Johnson & Johnson - 2009

Johnson & Johnson 2009

Case Notes Prepared by: Dr. Mernoush Banton

Case Authors: Sharynn Tomlin, Matt Milhauser, Bernhard Gierke, Thibault Lefebvre,

and Mario MartinezA.

Case Abstract

Johnson & Johnson (www.JNJ.com) is a comprehensive strategic management case that includes the companys calendar December 31, 2008 financial statements, competitor information and more. The case time setting is the year 2009. Sufficient internal and external data are provided to enable students to evaluate current strategies and recommend a three-year strategic plan for the company. Headquartered in New Brunswick in the U.S. state of New Jersey, Johnson & Johnson is traded on the New York Stock Exchange under ticker symbol JNJ. B. Vision Statement (Actual)

To maximize the global power of diversity and inclusion to drive superior business results and sustainable competitive advantage.C. Mission Statement (Actual)

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality. (1, 2)

We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. (6)We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. (9)We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. (3, 7, 8)Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return. (4, 5)1. Customer

2. Products or services

3. Markets

4. Technology

5. Concern for survival, profitability, growth

6. Philosophy

7. Self-concept

8. Concern for public image

9. Concern for employees

D.External Audit

CPM Competitive Profile MatrixJ&JP&GOther

Critical Success FactorsWeightRatingWeighted ScoreRatingWeighted ScoreRatingWeighted Score

Price competitiveness0.1140.4420.2230.33

Global Expansion0.1040.4030.3020.20

Organizational Structure0.0430.1220.0840.16

Employee Morale0.0540.2030.1520.10

Technology0.1040.4030.3020.20

Product Safety0.1140.4430.3320.22

Customer Loyalty0.1040.4030.3020.20

Market Share0.0640.2430.1820.12

Advertising0.0830.2440.3220.16

Product Quality0.1040.4030.3020.20

Product Image0.0840.3230.2420.16

Financial Position0.0740.2830.2120.14

Total1.003.882.932.19

Opportunities

1. Smaller companies are coming up with new and innovative drugs. This creates an opportunity for larger drug companies to acquire or form a joint venture with smaller companies2. Larger organizations have better purchasing power in buying raw material 3. The baby boomers are aging, therefore they have more need for health and medical services4. More consumers are becoming health conscious by taking more vitamins and use better brand health related products5. Due to economic downturn, many individuals may have more stress and depression and as such, may have a need for prescription drugs6. Despite years of research, companies still spend money for developing new drugs for health issues related to cancer, heart problems, HIV and Alzheimers7. Through the Internet, drug companies have found a more effective and less expensive way in advertising, educating, and promoting their productsThreats

1. The cost of R&D has been increasing at an astounding rate, rising currently at a rate of eightfold per year2. Due to economic downturn, there has been severe changes in the behavior and spending patterns of purchasers of healthcare products and services3. Generic drug firms have filed Abbreviated New Drug Applications (ANDAs) seeking to market generic forms of most of the key pharmaceutical products, prior to expiration of the applicable patents covering those products

4. By 2012, many major patents, often referred to as Patent Cliffs, will expire, clearing the way for companies involved in the production of generics to begin manufacturing the most effective and high-grossing drugs on the market5. Introducing a new drug into the market can take 10 to 15 years and require extensive amount of money to get it tested and receive FDA approval6. Often, drugs could have side effects which create negative publicity and/or force the company to recall the drug or remove it from the shelves

External Factor Evaluation (EFE) MatrixKey External FactorsWeightRatingWeighted Score

Opportunities

1. Smaller companies are coming up with new and innovative drugs. This creates an opportunity for larger drug companies to acquire or form a joint venture with smaller companies0.140.4

2. Larger organizations have better purchasing power in buying raw material 0.0930.27

3. The baby boomers are aging, therefore they have more need for health and medical services0.140.4

4. More consumers are becoming health conscious by taking more vitamins and use better brand health related products0.140.4

5. Due to economic downturn, many individuals may have more stress and depression and as such, may have a need for prescription drugs0.0630.18

6. Despite years of research, companies still spend money for developing new drugs for health issues related to cancer, heart problems, HIV and Alzheimers0.0630.18

