Johnson & Johnson Brand, INC.Form 10-kANNUAL REPORT for the fiscal year ended December 31,2017State or other jurisdiction of incorporation or organization New JerseyName of Each Exchange on Which RegisteredNew York Stock Exchange BusinessJohnson & Johnson was created for Human Health and Well-Being under the state of New Jersey in 1887. As of December 31, 2017, Johnson & Johnson consist of three operating:• Consumer includes limited exceptions and managed by the residents of the country of where it is located.• Pharmaceutical includes limited exceptions and managed by the residents of the country of where it is located.• Medical Devices includes limited exceptions and managed by the residents of the country of where it is located.GeneralJohnson & Johnson has approximately 134,000 employees worldwide which are actively involved in the health care field. These employees are involved in the research, development, manufacturing, and sale range for the health care. Johnson and Johnson have more than 260 operating companies across the world in a variety of countries. The primary focus is to have products that can be used to help improve human health and well-being. The Executive Committee is the principal management group of Johnson & Johnson to whom operate and allocate the companies resources. It is responsible for the business segments which contain, Consumer, Pharmaceutical and Medical Devices. The senior management of the U.S is responsible for creating their own operations. “Each subsidiary within the business segments is, with limited exceptions, managed by residents of the county where located”. (Johnson & Johnson 2017 Annual Report)Segments of BusinessJohnson & Johnson includes business segments: Consumer, Pharmaceutical and Medical Devices.ConsumerConsumer segment incorporates products used in oral care, beauty, women’s heath, baby care, and much more. Examples: Listerine (Oral Care), Clean & Clear (Beauty), Stay Free (Women’s Health) and Johnson’s (Baby Care). All these products can be sold by retail stores, or to the public. PharmaceuticalPharmaceutical segment is based on six therapeutic areas. They are Immunology, Infectious Diseases and Vaccines, Neuroscience, Oncology, Cardiovascular and Metabolism, Pulmonary Hypertension, and Actelion. The medicines in Pharmaceutical segment are distributed among wholesalers, retailers, health care professionals and hospitals. Medical DevicesMedical Devices segment incorporates products that are used in the surgery, cardiovascular, orthopedic diabetes care and eye care health fields. Many products are distributed to the same marketers such as, wholesalers, retailers, and hospitals. Although the main fields that are affected are nurses, hospitals, physicians, clinics, and eye professionals. Geographic AreasJohnson and Johnson have more than 260 operating companies across the world in a variety of countries. This includes more than 60 countries including the United States. Although Johnson and Johnson are an international company it can differ with other cultures. “Investments and activities in some countries outside the U.S. are subject to higher risks than comparable U.S. activities because the investment and commercial climate may be influenced by financial instability in international economies, restrictive economic policies and political and legal system uncertainties.”This statement in Johnson & Johnson 2017 Annual Report, explains that investments and activities outside the United States that may have a higher risk due to their countries financial stability and is restricted due to laws and regulations of their country. Raw MaterialsRaw Materials are used by the company’s business that are usually available from a wide selection of sources. There can sometimes be exceptions and unavailability of the raw materials that may not influence the company’s financials. PatentsPatent protection has become a subsidiary to Johnson & Johnson by protecting their own processes and products. Although Johnson’s & Johnson’s subsidiaries face many patent challenges. These challenges include third parties, manufacturing, generic, biosimilar and many more challenges. Every company has challenges within in their business, it just must be overcome and build the company up. TrademarksTrademarks are defined as object or logo that represent a company and protected. This companies’ subsidiaries are protected by the United States and other countries where their products are marketed it. Johnson & Johnson evaluates that their trademarks to be view with importance in the operation work field. SeasonalitySales are not reflected worldwide during the seasonal marketing. Although spending does increase heavier in the last quarter of each year, which increases spending decisions for research, and advertising. CompetitionAll products lines are competing with companies that are local and global. Mostly all product lines I Johnson & Johnson are in competition with other companies. As new products are being created every day, there is always an item that has one thing that another does not. For example, lotion, one company lotion is for sensitive skin when another company has a lotion is for sensitive skin; has a scent. The second company lotion product has an extra bonus that the first company does not have. Competing in the marketing field involves continues research. By maintain the customers’ demands the companies must insure the promotion and advertising is to meet those demands. Research and DevelopmentResearch and Development is very important due to:• Testing and developing new products. • Upfront payments, and milestones. • Improving existing products.These three statements above help regulate the launch of the company’s future, and what they need to do expand. Facilities that the research is in are the United States, Belgium, Brazil, China, France, Israel, Japan and including the 35 other countries that are involved as well. EnvironmentJohnson & Johnson operations are in believed to be respected with the correct environmental laws and regulations. They have not changed during the past years and are not to be accepted to change on any expenditures, cash follow, competitive positioning or earnings through the company. Risk FactorsJohnson & Johnson faces difficult risks that can affect the company as whole. Risks can be hard to predict because some risks that occur outside of the company is no longer their control. Companies must be aware of risks that can affect the company’s financials. Risk Factors Examples:The Company’s largest product, REMICADE (infliximab), is experiencing biosimilar competition, which will result in a reduction in U.S. sales of REMICADE.Johnson & Johnson encountered challenges to cove the patents product, REMICADE. REMICADE has a similar version that came out in 2016. This then led to competitors to join the market but the decrease in sales has affected the United States sales. Product reliability, safety and effectiveness concerns can have significant negative impacts on sales and results of operations, lead to litigation and cause reputational damage.Product safety is a major concern in marketing, this is because it can reduce risks to consumers. The company is aware of the legal requirements and general safety requirements. The concerns include: internally or by litigants regulators or consumer advocates whether or not based on scientific evidence safety alerts, product recalls, governmental investigations, regulatory action on the part of the FDA private claims lawsuits payment of fines and settlements declining sales reputational damage(Johnson & Johnson 2017 Annual Report)All these situations can affect the company’s image, brand image, customers trust and sales. Sales can decline and damage the company’s reputation. InvestmentBased on my research I would invest in Johnson & Johnson, not just because it is a world wide know brand. Johnson & Johnson has overcome 250 subsidiaries, allowing business to be well diversified. They have been able to keep pricing of stock to a manageable state. Safety is very important, they care about their customer, consumers, stock holders and employees. I believe Johnson & Johnson is a very know product worldwide but has the ability to expand further. Consolidated Statements of IncomeJohnson & Johnson and SubsidiariesFiscal years ended December 31,2017,2016(in millions, expect per share data) 2017 2016Sales to Customers 76,450 71,890Cost of Products Sold (25,354) (21,685)Selling, Marketing and Administrative Expenses 51,096 50,205Research and Development Expenses (21,420) (19,945)In-Process Research and Development (10,554) (9,095)Restructuring (408) (29)Operating Earnings (309) (491)Interest Income 18,405 20,645Interest Expense Net of Portion Capitalized 385 368Other Income (Expense), Net ((934) (484)Earnings Before Provision for Taxes on Income 17,673 19,803Net Earnings (16,373) (3,263)Consolidated Balance SheetJohnson & Johnson and Subsidiaries Fiscal years ended December 31,2017(in millions)AssetsCurrent assets Cash and cash equivalents 17,824 Marketable securities 472Accounts receivable trade, less allowances for doubtful accounts $291 13,490Inventories 8,765Prepaid expenses and other receivables 2,537Total current 43,088Property, plant and equipment, net 17,005Intangible assets, net 53,228Goodwill 31,906 Deferred taxes on income 7,105Other assets 4,971Total assets 157,303Liabilities and Shareholders’ EquityCurrent liabilitiesLoans and notes payable $3,906 Accounts payable 7,310 Accrued liabilities 7,304 Accrued rebates return and promotions 7,210 Accrued compensation and employee related obligations 2,953 Accrued taxes on income 1,854 Total current liabilities 30,537 Long-term debt 30,675Deferred taxes on income 8,368 Employee related obligations 10,074Long-term taxes payable 8,472 Other liabilities 9,017Total liabilities 97,143Shareholders’ equityCommon stock – par value $1.00 per share 3,120 Accumulated other comprehensive income (13,199)Retained earnings 101,793 91,714 Less: common stock held in treasury, at cost 31,554Total shareholders’ equity 60,160 Total liabilities and shareholders’ equity 157,303 Current Ratio:$12,471= $43,008 (Current Assets) / $30,537 (Current Liabilities) Debt Ratio: 6.38%= $127,768 (Total Liabilities) / $200,391 (Total Assets)Current Ratio and Debt Ratio shows further information about Johnson & Johnson. The debt ratio is 6.38% which states that the company has less risks. Work Cited”Corporate Reports | Johnson & Johnson.”” Johnson & Johnson Homepage | Johnson & Johnson. Johnson & Johnson Service Inc.
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