December 15, 2008
MM&M All-Stars Company of the Year: Johnson & Johnson
At a time when many pure pharmas are struggling and integration is the marketing buzzword du jour, Johnson & Johnson is steaming along with a diversified business and a decentralized structure that fosters innovation in marketing.
The company came in at No. 4 among pharmas in the US for 2007, ringing up $16.3 billion in drug sales. Worldwide sales for the year were $61.1 billion, around 40% of that coming from pharmaceuticals and another third coming from medical devices and diagnostics.
To be sure, J&J has its share of challenges. In April, safety and efficacy doubts about its anemia drug Procrit prompted the company to merge its Ortho Biotech and Centocor sales forces, eliminating 400 sales force jobs in the process. Like the rest of the drug industry, the giant is grappling with generic encroachment on key products. Risperdal, the world's seventh best-selling drug in 2007, lost US patent protection in June 2008 and saw sales plummet 62% in the third quarter. The long-acting injectible follow-on, Risperdal Consta, saw a 10% jump in sales, and other Rx drugs, including multiple myeloma drug Velcade, which J&J markets abroad, put in solid performances.
Under the leadership of Christine Poon, who is retiring in March, the company's pharmaceuticals division has often out-performed rivals and defined best practices in marketing. Poon is being replaced by Sheri McCoy, who previously headed the surgical group.
J&J has just completed a massive consolidation of its sprawling agency roster for its prescription drug brands, settling on WPP and Interpublic Group after an epic six-way pitch involving all of the big holding companies. Previously, advertising and promotion assignments could be parceled out to a dozen shops from as many networks on a single brand according to market and channel. Now entire franchises will be handled by holding companies, with CNS, oncology and anti-infectives going to WPP and IPG handling pain, women's health, gastrointestinal and HIV. The biologics business will be split between the two holding companies.
The firm has also made some targeted acquisitions of late—most recently, buying aesthetics firm Mentor, surgical products maker Omrix and Health Media, an “online health coach.” In 2006, J&J bulked up its consumer products division with its $16.6 billion acquisition of Pfizer Consumer Healthcare.
It's the breadth of J&J's business that keeps the firm steady, despite a slowing market for US pharmaceutical sales and growing generic competition. J&J's device and diagnostics sales were up 8.8% for Q3 while its consumer goods sales jumped 13.1%.
With its vast portfolio of consumer products, J&J was the world's seventh-biggest advertiser overall in 2007, placing between Ford Motor Co. (No. 6) and Nestle (No. 8) with $2.3 billion in measured media spend, according to Advertising Age. Most of that went towards marketing Band-Aids and baby oil, mouthwash, maxi-pads, home pregnancy tests and OTC analgesics like Tylenol and Motrin or allergy meds like Benadryl and Sudafed. But all that consumer marketing expertise seems to be rubbing off on the company's drug and devices businesses, which boast well-supported products such as Risperdal Consta, Concerta and the Ortho contraceptives line, along with Cypher Stents and LifeScan glucose meters.
J&J companies have been particularly forward-thinking when it comes to interactive, dabbling in digital media where few of their competitors have yet dared to tread. Their experimentation has yielded valuable insights about how pharmas might use social media, with notable successes—and, in the recent Motrin virals that incensed some moms, the inevitable misstep.
In July, J&J's McNeil Pediatrics launched a Facebook page for mothers of kids with ADHD, co-led by six “Mom-bassadors,” including Debbie Phelps, middle school principal and mother of Olympian Michael Phelps, and Dr. Patricia Quinn, MD, a pediatrician specializing in ADHD. “As a leader in ADHD research and marketing with Concerta, we thought it was important to provide a forum for caregivers to come together, to share their views and fears and hopes,” says Tracie Oliver, VP sales and marketing for McNeil Pediatrics.
