
Compliance and Government
Affairs
Audit; Science, Technology, and
Sustainability
Regulatory, Compliance, and
Government Affairs; (Chairman)
Company Profile Project | 10
Mark B. McClellan
William D. Perez
for Biomedical Research;
Professor
Director Duke-Robert J.
Margolis M.D Center for
Health Policy
Retired President and CEO
Wm. Wrigley Jr. Company
3
9
Charles Prince
Retired chairman and CEO
Citigroup Inc.
10
A. Eugene Washington
Duke University Chancellor
for Health Affairs; President
and CEO Duke University
Health System
Former Chairman and CEO
Aetna INC.
4
Ronald A. Williams
5
CEO of Johnson and Johnson
Science, Technology, and
Sustainability
Regulatory, Compliance, and
Government Affairs; Science,
Technology and Sustainability
Compensation and Benefits;
(Chairman) Nominating and
Corporate Governance;
(Chairman) Compensation and
Benefits; Nominating and
Corporate Governance
Compensation and Benefits;
Science, Technology and
Sustainability
Compensation and Benefits;
(Chairman) Regulatory,
Compliance and Government
Affairs
Company Profile Project | 11
Alex Gorsky
Mr. Gorsky has been working with Johnson and Johnson since 1988, providing an indepth knowledge of the issues such a broad multinational business faces. Over the course of 15
years he has advanced in position having first started with Janssen Pharmaceutica eventually
being appointed as president in 2001. In 2003 he became Chairman of Johnson and Johnson
pharmaceutical businesses in Europe, the Middle East, and Africa. Mr. Gorsky did take a 4 year
break from working with Johnson and Johnson from 2004 - 2008 where he joined Novartis
Pharmaceuticals Corporation. Once back to Johnson and Johnson he was able to increase in
rank again, while also serving on the board for Travis Manion Foundation, the Congressional
Medical of Honor Foundation and the National Academy Foundation.
Executive Compensation
Name and
Principal
Position
Year
Salary ($)
Bonu
s ($)
Stock
Awards ($)
Option
Awards
($)
NonEquity
Incentive
Plan
Compens
ation
Chain in
Pension
Value
All
other
compen
sation
Total ($)
Alex Gorsky
(Chairman/CE
O)
2015
2014
2013
$1,613,462
1,500,000
1,453,846
0
0
0
10,693,427
9,467,380
5,988,975
4,562,99
8
4,168,13
9
2,669,99
9
4,009,536
5,018,779
4,867,361
2,714,268
4,606,142
1,739,000
202,175
228,866
191,779
23,795,866
24,989,306
16,910,960
Dominic
Caruso (VP,
Finance, CFO)
2015
2014
2013
922,577
878,115
842,308
0
0
0
3,497,099
3,271,853
2,663,229
1,458,60
3
1,332,37
6
1,139,99
9
2,772,796
3,234,152
3,222,868
925,536
1,511,238
252,000
112,789
121,299
112,911
9,689,400
10,349,033
8,233,315
Paulus
Stoffels (CSO,
Worldwide
Chairman,
Pharmaceutic
als)
2015
2014
2013
1,158,385
1,075,423
952,923
0
0
0
4,208,874
10,690,520
2,580,468
1,823,24
6
1,307,66
9
1,109,99
9
2,171,098
2,573,450
2,416,809
1,022,024
2,267,167
357,000
401,118
425,088
404,802
10,785,745
18,339,317
7,822,001
Sandra
Peterson
(Group
Worldwide
Chairman)
2015
2014
2013
908,654
841,346
800,000
0
0
1,900
,000
3,504,177
2,833,545
635,867
1,574,62
1
1,368,00
1
299,998
1,125,000
1,400,000
1,200,000
367,000
451,000
274,000
147,000
192,714
527,396
7,626,452
7,086,606
5,637,261
Michael
Ullmann (VP,
2015
2014
645,385
591,346
0
0
1,962,425
1,615,191
819,002
721,877
1,162,936
1,502,105
1,051,480
1,494,001
35,125
36,171
5,676,353
5,960,691
Company Profile Project | 12
General
Counsel)
2013
542,308
0
1,390,982
656,248
1,348,953
394,000
30,845
4,363,336
Company Profile Project | 13
Total Director and Officer Ownership
NAME
Number of
Common
Shares
Deferred
Share Units
Total Number
of Shares
Beneficially
Owned
1,629
13,168
25,285
3,199
7,898
0
29,254
5,013
7,898
16,221
0
Common
Shares
Underlying
Options or
Stock Units
0
907,080
0
0
0
1,044,108
0
0
0
0
61,538
Mary C. Beckerle
Dominic J Caruso
Mary Sue Coleman
D. Scott Davis
Ian E. L. Davis
Alex Gorsky
Susan L. Lindquist
Mark B. McClellan
Anne M. Mulcahy
William D. Perez
Sandra E.
Peterson
Charles Prince
Paulus Stoffels
Michael H.
Ullmann
Eugene
Washington
Ronald A.
Williams
All Directors and
Executive Officers
as a group
0
116,982
11,952
0
4,193
178,308
16,258
0
5,789
19,622
35,644
26,445
122,543
92,923
13,969
0
0
0
102,692
162,350
40,414
225,235
255,273
0
10,888
0
10,888
3,650
11,685
0
15,335
683,716
146,107
2,277,768
3,107,591
1,629
1,037,230
37,237
3,199
12,091
1,222,416
45,512
5,013
13,687
35,843
97,182
Company Profile Project | 14
References
Most Recent 10-K Filing
Johnson & Johnson. (2023). SEC Filings. Retrieved December 5, 2023, from
https://www.investor.jnj.com/financials/sec-filings/default.aspx.
Most Recent DEF 14A
Johnson & Johnson. (2023). DEF 14A Document. United States Securities and Exchange
Commission. Retrieved December 6, 2023, from
https://www.sec.gov/Archives/edgar/data/200406/000020040623000025/a20230315defa
14asupplement.htm.
Johnson & Johnson. (2023). Full-Year 2020 Segment Commentary. Retrieved from
https://www.jnj.com
Johnson & Johnson. (2023). Corporate Reports. Retrieved from https://www.jnj.com/corporatereports
Johnson & Johnson. (2023). Discover J&J. Retrieved December 5, 2023, from
https://www.jnj.com.
Statista Research Department. (2023). Johnson & Johnson - Statistics & Facts. Statista. Retrieved
December 4, 2023, from https://www.statista.com/topics/1246/johnson-and-johnson.
Ozaist, Liz. “The Impact of Covid-19 on a Company: 6 Questions for the Chief Financial Officer
of Johnson & Johnson.” Content Lab (U.S), Content Lab (U.S), 8 Nov. 2023,
www.jnj.com/latest-news/johnson-johnson-cfo-joe-wolk-on-business-impact-of-covid19.
Clover, Juli. “Johnson & Johnson Chairman Alex Gorsky Joins Apple’s Board of Directors.”
MacRumors, MacRumors, 9 Nov. 2021, www.macrumors.com/2021/11/09/alex-gorskyapple-board-of-directors/.
“Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934.” DEF 14A,
United States Securities and Exchange Commission,
www.sec.gov/Archives/edgar/data/200406/000119312516505952/d110075ddef14a.htm#t
oc110075_20. Accessed 12 Dec. 2023.