Johnson & Johnson could beat out Apple and Google’s parent company Alphabet as the first $1 trillion company, according to a Motley Fool report.
Here are five things to know:
1. J&J is among the largest 10 companies in the world. On Friday, the company reported $328 billion market valuation.
2. The company’s products are inelastic, so there is more likelihood of generating consistent growth and cash-flow even if the economy takes a downturn or there is a recession. The company focuses on medical devices and pharmaceuticals in addition to consumer products that continue to be in demand.
3. The pharmaceutical company plans to submit 10 new drug applications through 2019 that have “blockbuster potential” according to the report. The company brought in 14 novel therapies with seven that have annual sales of $1 billion or more from 2009 to 2014.
4. Pricing power for J&J could stay strong as Congress will likely run into roadblocks trying to cap or control prescription drug pricing. The company can use the cash flow generated from “blockbuster” drugs for further internal research and acquisitions.
5. As the elderly population grows, demand for orthopedic medical devices such as hip and knee implants will be on the rise. There are also more people with insurance who can seek elective treatments.
6. J&J’s traditionally slower growth as a high volatility stock could impede its quest to become the first $1 trillion company but overtime it could push in that direction.