It was 2003 and the financial controller of Xian Janssen Pharmaceutical Ltd, XJP, was preparing for a meeting with the CEO of the company to discuss the 2004 business plan. XJP was a joint venture with Johnson and Johnson in the Chinese market. XJP was one of the largest single operating companies and was expected to close 2003 with $121.6 million in earnings. The CEO of XJP had already passed on the corporate earnings objectives for 2004, just under a 20% increase.
Although XJP had performed well in recent years, averaging 20% annual earnings growth despite many challenges, meeting corporate objectives this would be difficult. Many of the direct and indirect expenses had been rising including foreign exchange losses.
XJP produces and markets prescription and over the counter medications to the general public. The company was the number one foreign pharmaceutical company operating in China and had been there since 1985. The company operations were roughly equally divided between Ethical and OTC businesses, 2003 had proven a very busy year, with the company successfully wreathing two different price cuts, three new Ethical product introductions, not to mention closing the year with a 98% success rate on over 1,200 tender sales.