7. Through the Internet, drug companies have found a more effective and less expensive way in advertising, educating, and promoting their products0.0740.28

Threats

1. The cost of R&D has been increasing at an astounding rate, rising currently at a rate of eightfold per year0.0920.18

2. Due to economic downturn, there has been severe changes in the behavior and spending patterns of purchasers of healthcare products and services0.0830.24

3. Generic drug firms have filed Abbreviated New Drug Applications (ANDAs) seeking to market generic forms of most of the key pharmaceutical products, prior to expiration of the applicable patents covering those products0.0720.14

4. By 2012, many major patents, often referred to as Patent Cliffs, will expire, clearing the way for companies involved in the production of generics to begin manufacturing the most effective and high-grossing drugs on the market0.0620.12

5. Introducing a new drug into the market can take 10 to 15 years and require extensive amount of money to get it tested and receive FDA approval0.0510.05

6. Often, drugs could have side effects which create negative publicity and/or force the company to recall the drug or remove it from the shelves0.0720.14

Total1.002.98

Positioning Map

E.Internal Audit

Strengths

1. J&J offers a wide variety of products and services to hospitals, retailers, and families

2. The company does business in three segments: pharmaceutical, medical devices and consumer products

3. In July 2009, J&J purchased an 18.4 percent stake in Irish biotech company Elan Corp. in order to gain access to the US$3 billion market for Alzheimers disease treatments. The effectiveness of the drug could help the companys sales by US$25 billion

4. In 2009, J&J acquired the small cancer drug-developer Cougar Biotechnology for about US$894 million in cash. Cougar has an excellent drug for late stage prostate cancer

5. At the end of 2008, J&J reported US$7.6 billion in research and developments expenditures, which was a slight decrease from 2007

6. Sales for both consumer health products and medical devices and diagnostics were up from 2007 to 2008 by 10.8 percent and 6.4 percent, respectively

7. The consumer products segments operating profit increased 17.4 percent from 2007 to US$2,674 million in 2008

8. The pharmaceutical segment operating profit increased 16.3 percent from 2007, and operating profit increased to 31.0 percent to a total of US$7,605 million in 2008

9. Operating profit in medical devices segment increased 49.1 percent from 2007 to a total of US$7,223 million in 2008

Weaknesses

1. Sales for pharmaceutical segment was down from 2007 to 2008 by 1.2 percent

2. Patent on many of their popular and high volume drugs is about to expire

3. Increase in total liabilities by approximately US$4.8 billion from 2007 to 20084. In recent years, have not introduced any new innovative product unless by acquiring other companies5. Per 2009 data, the companys quarterly sales dropped by 5.3 percent from the same period in prior year6. The selling, general and administrating expenses to sales increased by 0.30 percent from 2007 to 2008Financial Ratio Analysis (December 2009)Growth Rates %J&JIndustryS&P 500

Sales (Qtr vs year ago qtr)-5.303.20-4.80

Net Income (YTD vs YTD)-1.705.10-6.00

Net Income (Qtr vs year ago qtr)1.1038.8026.80

Sales (5-Year Annual Avg.)8.778.4912.99

Net Income (5-Year Annual Avg.)12.4615.8312.69

Dividends (5-Year Annual Avg.)14.1814.4011.83

Price RatiosJ&JIndustryS&P 500

Current P/E Ratio14.115.326.7

P/E Ratio 5-Year High25.318.216.6

P/E Ratio 5-Year Low10.55.02.6

Price/Sales Ratio2.943.082.25

Price/Book Value3.538.103.48

Price/Cash Flow Ratio11.5012.2013.70

Profit Margins %J&JIndustryS&P 500

Gross Margin71.172.938.9

Pre-Tax Margin27.524.010.3

Net Profit Margin21.118.77.1

5Yr Gross Margin (5-Year Avg.)71.572.138.6

5Yr PreTax Margin (5-Year Avg.)25.421.316.6

5Yr Net Profit Margin (5-Year Avg.)19.115.911.5

Financial ConditionJ&JIndustryS&P 500

Debt/Equity Ratio0.232.301.09

Current Ratio1.81.91.5

Quick Ratio1.61.61.3

Interest Coverage57.120.623.7

Leverage Ratio1.84.73.4

Book Value/Share18.2711.5121.63

Adapted from www.moneycentral.msn.comAvg P/EPrice/ SalesPrice/ BookNet Profit Margin (%)

