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5-1 Milestone Three: Alternative Buyer Research Report and Acquisition Road Map

Student's Name

Institutional Affiliation

Course

Instructor

Date
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Alternative Buyer Research Report

1. Current Market

After evaluating the list of alternative buyers, we recommend Johnson & Johnson as the

potential buyer of the organization. Johnson & Johnson is a multinational corporation that has

become one of the most well-known and respected companies in the healthcare industry. Since

its inception, the company has been dedicated to developing innovative healthcare products and

improving the well-being of people worldwide. The company's early focus was on creating

sterile surgical dressings to address the high mortality rate resulting from infections during

surgery. Their first product, Johnson's Dressings, quickly gained popularity for its effectiveness.

This success paved the way for Johnson & Johnson to expand its product line and diversify into

other healthcare areas.

In 1894, J&J introduced its first commercial first aid kits containing a combination of

sterile dressings and antiseptic products. This marked the beginning of the company's

commitment to consumer healthcare. Over the years, J&J continued to develop and acquire new

products and companies, steadily growing its presence in various sectors of the healthcare

industry. Through these efforts, the company has expanded its reach globally. It introduced

several iconic brands and products, such as Band-Aid adhesive bandages and Johnson's Baby

Powder, which have become household names and synonymous with quality and trust.

However, Johnson & Johnson has also faced significant challenges. For example, in

1982, several people died after consuming Tylenol capsules that had been tampered with and

laced with cyanide. This incident prompted the company to recall the product. Despite the crisis,

Johnson & Johnson demonstrated exemplary crisis management by taking immediate

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responsibility and introducing extra safety measures. The company's swift actions helped rebuild

consumer trust and set new industry standards for product safety.

Since then, J&J has continued to diversify its portfolio and expand globally. For instance,

when the company ventured into pharmaceuticals, it acquired companies like Janssen

Pharmaceutica and Centocor and significantly strengthened its presence in the pharmaceutical

industry. Today, J&J operates in three main segments: Consumer Health, Pharmaceutical, and

Medical Devices. The company's portfolio includes well-known brands like Neutrogena, Aveeno,

Listerine, and many others. It remains committed to innovation, research, and development to

address the evolving healthcare needs of people worldwide.

J&J serves a diverse range of customers across various industries. For example, the

company offers a wide range of consumer healthcare products, including over-the-counter

medications, baby care products, oral care products, and skincare products. These products are

directly marketed and sold to individual consumers through retail channels, such as pharmacies,

supermarkets, convenience stores, and online platforms. J&J also provides pharmaceuticals,

medical devices, and diagnostics solutions to healthcare professionals, including doctors, nurses,

hospitals, clinics, and other healthcare institutions. These products are used in the treatment and

management of various medical conditions. Moreover, the company works with government

entities, public health agencies, and healthcare organizations to provide healthcare solutions,

especially during public health emergencies and vaccination campaigns. This includes supplying

vaccines, medications, and medical devices. Furthermore, J&J partners with research institutions,

academic centers, and laboratories for collaborative research and development efforts. These

collaborations can involve clinical trials, studies, and the exchange of scientific knowledge.

2. Financial Situation
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As aforementioned, J&J is a multinational conglomerate that operates in various sectors,

including pharmaceuticals, medical devices, and consumer goods. It is one of the largest

healthcare companies globally. To analyze their financial situation, we looked at key financial

metrics such as revenue, expenses, and profitability. J&J's revenue is primarily generated from

the sales of its pharmaceutical products, medical devices, and consumer goods. In 2022, the

company recorded an annual revenue of $94.943B (Macrotrends, 2023). This is a 1.25% increase

from the previous year. On the other hand, J&J incurs various expenses related to research and

development, manufacturing, marketing, and general administrative costs. R&D expenses are

particularly significant for pharmaceutical companies like J&J due to the high costs of

developing new drugs and medical treatments. According to microtrends, in 2022, J&J reported

annual operating expenses of $73.218B (Macrotrends, 2023). This amount represents a 3.13%

increase from the previous year.

Lastly, we looked at metrics such as annual net income, gross profit and return on equity

and determined that J&J is a profitable company. According to YCharts, the company recorded

an annual net income of $17.94B (YCharts, 2023). This figure represents a decrease from the

previous year's net income of $20.88B. The company's gross profit in 2022 was $63.854B, which

is slightly lower than its gross profit of $63.92B in 2021 (Macrotrends, 2023). Finally, the

company's current return on equity is 17.48%, which is a solid figure, indicating that the

company is generating a high level of profits.

3. Recent Developments

One news article on Johnson & Johnson’s website reveals that the company has reached a

major milestone in its attempt to embed digital tags onto the barcodes of its various medical

devices. These digital tags, commonly referred to as Unique Devices Identifiers (UDIs), are
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machine readable, and therefore, will allow the manufacturer or healthcare professionals to

obtain critical information about each medical device by simply scanning its barcode (Mascia,

2023). The Project Director for UDI at the company says that this development is part of J&J’s

ongoing effort to increase the safety of its products.

In another news article, J&J Innovation together with other stakeholders kicked off a

challenge where applicants from different states came up with ideas that will help reduce

maternal mortality rate for indigenous and black women (Brody, 2023). This event happened in

2022 and towards the end of the same year, J&J Innovation awarded two participants for their

innovative ideas on promoting better health for babies and moms.

These two events portray J&J in a good light. They present the company as an

organization that has a significant focus on research and development and will not hesitate to

invest substantial resources into discovering new drugs, treatments, and medical innovations.

Our organization shares similar objectives. Over the years, we have worked hard to come up with

treatments for various illnesses and improve patient safety. Therefore, by acquiring our

organization, J&J can potentially expand its R&D capabilities and access new technologies and

therapies. It will be an honor for our organization to be acquired by a company that remains

committed to research, innovation, and development to address the evolving healthcare needs of

people worldwide.

