Boston, MA 05/28/2014 (wallstreetpr) – Investment brokerage Goldman Sachs Group Inc. (NYSE:GS) sees enough opportunities for Johnson & Johnson (NYSE:JNJ), the manufacturer of a wide range of products, to gain from emerging markets’ growing potential for its future growth and also sees it as a high priority for the healthcare company.
Johnson & Johnson generated over 20% of its revenue from the emerging markets currently and is on track in DD% growth territory. Of this, China is the highest contributor accounting for 5% of Medical Devices and Diagnostics (MD&D) businesses revenue and achieved an uptick of 18% in the previous year. The brokerage believes that the health care company is expected to deliver above market rates, since it has more exposure in the emerging markets than its rivals, which has approximately mid-teens percentage.
During the recent analysts’ conference, Johnson & Johnson (NYSE:JNJ) highlighted its dual tactics towards premium imported and domestically manufactured value orthopedic products in China. The expanded domestic presence is predicted to allow for larger distribution into new divisions and increased reimbursement. The company is also focusing its attention on blood glucose monitoring development in China, where there is 25% of the international diabetic population.
The healthcare company is also ramping up vision care market uptick in Russia, where it has 60% market share, according to Goldman Sachs. In all, over 50% of Johnson & Johnson’s total MD&D uptick is expected to come from emerging markets in the next five years. The brokerage also expects the company to increase its share of revenue to 30% of the total industry from the current exposure of approximately 23%.
Goldman Sachs Group Inc. (NYSE:GS) sees pricing pressure modestly over time. However, the net positive will come in the form of gains from higher volumes of low penetration levels. The brokerage estimates international MD&D market to grow between 3% and 6% during the next five years. While the developed markets are expected to witness an uptick of 2 – 4%, emerging markets are predicted to grow 9-12%.