12/0814.202.603.8120.3

12/0717.603.214.4217.3

12/0616.703.674.8620.7

01/0619.303.574.6219.9

01/0520.404.015.9217.3

12/0322.003.645.5917.2

12/0226.604.476.9518.2

12/0128.305.677.4317.5

12/0027.605.587.7617.0

12/0814.202.603.8120.3

Book Value/ ShareDebt/ EquityReturn on Equity (%)Return on Assets (%)Interest Coverage

12/08$15.350.2830.515.238.9

12/07$15.250.2224.413.144.9

12/06$13.590.1728.115.7231.5

01/06$13.010.0726.017.1242.9

01/05$10.710.0925.715.365.9

12/03$9.050.1526.814.949.8

12/02$7.650.1829.116.358.1

12/01$7.950.1123.414.751.6

12/00$6.770.2324.314.533.7

12/08$15.350.2830.515.238.9

Adapted from www.moneycentral.msn.comInternal Factor Evaluation (IFE) Matrix

Key Internal FactorsWeightRatingWeighted Score

Strengths

1. J&J offers a wide variety of products and services to hospitals, retailers, and families0.0840.32

2. The company does business in three segments: pharmaceutical, medical devices and consumer products0.0840.32

3. In July 2009, J&J purchased an 18.4 percent stake in Irish biotech company Elan Corp. in order to gain access to the US $3 billion market for Alzheimer's disease treatments. The effectiveness of the drug could help the company's sales by US$25 billion0.0740.28

4. In 2009, J&J acquired the small cancer drug-developer Cougar Biotechnology for about US$894 million in cash. Cougar has an excellent drug for late stage prostate cancer0.0740.28

5. At the end of 2008, J&J reported US$7.6 billion in research and developments expenditures, which was a slight decrease from 20070.0830.24

6. Sales for both consumer health products and medical devices and diagnostics were up from 2007 to 2008 by 10.8 percent and 6.4 percent, respectively0.0630.18

7. The consumer products segment's operating profit increased 17.4 percent from 2007 to US$2,674 million in 20080.0630.18

8. The pharmaceutical segment operating profit increased 16.3 percent from 2007, and operating profit increased to 31.0 percent to a total of US$7,605 million in 20080.0630.18

9. Operating profit in medical devices segment increased 49.1 percent from 2007 to a total of US$7,223 million in 20080.0630.18

Weaknesses

1. Sales for pharmaceutical segment was down from 2007 to 2008 by 1.2 percent0.0610.06

2. Patent on many of their popular and high volume drugs is about to expire0.0910.09

3. Increase in total liabilities by approximately US$4.8 billion from 2007 to 20080.0520.1

4. In recent years, have not introduced any new innovative product unless by acquiring other companies0.0710.07

5. Per 2009 data, the company's quarterly sales dropped by 5.3 percent from the same period in prior year0.0420.08

6. The selling, general and administrating expenses to sales increased by 0.30 percent from 2007 to 20080.0720.14

Total1.002.7

F. SWOT Strategies

StrengthsWeaknesses

1. J&J offers a wide variety of products and services to hospitals, retailers, and families

2. The company does business in three segments: pharmaceutical, medical devices and consumer products

3. In July 2009, J&J purchased an 18.4 percent stake in Irish biotech company Elan Corp. in order to gain access to the US$3 billion market for Alzheimers disease treatments. The effectiveness of the drug could help the companys sales by US$25 billion

4. In 2009, J&J acquired the small cancer drug-developer Cougar Biotechnology for about US$894 million in cash. Cougar has an excellent drug for late stage prostate cancer

5. At the end of 2008, J&J reported US$7.6 billion in research and developments expenditures, which was a slight decrease from 2007

6. Sales for both consumer health products and medical devices and diagnostics were up from 2007 to 2008 by 10.8 percent and 6.4 percent, respectively

