Johnson & Johnson (JNJ, Financial) is believed to be extremely well positioned to return a significant 70% of its free cash flow to the shareholders in the last decade, amounting to approximately $90 billion.
Considering the Pharmaceutical business, Johnson & Johnson is keenly focused on delivering innovation and is producing unique products that are expected to fill the gap in the key medical requirements.
Johnson & Johnson seems to be increasingly focused on delivering superior shareholder value enabled by unrelenting innovation.
New products to consider
Johnson & Johnson introduced 14 innovative products since 2009, adding to its already robust revenue stream and positioning it rightly as a top industry behemoth for productivity linked with research and development in terms of per dollar spent compared to the benchmark. Further, in 2014 it recorded the approval of 20 fresh line extensions and applied for an extra 20. It also initiated 23 Phase 3 trials and started 11 Phase 2 trials. And at present, its robust pipeline is expected to register 10 innovative product filings amid 2013 and 2017.
In the Medical Devices business, Johnson & Johnson is leading surgery and vision care, electrophysiology and orthopaedics by launching 10 diverse platforms for the business and exceeding nearly $1 billion in sales. Johnson & Johnson is expanding robustly in the budding markets and is leveraging its solid portfolio of product offerings to support governments, major healthcare systems and key payors across the globe in delivering value addition. It has introduced more than 50 innovative products since 2012 and has over 30 fresh filings waiting for the years 2014 till 2016 that include TFN-ADVANCED Proximal Femoral Nailing System in trauma and its ECHELON FLEX Powered Vascular Stapler to be launched this year. Johnson & Johnson is also developing medical devices for consumers such as the new brand of ACUVUE to be utilized in the presbyopic and beauty and astigmatism segments coupled with its new Calibra 3-Day Wearable Insulin Patch.
The well-diversified and ever-expanding portfolio of product offerings place Johnson & Johnson at the top slot ahead of the competition and encourages the shareholders to invest into this exciting growth company.
In the Consumer brands business, Johnson & Johnson is witnessing four times increase in consumption compared to the overall market consumption, with major strength experienced in children’s MOTRIN and children’s TYLENOL. In addition, it has 20 major product launches scheduled for this year that include LISTERINE HEALTHY WHITE and NEUTROGENA Hydro Boost.
Johnson & Johnson is ultimately focused on delivering innovation and has invested approximately $8.5 billion in R&D last year throughout its segments to keep it ahead of the competition.
The continued and unrelenting focus on delivering innovation is paying off well for the company, adding new revenue streams and attracting the key investors.
Johnson & Johnson is also focused on achieving cross-segment association for implementing supreme innovation and developing unique market-dominating capabilities for achieving the highest efficiency and quality standards possible on the globe.
Key partnerships to drive growth
The key partnerships developed since 2008 in the oncology segment has enabled the company to grow to more than $4.5 billion franchise now from just $1 billion earlier. Since the start of the Johnson & Johnson Development Corporation, it has invested more than $1 billion in emerging companies and has made an added 43 investments with approximately $200 million since last year. Its new innovation centers located in four innovation hubs throughout the world have created more than 200 alliances in the preceding some years and it is allowing small emerging companies place to work and leverage the instrumentation at its four no-strings-attached incubators at Janssen Labs.
The illustrated achievements in delivering superior innovation highlight the company’s command over the key technologies and ability to minimize costs by leveraging these uniquely developed technologies.
Johnson & Johnson is building a China Lung Cancer Center for transforming the deadly disease into a preventable and curable one by implementing the key R&D activities, superior medical devices for delivering unique and highly comprehensive solutions.
Johnson & Johnson eyes excellent growth opportunities in the U.S. NUCYNTA pain brand and recently declared the divesting plans of Ortho-Clinical Diagnostics. These key moves are believed to revitalize its portfolio and allow it to focus on the key programs that are believed to support additional patients and expand its business.
Hence, the health equipment and services major is focused on countering the potential threats to health by implementing key innovation at an affordable cost.
Conclusion
Overall, the investors are advised to invest into the Johnson & Johnson Co. looking at the impressive trailing P/E and forward P/E ratios of 17.94 and 15.59 respectively, suggesting the stock is just rightly priced. The PEG ratio of 2.83 depicts that the investors need not pay excessively for achieving a healthy company growth. The profit margin of 21.96% is also good. Moreover, the company operations are well supported by its solid balance sheet with total cash of $33.00 billion and total debt of just $15.27 billion.
