One of the biggest reasons for investors to like Johnson & Johnson (NYSE:JNJ) is its staying power. The company’s ability to weather practically any storm is tied to its brand name, which earned the number-one position in a ranking of the top pharmaceutical brands for 2020.
Despite a share price drop of more than 11% in 2019, J&J’s brand is currently worth $10.9 billion according to Brand Finance’s annual assessment of global pharma names, supplanting last year’s leader, Roche AG (RHHBY).
Among the top 25, Bayer AG (BAYRY)’s estimated brand name value dropped 17% as its brand image was damaged by the Monsanto acquisition and its accompanying problems. Pfizer’s (NYSE:PFE) brand fell the fastest, down 20% from the previous year.
Richard Haigh, managing director at Brand Finance, said brand recognition is important because it reflects a company’s resilience. “You do see scandals with big brands, but it takes quite a few before things really start to go off the boil,” he said. “I think J&J is still a very well loved and respected and trusted brand despite some of these issues.”
The issues he was referring to were J&J’s fourth quarter financial shortfall and the damages to its reputation from talc and opioid lawsuits. However, the company’s value was boosted by its strong performance in antimicrobial research and development.
Last week, J&J said it was working to develop a vaccine against the new coronavirus outbreak in China, an effort that could further increase its brand value for next year.
Pfizer fell to number six on the list. Haigh attributed the drop to the company’s lower earnings, an overly broad product line and setbacks in its innovation. Investors need not panic, though. Haigh thinks it won’t take much for the company to get back on track:
“Having been around for many decades, they clearly know what they’re doing creating a sustained and sustainable business. So although they have gotten into a rut now, from what I can tell they’ve identified the issues and are investing in getting through.”
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors, according to Brand Direct. To measure a brand’s strength, the firm considers marketing investment and shareholder equity and the impact they have on business performance.
Brand Finance’s list was expanded to 25 in 2020, which allowed Asian companies to join the ranking for the first time. The most valuable of those were China’s Sinopharm Group (HSKE:01099), ranked 15th, and Japan’s Takeda Pharmaceutical Co. (NYSE:TAK), ranked 16th, both of which have a brand name valued at about $2 billion according to the Brand Finance ranking.
Disclosure: The author holds a position in Johnson & Johnson.
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This article first appeared on GuruFocus.