7. The consumer products segments operating profit increased 17.4 percent from 2007 to US$2,674 million in 2008

8. The pharmaceutical segment operating profit increased 16.3 percent from 2007, and operating profit increased to 31.0 percent to a total of US$7,605 million in 2008

9. Operating profit in medical devices segment increased 49.1 percent from 2007 to a total of US$7,223 million in 20081. Sales for pharmaceutical segment was down from 2007 to 2008 by 1.2 percent

2. Patent on many of their popular and high volume drugs is about to expire

3. Increase in total liabilities by approximately US$4.8 billion from 2007 to 2008

4. In recent years, have not introduced any new innovative product unless by acquiring other companies

5. Per 2009 data, the companys quarterly sales dropped by 5.3 percent from the same period in prior year

6. The selling, general and administrating expenses to sales increased by 0.30 percent from 2007 to 2008

OpportunitiesS-O StrategiesW-O Strategies

1. Smaller companies are coming up with new and innovative drugs. This creates an opportunity for larger drug companies to acquire or form a joint venture with smaller companies2. Larger organizations have better purchasing power in buying raw material 3. The baby boomers are aging, therefore they have more need for health and medical services4. More consumers are becoming health conscious by taking more vitamins and use better brand health related products5. Due to economic downturn, many individuals may have more stress and depression and as such, may have a need for prescription drugs6. Despite years of research, companies still spend money for developing new drugs for health issues related to cancer, heart problems, HIV and Alzheimers7. Through the Internet, drug companies have found a more effective and less expensive way in advertising, educating, and promoting their productsIncrease R&D on products related to curing Alzheimers, Cardiovascular, and Cancer diseases (S2, S3, S4, S8, O3, O6)Acquire additional companies that are innovative and have pending patents on popular health related products (S2, S8, O1, O3, O4, O6)1. Increase marketing efforts through social networks and the Internet on consumer, OTC and pharmaceutical products, specific to young generation (W1, O4, O7)2. Develop new health related products such as vitamins and dietary pills / drinks for health conscious consumers (W4, O3, O4)

ThreatsS-T StrategiesW-T Strategies

1. The cost of R&D has been increasing at an astounding rate, rising currently at a rate of eightfold per year

2. Due to economic downturn, there has been severe changes in the behavior and spending patterns of purchasers of healthcare products and services

3. Generic drug firms have filed Abbreviated New Drug Applications (ANDAs) seeking to market generic forms of most of the key pharmaceutical products, prior to expiration of the applicable patents covering those products

4. By 2012, many major patents, often referred to as Patent Cliffs, will expire, clearing the way for companies involved in the production of generics to begin manufacturing the most effective and high-grossing drugs on the market

5. Introducing a new drug into the market can take 10 to 15 years and require extensive amount of money to get it tested and receive FDA approval

6. Often, drugs could have side effects which create negative publicity and/or force the company to recall the drug or remove it from the shelves1. Form a partnership/ joint venture (minority interest) with generic drug manufacturers on promoting and educating the health benefits of specific products (S1, S2, S8, T1, T3, T4)2. Outsource some of R&D procedures and processes in order to reduce R&D cost but ensure the intellectual property remains secure and confidential (S2, S7, S8, S9, T1, T5)1. Increase advertising and promotion by educating the consumers on the benefits of using brand versus generic drugs (W1, W5, T3, T4)2. Create a social network area for consumers to discuss their concerns and side effect of drugs so the company can have better track records of issues and be able to improve public image before the issues escalates legally (W1, T6)

G.SPACE Matrix

Financial Stability (FS)Environmental Stability (ES)

Return on Investment5Unemployment-4

Leverage3Technological Changes-3

Liquidity5Price Elasticity of Demand-2

Working Capital5Competitive Pressure-4

Cash Flow5Barriers to Entry-4

Financial Stability (FS) Average

4.6Environmental Stability (ES) Average-3.4

Competitive Stability (CS)Industry Stability (IS)

