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Johnson & Johnson

USINFO | 2013-08-02 10:01

Johnson & Johnson

Type	Public
Traded as	NYSE: JNJ Dow Jones Industrial Average Component S&P 500 Component
Industry	Medical equipment Pharmaceutical
Founded	1886
Founder(s)	Robert Wood Johnson I, James Wood Johnson, Edward Mead Johnson
Headquarters	New Brunswick, New Jersey,United States
Area served	Worldwide
Key people	William Weldon (Chairman of the Board) Alex Gorsky (Chief Executive Officer)
Products	See list of Johnson & Johnson products
Revenue	US$ 65.030 billion (2012)^[1]
Operating income	US$ 12.361 billion (2012)^[1]
Net income	US$ 9.672 billion (2012)^[1]
Total assets	US$ 113.644 billion (2012)^[1]
Total equity	US$ 57.080 billion (2012)^[1]
Employees	117,900 (2012)^[1]
Website	JNJ.com

Johnson & Johnson is an American multinational medical devices, pharmaceutical and consumer packaged goods manufacturer founded in 1886. Itscommon stock is a component of the Dow Jones Industrial Averageand the company is listed among the Fortune 500.
Johnson & Johnson ranked at the top of Harris Interactive's National Corporate Reputation Survey for seven consecutive years up to 2005,^[2] was ranked as the world's most respected company by Barron's Magazine in 2008,^[3] and was the first corporation awarded the Benjamin Franklin Award for Public Diplomacy by the U.S. State Department in 2005 for its funding of international education programs. However, in recent years the company's reputation has been adversely affected by product recalls, fines for pharmaceutical marketing practices, litigation with a group of shareholders, and other legal issues.
Johnson & Johnson is headquartered in New Brunswick, New Jersey with the consumer division being located in Skillman, New Jersey. The corporation includes some 250 subsidiary companies with operations in over 57 countries and products sold in over 175 countries. Johnson & Johnson had worldwide pharmaceutical sales of $65 billion for the calendar year of 2011.^[4]
Johnson & Johnson's brands include numerous household names of medications and first aid supplies. Among its well-known consumer products are the Band-Aid Brand line of bandages, Tylenol medications, Johnson's baby products,Neutrogena skin and beauty products, Clean & Clear facial wash and Acuvuecontact lenses.
On December 31, 2012, the Food and Drug Administration approved Sirturo, a Johnson & Johnson tuberculosis drug that is the first new medicine to fight the infection in more than forty years.^[5]

History

Inspired by a speech by antiseptic advocate Joseph Lister, Robert Wood Johnson, joined brothers James Wood Johnson and Edward Mead Johnson to create a line of ready-to-use surgical dressings in 1885. The company produced its first products in 1886 and incorporated in 1887.
Robert Wood Johnson served as the first president of the company. He worked to improve sanitation practices in the nineteenth century, and lent his name to a hospital in New Brunswick, New Jersey. Upon his death in 1910, he was succeeded in the presidency by his brother James Wood Johnson until 1932, and then by his son, Robert Wood Johnson II.
Robert Wood Johnson's granddaughter, Mary Lea Johnson Richards, was the first baby to appear on a Johnson & Johnson baby powder label.^[6]^[7]^[8] His great-grandson, Jamie Johnson, made a documentary called Born Rich about the experience of growing up as the heir to one of the world's greatest fortunes.

Corporate chairmanship
Robert Wood Johnson I 1887–1910
James Wood Johnson 1910–1932
Robert Wood Johnson II 1932–1963
Philip B. Hofmann 1963–1973
Richard B. Sellars 1973–1976
James E. Burke 1976–1989
Ralph S. Larsen 1989–2002
William C. Weldon 2002–2012
Alex Gorsky 2012–Present

Corporate governance

Current members of the board of directors of Johnson & Johnson are: Mary Sue Coleman, James G. Cullen, Dominic Caruso, Michael M.E. Johns, Ann Dibble Jordan, Arnold G. Langbo, Susan L. Lindquist, Leo F. Mullin, William Perez,Christine A. Poon, Steven S. Reinemund, David Satcher, and William C. Weldon.^[9]

Diversification
Since the 1900s, the company has pursued steady diversification. It added consumer products in the 1920s and created a separate division for surgical products in 1941 which became Ethicon. It expanded into pharmaceuticals with the purchase of McNeil Laboratories, Inc., Cilag, and Janssen Pharmaceutica, and into women's sanitary products and toiletries in the 1970s and 1980s. In recent years, Johnson & Johnson has expanded into such diverse areas asbiopharmaceuticals, orthopedic devices, and Internet publishing. Recently, Johnson & Johnson has purchased Pfizer's Consumer Healthcare department. The transition from Pfizer to Johnson and Johnson was completed December 18, 2006.
Johnson & Johnson has been consistently named one of the 100 Best Companies for Working Mothers by Working Mother.^[10]
Along with Gatorade, Johnson & Johnson is one of the founding sponsors of theNational Athletic Trainers' Association.

