Johnson & Johnson's Pharmaceuticals Business To Account For 53% of The Company's Total Revenue In 2020, And It Will Also Grow At A Much Faster Pace Compared To The Company's Other Segments
Pharmaceuticals expected to be the single-biggest revenue driver in 2020 with $43.7 billion in revenues (53% of Total Revenues), which is 1.8x the size of its Medical Devices business, and 3.1x the size of its Consumer Healthcare Business. Pharmaceuticals will also be the fastest growing segment, adding $7.4 billion over 2017-20.Medical Devices will likely see a decline $2.8 billion, and Consumer Healthcare will add $0.4 billion.
Total Revenues
What Is Big?
1. Pharmaceuticals: $43.7 Bil (52%)
2. Medical Devices: $23.8 Bil (31%)
3. Consumer Healthcare: $14.0 Bil (17%)
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Total Revenue In 2020E: $81.6 Bil**
What Has Changed?
From 2017 To 2020E
Pharmaceuticals: $7.4 Bil
+ Medical Devices: $(2.8) Bil
+ Consumer Healthcare: $0.4 Bil
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Total Change 2017-2020E: $5.0 Bil
+ J&J's Revenue In 2017: $76.5 Bil
= Total Revenue In 2020E: $81.6 Bil**
**Numbers may not add up due to rounding.
Johnson & Johnson's Business Model
What Need Does It Serve?
Johnson & Johnson primarily serves the pharmaceuticals, medical devices, and consumer products markets. The company discovers, develops, and sells pharmaceutical products globally. Its drugs are used for the treatment of various types of diseases, including cancer, heart-related, and infectious, among others.
Overall, the company's pharmaceuticals portfolio can be divided into 6 categories, primarily on the basis of therapeutic areas: 1) Cardiovascular, 2) Oncology, 3) Anti-Infectious, 4) Immunology, 5) Neuroscience, and 6) Pulmonary.
Johnson & Johnson sells medical devices for Orthopaedics, Surgery, Interventional Solutions, and Vision Care. These medical devices are used primarily by various healthcare institutions in several countries.
Lastly, the company's consumer products business includes its beauty products, baby care, and OTC among others.
Who Pays To Johnson & Johnson?
Chain stores (Walgreens, CVS, Rite-Aid, Walmart), clinics, long term care facilities, health maintenance organizations, federal facilities, non-federal institutions, mail order pharmacies, and retail stores.
What Buyers Care About?
PriceSubsidies available in the form of reimbursementsAvailability Any possible side effectsBrand image
What Are The Alternatives To Johnson & Johnson?
Within pharmaceuticals, other alternatives are Bristol-Myers Squibb, Roche, Pfizer, Merck, Abbvie, GlaxoSmithKline, and Teva, among others.
Outside of pharmaceuticals, other alternatives are acupuncture, aromatherapy, ayurvedic medicine, chiropractic care, homeopathy, and nutritional counseling, among others.
In Medical Devices, Johnson & Johnson competes with Boston Scientific, Medtronic, Abbott Labs, and Intuitive Surgical.
Johnson & Johnson's Immunology And Oncology Portfolios Will Likely Aid Near Term Growth
Johnson & Johnson's pharmaceuticals sales grew from $31.4 billion in 2015 to $42.2 billion in 2019, led by its oncology drugs portfolio.
We estimate it to grow to $48.1 billion in 2022, led by continued growth in its immunology and oncology portfolios.
The near term growth will likely be led primarily by five drugs ~ Imbruvica, Darzalex, Stelara, Simponi and Opsumit, which combined will likely garner sales of over $25 billion or 51% of the total expected pharmaceuticals sales in 2022. However, some of the company's big ticket older drugs, including Remicade, Invega, Zytiga, Xarleto, and Prezista are expected to see decline, as they face biosimilar/generic competition, and increased competition from other pharmaceuticals companies.
Pharmaceuticals
Change In Pharmaceuticals Sales
Johnson & Johnson's Medical Devices Sales Have Been Impacted By Acquisition And Divestiture Over The Recent Years
Medical Devices sales grew from $25.1 billion in 2015 to $26.0 billion in 2019, partly aided by the acquisition of Abbott Medical Optics.
The decline in 2019 sales can be attributed to the divestiture of Diabetes Care business last year.
Looking forward, we estimate the segment revenues to decline to $23.8 billion in 2020, due to the impact of COVID-19 on elective procedures. Sales will likely grow over the next few years to $24.5 billion in 2022. Interventional solutions sales have grown at a CAGR of 18% over the last 3 years, and we expect the annual growth to be in double-digits for next few years, led by the company's electrophysiology business.
Medical Devices
Change In Medical Devices Sales
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