Market Share-1Growth Potential5

Product Quality-2Financial Stability5

Customer Loyalty-2Ease of Market Entry4

Competitions Capacity Utilization-2Resource Utilization3

Technological Know-How-2Profit Potential4

Competitive Stability (CS) Average

-1.8Industry Stability (IS) Average

4.2

Y-axis: FS + ES = 4.6 + (-3.4) = 1.2

X-axis: CS + IS = (-1.8) + (4.2) = 2.4H.Grand Strategy Matrix

1. Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration

7. Related diversification

I.The Internal-External (IE) MatrixThe IFE Total Weighted Score

Strong3.0 to 4.0Average2.0 to 2.99Weak1.0 to 1.99

High3.0 to 3.99I

II

III

Medium2.0 to 2.99IVIV

Johnson & JohnsonVI

Low1.0 to 1.99VIIVIIIIX

J. QSPM

Acquire additional companies that are innovative and have pending patents on popular health related productsDevelop new health related products such as vitamins and dietary pills/drinks for health conscious consumers

Key FactorsWeightASTASASTAS

Opportunities

1. Smaller companies are coming up with new and innovative drugs. This creates an opportunity for larger drug companies to acquire or form a joint venture with smaller companies0.140.420.2

2. Larger organizations have better purchasing power in buying raw material 0.09------------

3. The baby boomers are aging, therefore they have more need for health and medical services0.1------------

4. More consumers are becoming health conscious by taking more vitamins and use better brand health related products0.1------------

5. Due to economic downturn, many individuals may have more stress and depression and as such, may have a need for prescription drugs0.0620.1230.18

6. Despite years of research, companies still spend money for developing new drugs for health issues related to cancer, heart problems, HIV and Alzheimers0.0640.2430.18

7. Through the Internet, drug companies have found a more effective and less expensive way in advertising, educating, and promoting their products0.07------------

Threats

1. The cost of R&D has been increasing at an astounding rate, rising currently at a rate of eightfold per year0.0920.1840.36

2. Due to economic downturn, there has been severe changes in the behavior and spending patterns of purchasers of healthcare products and services0.0820.1610.08

3. Generic drug firms have filed Abbreviated New Drug Applications (ANDAs) seeking to market generic forms of most of the key pharmaceutical products, prior to expiration of the applicable patents covering those products0.0730.2140.28

4. By 2012, many major patents, often referred to as Patent Cliffs, will expire, clearing the way for companies involved in the production of generics to begin manufacturing the most effective and high-grossing drugs on the market0.0630.1840.24

5. Introducing a new drug into the market can take 10 to 15 years and require extensive amount of money to get it tested and receive FDA approval0.0540.2020.1

6. Often, drugs could have side effects which create negative publicity and/or force the company to recall the drug or remove it from the shelves0.07------------

TOTAL1.001.691.62

Strengths

1. J&J offers a wide variety of products and services to hospitals, retailers, and families0.08------------

2. The company does business in three segments: pharmaceutical, medical devices and consumer products0.0840.3230.24

3. In July 2009, J&J purchased an 18.4 percent stake in Irish biotech company Elan Corp. in order to gain access to the US$3 billion market for Alzheimer's disease treatments. The effectiveness of the drug could help the company's sales by US$25 billion0.07------------

4. In 2009, J&J acquired the small cancer drug-developer Cougar Biotechnology for about US$894 million in cash. Cougar has an excellent drug for late stage prostate cancer0.07------------

5. At the end of 2008, J&J reported US$7.6 billion in research and developments expenditures, which was a slight decrease from 20070.08------------

6. Sales for both consumer health products and medical devices and diagnostics were up from 2007 to 2008 by 10.8 percent and 6.4 percent, respectively0.0630.1840.24

7. The consumer products segment's operating profit increased 17.4 percent from 2007 to US$2,674 million in 20080.06------------

8. The pharmaceutical segment operating profit increased 16.3 percent from 2007, and operating profit increased to 31.0 percent to a total of $7,605 million in 20080.0640.2420.12

9. Operating profit in medical devices segment increased 49.1 percent from 2007 to a total of US$7,223 million in 20080.06------------

