During Johnson & Johnson’s second-quarter financial results conference call on July 15, Alex Gorsky, Chairman of the Board and CEO, told investors that the company is developing innovative collaboration models with retailers across the globe to create an unparalleled experience for shoppers in OTC (Over-the-Counter) categories like cold and flu, by sharing insights and developing ways to reduce complexity for consumers and drive visibility to its products.
Gorsky said the company’s consumer brands are important to the equity of Johnson & Johnson, and consumer health care “truly is strategic for us with the potential to serve the 2 billion additional consumers who are predicted to join the growing middle-class in emerging markets. We made significant progress in this segment over the last few years and have
plans for the coming years to accelerate the growth of this business through new innovations, brand-building and strategic collaborations, working off a foundation that starts with deep consumer insights.”
As part of its strategy, Johnson & Johnson identified 11 key need states where it can make a difference to consumers and grow business.
“We are also focusing on 12 mega brands including LISTERINE, AVEENO, TYLENOL and JOHNSON’s Baby to ensure they are exceeding consumers’ expectations around the world and the strategy is working,” Gorsky explained. “We are capturing share in these and several of the other key categories. For example, we have seen strong growth in our oral care business outside the U.S. at 7% operationally. Our skin care and baby businesses are both up 7% operationally in the quarter.”
While there is still work to do, Gorsky said the goal is to ensure all U.S. OTC products are available every time a consumer wants them.
“And I’m confident that we are on a good path to meet that goal,” he said.
What’s more, Gorsky said the company’s pharmaceutical business has made great strides.
“You’ll recall that in the late 2000s, our pharmaceutical business faced significant patent expirations as products worth roughly $8 billion went off patent,” he explained. “We have to rethink that business model and really focus on areas where we could make a difference. We needed to streamline our organization and made tough choices to gain efficiencies and reduce headcount in developed markets by nearly 25%. But through our diversified business model, with consumer and MD&D continuing to grow during this time, we were able to continue to invest in our pharma business.”
Johnson & Johnson is the fastest growing top 10 global pharmaceutical company in the U.S., Europe, and Japan by a significant margin.
“We noted several years ago that a focused portfolio, consistent investments in R&D and overall increased productivity in our development capabilities would be the key to driving our innovation,” Gorsky added. “These innovations and, indeed, the innovations that we’re making in each of our segments enable us to meet the growing demand for health-care products and services and creates new opportunities to address unmet medical needs.”
Turning to emerging markets, the company’s strategy is focused on strong innovative brand growth through targeted capability building and novel access models.
“In particular, we are harnessing innovation,” Gorsky said. “One example of this is the opening of our Shanghai Innovation Center expected in October this year. We’re also improving local manufacturing capacity by building factories such as our state-of-the-art facility in Xi'an, China and through technology transfer to local organizations.”