Johnson & Johnson (JNJ), AstraZeneca plc (ADR) (AZN), The Procter & Gamble Company (PG): The Priceless Health Business Every Investor Overlooks

Page 1 of 2

Investors know Johnson & Johnson (NYSE:JNJ) for many things.

It’s arguably health care’s biggest name. The company’s pharmaceutical segment boasts billions of dollars in sales annually from its largest drug, immunology star Remicade, alone. It has a number of up-and-coming drugs ready to fuel the company’s future, and the firm’s orthopedics device division isn’t looking too bad recently, either, with the acquisition of medical device producer Synthes last year.

Yet many investors often forget about Johnson & Johnson (NYSE:JNJ)’s powerhouse consumer health business. It’s a business that demands your attention, however: With the volatile nature of health care today, strong consumer sales just might be Johnson & Johnson’s reliable foundation.

Johnson & Johnson (JNJ)

Grit, not glamour

Compared to J&J’s two other major businesses, its consumer health segment might not seem like much. It only posted sales of around $7.3 billion over the first half of the year. That’s a sizable sum to be sure, but it was only just over half of what the company’s medical device business sold in that same time span.

Compared to both devices and pharmaceuticals, consumer products also grew slowly. Sales for the segment climbed only 1.6% year-over-year over 2013′s first six months, far below the 9.9% and 11% from medical devices and pharmaceuticals, respectively.

So, why is this segment important to Johnson & Johnson (NYSE:JNJ) and its investors? Take a look inside its medical device and pharmaceuticals sales, and you’ll see that not every product or drug is hitting high marks for growth. Generic drug competition has torn down top neuroscience drug Concerta’s sales by more than 16% in the year’s first half.

While many of J&J’s drugs are showing strong growth, a quick look around the company’s big pharma rivals shows just how hard the patent cliff has hammered firms’ sales. AstraZeneca plc (ADR) (NYSE:AZN), one of big pharma’s top companies, saw sales decline by more than 15% last year with patent expirations hammering both the company’s top and bottom lines. As more drugs fall off patent in the near future, AstraZeneca plc (ADR) (NYSE:AZN)’s outlook remains murky – and its stock’s in a state of flux. While big pharma can mean big profits, the industry’s boom-or-bust nature can lead to serious investor disappointment.

Volatility doesn’t end with pharmaceuticals, either. J&J’s medical device segment might have grown strongly, but without its Synthes acquisition, the division’s performance so far this year hasn’t been quite as illustrious as a first glance might have suggested. Three of the division’s top five specialties by sales saw revenue fall over the year’s first half, part of a slowdown that’s affected many of the device industry’s leaders.

Adding stable growth

Up-and-down sales are the nature of health care, but that’s the beauty of Johnson & Johnson (NYSE:JNJ)’s consumer segment: It’s the cash cow that investors can count on. While growth may be elusive, this segment — accounting for more than 20% of the company’s overall revenue — is a reliable, if not glamorous, revenue producer.

It’s a trend symptomatic to the consumer health industry: Rival The Procter & Gamble Company (NYSE:PG)‘s health care division, a consumer-focused business, has posted 3% sales growth in each of the last three years, emerging as the conglomerate’s most reliable business in a time when other, higher-selling segments have seen revenue fall recently.

Consumer sales aren’t geographically exclusive, either: Johnson & Johnson (NYSE:JNJ)’s division posted similar growth in both the U.S. and internationally over the first six months of the year. This business likely won’t become an emerging market superstar, but as middle classes develop in growing economies such as India and Latin America, Johnson & Johnson is well-positioned to take advantage of basic health needs of consumers in such developing nations.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!