4. Buyer Rationale

J&J is the best candidate to buy our organization because of various reasons. First, J&J is

a multinational corporation with a long history in the healthcare industry. It has built a strong

reputation for its pharmaceutical, medical device, and consumer health products. The company's

experience and expertise in the life sciences sector make it a desirable choice for acquiring our
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organization. J&J also has a track record of successful acquisitions and integrations of companies

in the healthcare sector. This achievement will be a valuable asset in the acquisition process. In

addition, the company’s financial stability and resources make it capable of undertaking

significant acquisitions. This financial stability can facilitate the acquisition process and provide

the necessary resources to integrate our organization effectively.

Moreover, J&J has a significant focus on research and development. Therefore, acquiring

the organization will enhance its R&D capabilities and accelerate innovation by gaining access to

our company's expertise, patents, and pipelines. This can strengthen J&J's competitive position in

the market. Lastly, J&J has a well-developed manufacturing and distribution network, allowing it

to efficiently produce and distribute its products worldwide. If it acquires our organization, it can

leverage its existing infrastructure to scale up production and reach a broader market.

Acquisition Road Map

1. Acquisition-Related Tasks

Since I joined the strategic planning team, several steps have been taken to facilitate a

seamless acquisition. Our progress so far includes the formation of a guiding coalition and

determination of potential buyers. Initially, we settled on three companies. However, after careful

consideration, we have identified Johnson & Johnson as the most suitable company to acquire

our organization. Completing an acquisition is a complicated and time-consuming process.

Therefore, there is still much to do. The duration of the remaining tasks varies from three months

to six months. In the business world, acquiring an existing organization is generally preferable to

starting a new one from scratch. So, as we wait for J&J to consider the offer of acquiring our

organization, let us look at the things that need to be done in the next two years.
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One of our main priorities is planning the acquisition. This step involves laying out the

details of the acquisition and presenting them to the potential buyer. For example, it is important

to assess and record all of our organization’s products, asset, and patents. In addition, we need to

evaluate any outstanding debts and establish plans for their repayment. The process of laying out

the details of the acquisition and presenting them to J&J is expected to take approximately two to

three months.

Once the above step is complete, the evaluation phase follows. In this phase, J&J will

review the details of the acquisition. This step does not involve much and will likely take a

month. After J&J has reviewed the acquisition proposal and other relevant details, the

negotiation phase begins. This stage is projected to take approximately three months to finalize.

However, there is the possibility of additional time if counteroffers are made and further

amendments are required. During negotiations, we must strive to ensure that the outcomes align

with our goal of securing the best possible deal.

Once both companies come to an agreement, each party must conduct due diligence to

ensure the details of the agreement are correct. This step involves a lot of work and it can take up

to two months. After both parties have completed the due diligence, the next step involves the

closing of the deal. In this phase, we will finalize the necessary contracts, determine the

financing arrangements, establish payment terms, and complete the signing of relevant

documents to facilitate the sale of our company to Johnson & Johnson. This process is

anticipated to require at least three months. The closing of the deal does not mark the end of the

acquisition. Integration is the next step that comes after the sale of the organization and it takes

around six months. It involves bringing together the two organizations to operate as a unified

entity. Effective integration requires careful planning, strong leadership, open communication,
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and collaboration between J&J and our company. It is essential to address potential challenges,

manage resistance to change, and ensure a smooth transition to realize the full value of the

acquisition.

2. Gantt Chart
Select a period to highlight at right. A legend describing the charting follows. Period Highlight: 1 Plan Duration Actual Start % Complete Actual (beyond plan)

PLAN ACTUAL ACTUAL PERCENT

ACTIVITY PLAN START
DURATION START DURATION COMPLETE PERIODS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Establishment of a guiding
100%
coalition 2 1 2 1
Determination of
100%
potential buyers 3 1 3 1
100%
Selection of J&J 4 1 4 1
0%
Planning the acquisition 5 3 5 3
0%
Evaluation 8 1 8 1
0%
Negotiation 9 3 9 3
0%
Due diligence 12 2 12 2
0%
Signing of the deal 14 1 14 1
0%
Closure 15 2 15 2
0%
Integration 17 6 17 6
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References

Brody, B. (2023). 2 Big Ideas to Help Lower the Risk of Maternal-Fetal Complications in

BIPOC Women. Johnson & Johnson. https://www.jnj.com/innovation/2-big-ideas-to-help-

lower-the-risk-of-maternal-fetal-complications-in-bipoc-women

Macrotrends. (2023). Johnson & Johnson Gross Profit 2010-2023 | JNJ.

https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnson/gross-profit

Macrotrends. (2023). Johnson & Johnson Operating Expenses 2010-2023 | JNJ.

https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnson/operating-

expenses#:~:text=Johnson%20%26%20Johnson%20operating%20expenses%20for

%20the%20twelve%20months%20ending%20March,a%203.13%25%20increase

%20from%202021.

Macrotrends. (2023). Johnson & Johnson Revenue 2010-2023 | JNJ.

https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnson/revenue#:~:text=Johnso

n%20%26%20Johnson%20revenue%20for%20the%20twelve%20months%20ending

%20March%2031,a%2013.55%25%20increase%20from%202020.

Mascia, K. (2023). Inside the Decade-Long Effort to Add Digital Tags to Thousands of Johnson

& Johnson MedTech Products. Johnson & Johnson.

https://www.jnj.com/innovation/inside-the-decade-long-effort-to-add-digital-tags-to-

thousands-of-johnson-johnson-medtech-products

YCharts. (2023). Johnson & Johnson (JNJ).

https://ycharts.com/companies/JNJ/net_income_annual
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