Johnson & Johnson works to integrate new Pfizer brands
Published 9:00 pm Friday, June 30, 2006
TRENTON, N.J. – Already a trusted household name with operations from Algeria to Zimbabwe, Johnson &Johnson is set to add a host of popular consumer health brands to its stable, which includes iconic names such as Band-Aids and Johnson’s Baby Shampoo.
J&J’s pricey $16.6 billion victory this week in the bidding war for Pfizer Inc.’s consumer health care unit should help it quickly make up for sagging prescription drug revenues and expand its dominance in some product categories.
Marketing and branding experts foresee the New Brunswick-based health-care giant using its savvy about consumers to boost sales of mature Pfizer products, such as Listerine and Visine, through advertising and new product twists – and to take advantage of the near-perfect matchup between Pfizer’s brands and its own.
Bill Weldon, J&J’s CEO, said in an interview after the deal was announced Monday that the company is assembling a leadership team “to see how everything fits together.”
Think of the pairings: Pfizer’s Neosporin and Band-Aids, Bengay and Tylenol, Desitin diaper rash ointment and Johnson’s Baby Powder. For dental care, there’s Pfizer’s Listerine and Efferdent to go with J&J’s Rembrandt toothpaste and Reach toothbrushes and dental floss.
Suffering from stomach problems? There’s Pfizer’s Kaopectate or J&J’s Mylanta, Gas Aid, Pepcid or Imodium. Got a skin condition? Take your pick from Pfizer’s Lubriderm, Cortisone cream or Caladryl calamine lotion and J&J’s Neutrogena, Aveeno, Clean &Clear and Roc skin-care lines. Thinking about sex? J&J sells K-Y lubricant, plus a host of popular prescription contraceptives; Pfizer offers the e.p.t. Pregnancy Test.
Pfizer sold $3.9 billion in consumer health products worldwide last year, while J&J sold $9.1 billion.
“With all these brands, J&J touches people at almost every point in their life” and nearly owns the medicine cabinet, said Susan Palombo, an expert on health product branding at Landor Associates. “There might be really interesting opportunities to bundle these brands together,” such as putting Neosporin on Band-Aids or applying Pfizer’s Listerine “PocketPak” technology to other products.
She said that after the acquisition, J&J could jointly promote products like Desitin and baby powder, and even try stocking store shelves differently, putting its related brands together rather than in the current spots.
The sheer sales volume J&J will now have also will give it more clout with its drug and grocery store customers, Palombo said.
Pfizer and J&J together sold $6.35 billion in consumer health products in the U.S. last year. That’s nearly 20 percent of the $33.4 billion of U.S. sales – excluding Wal-Mart – in the 30 categories in which they sell products, according to market research firm ACNielsen.
Where competing products are concerned, J&J can give preference to the more popular one in different regions to better manage precious shelf space, or even phase out the lower-selling brand, said Pradeep Chintagunta, a marketing professor at the University of Chicago’s Graduate School of Business. He also envisions J&J bundling products together for special store promotions and displays, and thinks the weaker Pfizer items might be rebranded with the red Johnson &Johnson signature logo.
Despite the bigger number of products and greater sales volume J&J will have, Chintagunta said competition from store brands and other large players such as Unilever, Procter &Gamble Co., Kimberly-Clark Corp. and several drugmakers who sell nonprescription medicines “hopefully will keep a lid on prices for the consumer.”
Meanwhile, J&J can save money because it will need fewer manufacturing plants and salespeople with the combined brands, said Gary Stibel, chief executive of New England Consulting Group.