Headquarters

J&J headquarters at One Johnson & Johnson Plaza in New Brunswick, New Jersey.

J&J headquarters at Madrid, Spain.

The company has historically been located on the Delaware and Raritan Canal in New Brunswick. The company considered moving its headquarters out of New Brunswick in the 1960s, but decided to stay in the town after city officials promised to gentrify downtown New Brunswick by demolishing old buildings and constructing new ones. While New Brunswick lost at least one historic edifice -- the inn where Rutgers University began -- to the redevelopment, the gentrification did attract people back to New Brunswick. Johnson & Johnson hiredHenry N. Cobb from Pei Cobb Freed & Partners to design an addition to its headquarters, which took the form of a white tower in a park across therailroad tracks from the older portion of the headquarters. The stretch of Delaware and Raritan canal by the company's headquarters was replaced by a stretch of Route 18 in the late 1970s,^[11] after a lengthy dispute.^[12]

Environmental record
Johnson & Johnson has set several positive goals to keep the company environmentally friendly and was ranked third among the United States's largest companies in Newsweek's "Green Rankings".^[13] Some examples are the reduction in water use, waste, and energy use and an increased level of transparency.^[14] Johnson & Johnson agreed to change its packaging of plastic bottles due to harmful chemicals used in the manufacturing process, switching their packaging of liquids to safe non-polycarbonate containers.^[15] The corporation is working with the Climate Northwest Initiative and the EPA National Environmental Performance Track program.^[16] As a member of the national Green Power Partnership, Johnson & Johnson operates the largest solar power generator in Pennsylvania at its site in Spring House, PA.^[17]

Cooperative giving
Johnson & Johnson along with its companies support company-based programs that improve health and well being. Together with its partners they help mothers and infants survive childbirth. The company supports doctors, nurses and local leaders as they work to provide the best medical care to their people. They also educate communities on how to reduce the risk of infection from preventable diseases.

Internet communication
Johnson & Johnson is known for having registered many high profile internet domains during the early internet years 1996 to 2000. The Johnson & Johnson internet portfolio includes 29,925 internet domains, more than most of the large internet and technology companies. The portfolio includes generic expressions like Babypowder.com as well as a couple of very short domains; 2 of the 676 two letter domains, jj.com and ky.com, are owned by Johnson & Johnson.

Recalls

1982 Chicago Tylenol murders
On September 29, 1982, a "Tylenol scare" began when the first of seven individuals died in metropolitan Chicago, after ingesting Extra Strength Tylenol that had been deliberately laced with cyanide.^[18] Within a week, the company pulled 31 million bottles of capsules back from retailers, making it one of the first major recalls in American history.^[18] The incident led to reforms in the packaging of over-the-counter substances and to federal anti-tampering laws. The case remains unsolved and no suspects have been charged. Johnson & Johnson's quick response, including a nationwide recall, was widely praised by public relations experts and the media and was the gold standard for corporate crisis management.^[19]

2010 children's product recall
On April 30, 2010, McNeil Consumer Healthcare, a subsidiary of Johnson and Johnson, voluntarily recalled 43 over-the-counter children's medicines, including Tylenol, Tylenol Plus, Motrin, Zyrtec and Benadryl. The recall was conducted after a routine inspection at a manufacturing facility in Fort Washington, Pennsylvania, United States revealed that some "products may not fully meet the required manufacturing specifications".^[20]^[21] Affected products may contain a "higher concentration of active ingredients" or exhibit other manufacturing defects.^[21] Products shipped to Canada, Dominican Republic, Guam, Guatemala, Jamaica, Puerto Rico, Panama, Trinidad and Tobago, the United Arab Emirates, Kuwait and Fiji were included in the recall.^[20] In a statement, Johnson & Johnson said "a comprehensive quality assessment across its manufacturing operations" was underway.^[20]^[21] A dedicated website was established by the company listing affected products and other consumer information.^[21]

2010 Hip replacement recall
On August 29, 2010, DePuy, a subsidiary of American giant Johnson & Johnson, recalled its ASR (articular surface replacement) hip prostheses from the market. DePuy said the recall was due to unpublished National Joint Registry data showing a 12% revision rate for resurfacing at five years and an ASR XL revision rate of 13%. All hip prostheses fail in some patients, but it is expected that the rate will be about 1% a year.^[22] Pathologically, the failing prosthesis had several effects. Metal debris from wear of the implant led to a reaction that destroyed the soft tissues surrounding the joint, leaving some patients with long term disability. Ions of cobalt and chromium—the metals from which the implant was made—were also released into the blood and cerebral spinal fluid in some patients.^[23]

