ABSTRACT
Although 2003 was a tough year for many drug companies, Johnson & Johnson's stock performance trailed behind most of its competitors. The company, which makes numerous product lines, from baby shampoo to artificial knees, did see a rise in sales and profit, yet it must analyze and redirect its efforts in order to sustain its historical levels of 10 percent annual growth in revenue. In the past, Johnson & Johnson has relied on several different strategies to sustain its market growth, including new product development and diversification through acquisition. However, with new pharmaceutical products taking sometimes years to develop and approve through the Food and Drug Administration, the company needs to find additional means to obtain market growth. Today, Johnson & Johnson spends 50 percent of its drug-development budget on new compounds, compared to only 20 percent just five years ago. The remainder of the budget is used to find new uses for existing drugs.
