Olayemi bamisile rena huynh luciana vallejo
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Olayemi Bamisile Rena Huynh Luciana Vallejo. To add value to Johnson & Johnson we are considering acquiring Incyte Corporation. Executive Summary. Products/Services: Pharmaceutical Company Segments: Consumer Products Pharmaceutical Products Medical Devices & Diagnostics.

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Olayemi Bamisile Rena Huynh Luciana Vallejo

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Olayemi bamisile rena huynh luciana vallejo

OlayemiBamisile

Rena Huynh

Luciana Vallejo


Executive summary

To add value to Johnson & Johnson we are considering acquiring Incyte Corporation.

Executive Summary


Jnj products segments

  • Products/Services: Pharmaceutical Company

  • Segments:

    • Consumer Products

    • Pharmaceutical Products

    • Medical Devices & Diagnostics

JNJ Products & Segments


Jnj s unprincipled leadership

  • Strategy: Decentralized Management

  • Issues: Scandals surrounding products in medical devices & diagnostics segments

  • Costs of Unprincipled Leadership

  • $8M in damages per customer

  • Over 10,000 potential cases

  • Up to $80B in damages

JNJ’s Unprincipled Leadership


Leading jnj into becoming an ethical company

  • Managers need to lead the company into becoming a socially responsible company

    • Coordinate & influence modifications in operations, engineering, logistics, product design, and financing

Leading JNJ into Becoming an Ethical Company


Jnj s cash flows

  • 2012 Acquisition of Synthes, Inc.: $20B

    • Products: Manufactures orthopedic devices

    • Premium: 37%

JNJ’s Cash Flows


Jnj s cost of capital 9

JNJ’s Cost of Capital: 9%


Jnj is under valued

  • Terminal Value: $490B

  • SGR: 7%

JNJ is Under Valued

*Source: Yahoo Finance


Incyte s leading product

1st and only FDA approved drug to treats intermediate to high-risk myelofibrosis (bone marrow disorder)

Incyte’s Leading Product


Incyte s business strategy

  • Develop, and commercialize compounds independently in 2 core disease areas such as oncology and inflammation

  • Collaborations with:

Incyte’s Business Strategy


Incyte s cash flows

Incyte’s Cash Flows


Incyte s cost of capital 14

Incyte’sCost of Capital: 14%


Incyte is over valued

Incyte is Over Valued

*Source: Yahoo Finance


Incyte s new drug adds value of 300m

  • Waiting time for FDA approval: 3 years

  • 2 Dosages Available: 250mg & 500mg

  • Each dosage comes in 30-days supply

Incyte’s New Drug Adds Value of $300M


Incyte s new drug adds value of 300m1

Put dosage

  • Payback Period: 4.5 years

  • Project’s Expected Return: 82%

Incyte’s New Drug Adds Value of $300M


Recommendations

  • JNJ will not acquire Incyte

    • Insufficient Operating Cash Flows

    • Finance company for future cash flows

    • Company is overvalued

  • JNJ should focus on fixing house issues related to defective products and unprincipled leadership

  • Incyte should implement our project

Recommendations


References

  • Ingram-Albright. (2007). Interpreting Cash Flows. In S. Oblinger (Ed.), Financial Accounting Information for Decisions (pp. 184-187) Dewey, Rob.

  • Nielsen, R. P. (1989). Changing Unethical Organizational Behavior. Academy Of Management Executive (08963789), 3(2), 123-130. doi:10.5465/AME.1989.4274762

  • When J&J learned of Implant Problems. Wall Street Journal, Torello, A. (2013, January 31, 2013). EU sends anti-trust complaint to J&J, Novartis. Wall Street Journal

References


Questions

Questions?


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