Shareholders lawsuit
In 2010 a group of shareholders sued the Johnson and Johnson management board for failing to take action to prevent serious failings and illegalities since the 1990s, including manufacturing problems, bribing officials, covering up adverse effects and misleading marketing for unapproved uses. The judge initially dismissed the case in September 2011 due to the high standard of evidence required to implicate the board members, but given serious concerns allowed for the plaintiffs to re-submit their case with more particulars.^[24]In 2012 Johnson and Johnson proposed a settlement with the shareholders, whereby the company would institute new oversight quality and compliance procedures binding for five years.^[25]

Marketing of Risperdal
Juries in several US states have found J&J guilty of hiding what it knew about adverse effects of the antipsychotic medication Risperdal (chemical name Risperidone), produced by its unit Janssen Pharmaceuticals, in order to promote it to doctors and patients as better than cheaper generics. States that have awarded damages include Texas ($158 million), South Carolina ($327 million), Louisiana ($258 million), and most notably Arkansas ($1.2 billion) - the Attorney General stated: “These two companies put profits before people, and they are rightfully being held responsible for their actions"; however the drug giant's share price barely dipped on the announcement.^[26]
In addition, the United States Department of Justice has been investigating J&J's Risperdal sales practices since 2004, and in 2010 joined awhistleblowers suit against the company for illegally marketing Risperdal through Omnicare, the largest company supplying pharmaceutical drugs to nursing homes.^[27]^[28] The allegations include that J&J were warned by the FDAnot to promote Risperdal as effective and safe for elderly patients when in fact it is associated with early death, but they did so; and that they in fact bribed Omnicare pharmcists tens of millions of dollars to promote the drug to care home physicians for this unapproved use. A settlement has been provisionally agreed with J&J of around $2.2 billion for this and related allegations, with Omnicare having already settled for around $100 million.^[29]

Use of the Red Cross symbol

Flag of the Red Cross

Further information: Emblems of the International Red Cross and Red Crescent Movement#Use of the emblems
Johnson & Johnson registered the Red Cross as a U.S. trademark for "medicinal and surgical plasters" in 1905 and has used the design since 1887.^[30] The Geneva Conventions, which reserved the Red Cross emblem for specific uses, were first approved in 1864 and ratified by the United States in 1882; however, the emblem was not protected by U.S. law for the use of the American Red Cross and the U.S. military until after Johnson & Johnson had obtained its trademark. A clause in this law (now 18 U.S.C. 706) permits pre-existing uses of the Red Cross, such as Johnson & Johnson's, to continue.
A declaration made by the U.S. upon its ratification of the 1949 Geneva Conventions includes a reservation that pre-1905 U.S. domestic uses of the Red Cross, such as Johnson & Johnson's, would remain lawful as long as the cross is not used on "aircraft, vessels, vehicles, buildings or other structures, or upon the ground," uses which could be confused with its military uses.^[31] This means that the U.S. did not agree to any interpretation of the 1949 Geneva Conventions that would overrule Johnson & Johnson's trademark. Even as it disputes a recent lawsuit by Johnson & Johnson, the American Red Cross continues to recognize the validity of Johnson & Johnson's trademark.^[32]
In August 2007, Johnson & Johnson filed a lawsuit against the American Red Cross (ARC), demanding that the charity halt the use of the red cross symbol on products it sells to the public, though the company takes no issue with the charity's use of the mark for non-profit purposes.^[33] In May 2008, the judge in the case dismissed most of Johnson & Johnson's claims, and a month later the two organizations announced a settlement had been reached in which both parties would continue to use the symbol.^[34]

Boston Scientific lawsuits
Beginning in 2003, Johnson & Johnson and Boston Scientific have been involved in a series of litigations involving patents covering heart stent medical devices. Both parties claimed that the other had infringed upon their patents. The litigation was settled once Boston Scientific agreed to pay $716 million to Johnson & Johnson in September 2009 and an additional $1.73 billion in February 2010.^[35]

Patent-infringement case against Abbott
In 2007, Johnson & Johnson sued Abbott Laboratories over the development and sale of the arthritis drug Humira. Johnson & Johnson claimed that Abbott used technology patented by New York University and licensed exclusively to Johnson & Johnson's Centocor division to develop Humira. Johnson & Johnson won the court case, and in 2009 Abbott was ordered to pay Johnson & Johnson $1.17 billion in lost revenues and $504 million in royalties.^[36] The judge also added $175.6 million in interest to bring the total to $1.84 billion.^[37]This was the largest patent-infringement award in U.S. history.^[36]
Abbott has since successfully reversed the verdict at appeal.
Subsidiary holdings Johnson & Johnson is a highly diversified company with at least 230 subsidiaries, which it refers to as the "Johnson & Johnson Family of Companies". Some of these subsidiaries include as follows: