|Johnson & Johnson's Medical Companies Innovation Center in Suzhou, China--Courtesy of J&J|
Johnson & Johnson
Emerging Markets Sales 2012: about $16.8 billion
Percentage of Sales in Emerging Markets: 23%
Johnson & Johnson's ($JNJ) sprawling agglomeration of operating units has sprawled all over the globe for decades. Products from Tylenol to Listerine to Remicade are as common in far-flung spots around the globe as they are in U.S. and European drugstores. So, the fact that J&J brings in 23% of its sales in emerging countries just makes sense.
But like its competitors, J&J isn't content with its current status in these high-growth areas. J&J wants more--and it's investing to gain more.
Over the past 5 years, J&J's pharma business has almost doubled its footprint in emerging markets. In 2007, just 12% of J&J prescription drug sales came from emerging markets; last year, that amounted to 20%. As part of that expansion, the company has set up R&D and manufacturing centers in the fastest-growing pharma markets: China, India and Brazil. It has also linked up with local partners; under one deal announced in May 2013, J&J's Janssen unit will work with the biotech company Ascletis to develop an HIV drug for Chinese patients.
The company aims to grow emerging markets sales in consumer health and its other medical businesses, too. The company has had success tailoring iconic products for local tastes; for instance, it created country-specific versions of the antiseptic mouthwash Listerine, including a Green Tea flavor in China and an alcohol-free formula for the Middle East, where Muslims dominate the market. On the device side, J&J has created bare-bones glucose monitors, redesigned and simplified a knee-replacement device for India, and set up training centers to teach physicians in rural China to use its devices.
Last year, J&J set up a "strategic initiative" to rev up operations in key countries. Under that initiative, J&J centralized management in Vietnam, putting its diverse business units under one domestic executive. In August 2013, China followed suit, reorganizing the $2.5 billion business under a new local chairman, Jesse Wu. All three of J&J's Chinese businesses--consumer health, devices and diagnostics, and drugs--now report to Wu. That includes a new innovation center established last year, tasked with tracking down partnership and investment opportunities--in other words, a dealmaking task force.
But as it has in the U.S., J&J is running into trouble with manufacturing and quality control in some emerging markets. The company's over-the-counter drug business is under criminal investigation in South Korea, where the government has zeroed in on too-potent children's Tylenol products. In Brazil, the company had to recall more than 3.3 million bottles of Tylenol Drops because of problems with the dropper that could lead to an overdose.
J&J rejigs Chinese ops to centralize under local chairman
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