McNeil marketers observed that patients and caregivers tend to fall into informational “silos” in searching for health information online—visiting product sites, corporate sites, health portals. “We thought we'd flip the paradigm,” says Tricia Geoghegan of J&J CNS communications and public affairs. “We knew that, as a regulated company, we couldn't do true Web 2.0, but we thought, ‘What if we brought resources into their comfort zone instead of making them go out there to industry-based sites?' We know this caregiver community. We know moms feel isolated, like they're the only ones going through this.”
They also knew that Facebook wasn't just for college kids anymore. With 6.5 million moms between the ages of 25 and 54 now on Facebook, they're the fastest-growing demographic group on the site.
In the six months since it went live, the site has drawn 6,100 “fans” and 77,000 unique visits. The “Mom-bassadors” have posted 33 topical, seasonally appropriate podcasts and 59 blog postings, covering top-of-mind issues like vacation prep in the summer and back-to-school concerns like progress reports and how to handle teachers in the fall. Phelps blogged movingly about watching her son's epic run of medals at the Olympics—as it was happening.
The site melds the credibility of a sound medical information source with the sensibility of informal word of mouth.
“We didn't want them going all around the web trying to find information that might or might not be good,” says Oliver. “We wanted them to look at a site where they could be comfortable.”
“We're taking baby steps,” says Geoghegan. “We're moving very prudently and carefully into this area to do it right.”
J&J spends many thousands monitoring YouTube for mentions of its products—and that dragnet has caught some surprising shout-outs. At a September conference on digital media, VP new media for J&J's Children With Diabetes Joe Natale noted that “in the world of diabetes, people want to talk about what they are going through” and exhorted attendees to “Connect with your influencer and let them evangelize your brand.” Natale cited two such unprompted evangelists—one who had taken an image of his brand of insulin pump as his avatar, the other who had posted a YouTube video of himself using his preferred pump and actually calculated the savings he makes from using that brand over rival products.
J&J has launched its own YouTube channel, where users can view health information videos and even post comments to the site, subject to company approval first. As of this writing, the site had drawn 423 subscribers, with video posts from patients and healthcare professionals. In 2007, J&J launched a corporate blog—JNJ BTW (or J&J By The Way)—and last spring the company's Centocor unit followed up with its own blog, CNTO411.
“We recognize that a shift is happening in the way people are communicating about our products,” says Marc Monseau, of J&J corporate communications. “We need to be part of that conversation. The blog has provided a place for us to have a voice in that conversation. From these projects and initiatives, we're learning how the social media space works and trying to get ourselves familiar with what we need to do as an organization to get more comfortable with it.”
This past November, when a tongue-in-cheek Motrin campaign employing online video and print ads aimed at new mothers miffed some of its intended audience, Kathy Widmer, McNeil Consumer Healthcare VP marketing, took to the blog with an apologetic post. “This weekend, a lot was said about Motrin on Twitter and in the blogosphere,” said Widmer. “Unfortunately, it was not the kind of conversation that we here at McNeil had hoped to be at the center of.” The ads employed snark about the vogue for chiropractically incorrect baby slings in an effort to connect with moms, but it backfired, prompting a slew of spoof videos and angry online chatter. “It was meant to engender sympathy and appreciation for all that parents do for their kids, but did so through an attempt at humor that missed the mark and many moms found offensive,” Widmer wrote. The show of contrition, coupled with a vow to pull the offending ads, seemed to calm the Twittering masses.
“A press release has a different message and purpose,” says Monseau. “I don't think it speaks in a human voice. To me, this is about providing a more personal nature than formal communication does.”
That applies to offline media, too. In 2007, Centocor produced an hour-long documentary about patients with immune-mediated inflammatory diseases. The unbranded film followed three patients – a restaurant manager with psoriasis, a racecar driver with Chron's disease and a country musician with rheumatoid arthritis. It cost less than a traditional DTC awareness campaign and was distributed free through movie rentals outlets.
The drug industry's in a pickle right now. It will take innovative approaches to marketing and communications —including speaking in a human voice —to break out of the morass. Johnson & Johnson's companies are a model of that kind of innovation and experimentation, and for that, J&J is our 2009 Company of the Year.