Johnson & Johnson's lucky break
In 2006, Johnson & Johnson lost out in its bid to buy cardiac device manufacturer Guidant, when Boston Scientific outbid it to the tune of $27 billion. Flush with cash it had raised for the buyout, Johnson & Johnson went for what seemed at the time second best. It bought Pfizer's over-the-counter health and beauty product line for $10.6 billion.
Now over a year later, according to a BusinessWeek article ("J & J's New Baby", 6/18/2007), J & J is congratulating itself for not buying the one company and for buying the other. Boston Scientific has had trouble integrating Guidant, and that is reflected both in its results and its stock price. J & J, on the other hand, has shown dramatic growth in its consumer products division, the one into which the Pfizer products were integrated. That's kept the company afloat as problems with both its prescription drug and its medial devices operations have underperformed.
The article details the way in which J & J has not simply integrated products like Listerine mouthwash, Sudafed allergy treatment, and Lubriderm skin cream (among others) by an intense campaign of extending brands,
First, it has piggybacked on Pfizer's strong presence in some markers for example Mexico where J & J had a small presence, to also start selling its one products.
Second, it has invested seriously in Indian and Chinese developing markets, where new middle-class customers are getting to adopt J & J brands.
Third, it has hired design teams to punch up packaging throughout its brands.
Fourth, it has scientific/marketing teams developed new shelf space -grabbing pseudovariants (Vanilla Mint Listerine, Lubriderm Skin Nourishing Moisturizing Lotion with Sea Kelp Extract, Sudafed PE Sinus Headache Caplets) and many more. It's done the same thing with older J & J products like EatraStrength Tylenol Rapid Release Gelcaps, Band-Aid Advanced Healing Blister, and Neutrogena Ultra Sheen Body Moist Sunblock.)
Finally, it has started extending brands by developing new delivery technology. For example, such products as Listerine Agent Cool Blue Plaque-Detecting Rinse, Sudrub Vapor Rub, and Listerine PocketPaks, melt-in-your mouth film breath strips that, according to the article, have quickly become a $100 million a year product.
This is one acquisition that has already paid for itself and it was almost the road J & J did not take. Give lots of credit to J & J disciplined approach to brand improvement, but also realize that it was a lucky break that may end up saving the company.
9:33:49 PM 
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