Weaknesses

1. Sales for pharmaceutical segment was down from 2007 to 2008 by 1.2 percent0.0640.2420.12

2. Patent on many of their popular and high volume drugs is about to expire0.0940.3620.18

3. Increase in total liabilities by approximately US$4.8 billion from 2007 to 20080.05------------

4. In recent years, have not introduced any new innovative product unless by acquiring other companies0.07------------

5. Per 2009 data, the company's quarterly sales dropped by 5.3 percent from the same period in prior year0.04------------

6. The selling, general and administrating expenses to sales increased by 0.30 percent from 2007 to 20080.07------------

SUBTOTAL1.001.340.9

SUM TOTAL ATTRACTIVENESS SCORE3.032.52

Recommendations

Acquire companies that manufacture products not available currently through Johnson and Johnson product line and could fall under one of the companys primary segment / product line. L. EPS/EBIT Analysis

US$ Amount Needed: $1 billionStock Price: US$64.74

Tax Rate: 23.5%

Interest Rate: 5.46%

# Shares Outstanding: 2.8 billion

Common Stock FinancingDebt Financing

RecessionNormalBoomRecessionNormalBoom

EBIT$28,000,000,000$30,000,000,000$45,000,000,000$28,000,000,000$30,000,000,000$45,000,000,000

Interest 00054,600,00054,600,00054,600,000

EBT28,000,000,00030,000,000,00045,000,000,00027,945,400,00029,945,400,00044,945,400,000

Taxes6,580,000,0007,050,000,00010,575,000,0006,567,169,0007,037,169,00010,562,169,000

EAT21,420,000,00022,950,000,00034,425,000,00021,378,231,00022,908,231,00034,383,231,000

# Shares2,815,446,4012,815,446,4012,815,446,4012,800,000,0002,800,000,0002,800,000,000

EPS7.618.1512.237.648.1812.28

70 Percent Stock - 30 Percent Debt70 Percent Debt - 30 Percent Stock

RecessionNormalBoomRecessionNormalBoom

EBIT$28,000,000,000$30,000,000,000$45,000,000,000$28,000,000,000$30,000,000,000$45,000,000,000

Interest 43,680,00043,680,00043,680,00010,920,00010,920,00010,920,000

EBT27,956,320,00029,956,320,00044,956,320,00027,989,080,00029,989,080,00044,989,080,000

Taxes6,569,735,2007,039,735,20010,564,735,2006,577,433,8007,047,433,80010,572,433,800

EAT21,386,584,80022,916,584,80034,391,584,80021,411,646,20022,941,646,20034,416,646,200

# Shares2,810,812,4812,810,812,4812,810,812,4812,804,633,9202,804,633,9202,804,633,920

EPS7.618.1512.247.638.1812.27

M. Epilogue

The U.S. Congress has been discussing plans to pass a national healthcare program which could impact the drug companies and how they do business in the United States. If the healthcare reform is passed, more individuals could afford to have health insurance and accordingly use products or services prescribed by their physician. On the other hand, there may be some requirements in regards to lowering prices on products or services by the drug manufacturers.

In recent months, Johnson & Johnson has announced several victories such as unveiling Cytomimic Technology which is related to how the bodys electrical field affects skin regression; reaching an agreement between Cordis Corporation (owned by Johnson & Johnson) with Boston Scientific resolving two litigations; receiving an approval from the U.S. Food and Drug Administration for labeling update for Prezista tablets; and an increase in sales of 9.0 percent in the fourth quarter of 2009 compared to the same period in 2008.

Brand Loyalty (High)

Brand Loyalty (Low)

Innovation (High)

Innovation (Low)

Johnson & Johnson

Procter & Gamble

Pfizer

-1

-2

-3

-4

-5

-6

-7

7

-6

-1

-7

-5

-4

-3

-2

7

6

5

4

3

2

1

Defensive

Competitive

Aggressive

Conservative

1

2

3

4

5

6

IS

Weak Competitive Position

Quadrant II

Quadrant I

Quadrant IV

Quadrant III

StrongCompetitivePosition

Rapid Market Growth

Slow Market Growth

The EFE Total

Weighted Score

ES

CS

FS

Novartis

Merck & Co.

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