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Strategies of Johnson & Johnson & IBM

Pharmaceutical Business Segment, Johnson & Johnson

2.1 The pharmaceutical business segment of Johnson & Johnson enjoys a number of distinct competitive advantages and internal competencies. Hamer (2004) commented that among these advantages and competencies are such items as a well-established and highly productive research and development pipeline, an excellent cash position, superior marketing ability, and an ongoing commitment to high quality science. Research and development and various scientific laboratories are largely responsible for identifying potential products, testing and evaluating those products, and moving the products through the pipeline toward eventual Food and Drug Authority approval. Marketing is a major participant in ensuring that both prescription and over-the-counter (OTC) pharmaceutical products are appropriately priced, packaged, positioned, and advertised.

2.2 The pharmaceutical segment enjoys a number of competitive advantages as identified by Michael Porter's Five Forces Model (Wheelen & Hunger, 2000). The pharmaceutical sector is generally immune to the threat of new entrants. The cost of moving into this sector is prohibitive for most potential entrants, who are more likely to be acquired by an existing company. Rivalry among firms is, however, quite high and competition for research talent, market share, and so forth is intense. Pharmaceutical firms, according to Elling, et al (2002), have experienced enormous changes in the past several years. Both competition from generic drug producers and the rise of managed care in such forms as Health Maintenance Organizations (HMOs) have increased pricing pressure and have made it more urgent to boost market share. While blockbuster drugs (e.g., Viagra) have become an important means of achieving that goal, they have also made it necessary for sales and marketing professionals in the sector to focus on selling particular products rather than s...

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