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Gary Pruden, Worldwide Chairman, Medical Devices
Johnson & Johnson (JNJ), parent company of DePuy Synthes, will undertake restructuring actions in its Medical Devices business, including changes to the orthopaedics segment. Surgery and cardiovascular segments are also included in the expected impact. Orthopaedic revenue represents over one-third (~35%) of JNJ’s overall Medical Devices revenue.
Restructuring actions are expected to yield annualized pre-tax cost savings of US $0.8BB to $1.0BB by end of 2018, including ~$200MM in 2016. Guidance for 2016 will be updated in the 4Q15 earnings call on 1/26/16.
While JNJ is not presently providing details on potential business exits, leadership noted a “company-wide premise that we should be number one or number two in the categories where we’re committed or have a clear path forward to getting there or the business must be complementary to another existing business. If we have businesses that don’t meet these requirements, we’re committed to considering strategic options for them.” Expected potential sales impact is described as minimal.
In October, leadership noted that in areas the company divests assets, it might look for acquisition opportunities. JNJ expects to accelerate the pace of tuck-in deals in the next 12 to 18 months in orthopaedics and surgery.
Since its purchase of Synthes, DePuy has been the largest player in the orthopaedic industry with revenue of $9.6 billion in 2014 and projected revenue of $9.4 billion in 2015.
In its claim of the top spots in orthopaedics, according to ORTHOWORLD estimates in, DePuy Synthes ranks:
- #2 in Joint Replacement
- #1 in Trauma
- #3 in Arthroscopy/Soft Tissue
- #2 in Spine
- #3 in Orthobiologics
In October, leadership noted that JNJ was prioritizing its knee and trauma platforms and hip remains a key focus.
As of 4Q15, JNJ will adopt a new reporting format for the Medical Devices segment, including visibility into orthopaedic revenue segments of Hips, Knees, Trauma, Spine & Other, with Other comprising Sports Medicine, Neuro, Shoulders, CMF and Power Tools.
Orthopaedic Revenue, YTD15 vs. YTD14
(Growth as reported)
$6,839MM, -5.5%
- Hips $978MM, -3.9%
- Knees $1,091MM, -3.6%
- Trauma $1,884MM, -5.8%
- Spine & Other* $2,886MM, -6.3%
*Other = Sports Medicine, Neuro, Shoulders, CMF and Power Tools
DePuy Synthes posted positive U.S. growth in each of the first three quarters of 2015. That growth has been offset by lower ex-U.S. sales in the second and third quarter and a reduction in inventory in China.
Cardiovascular Revenue YTD15 vs. YTD14 is $1,597MM, -4.1%, and Surgery Revenue is $6,804MM, -6%.
A reduction of four to six percent of the global Medical Devices segment headcount is expected, translating to ~2,400 to 3,600 positions out of ~60,000.
In 2Q15, JNJ combined its orthopaedics and surgery divisions into the present single Medical Device group and named new leadership, including the appointment of Gary Pruden as Worldwide Chairman, JNJ Medical Devices. The move reflected previous comments from JNJ leadership regarding a holistic look at its breadth of products when working with partners around the world.
Julie Vetalice is ORTHOWORLD’s Editorial Assistant. She can be reached by email.
Johnson & Johnson (JNJ), parent company of DePuy Synthes, will undertake restructuring actions in its Medical Devices business, including changes to the orthopaedics segment. Surgery and cardiovascular segments are also included in the expected impact. Orthopaedic revenue represents over one-third (5%) of JNJ’s overall Medical Devices...
Gary Pruden, Worldwide Chairman, Medical Devices
Johnson & Johnson (JNJ), parent company of DePuy Synthes, will undertake restructuring actions in its Medical Devices business, including changes to the orthopaedics segment. Surgery and cardiovascular segments are also included in the expected impact. Orthopaedic revenue represents over one-third (~35%) of JNJ’s overall Medical Devices revenue.
Restructuring actions are expected to yield annualized pre-tax cost savings of US $0.8BB to $1.0BB by end of 2018, including ~$200MM in 2016. Guidance for 2016 will be updated in the 4Q15 earnings call on 1/26/16.
While JNJ is not presently providing details on potential business exits, leadership noted a “company-wide premise that we should be number one or number two in the categories where we’re committed or have a clear path forward to getting there or the business must be complementary to another existing business. If we have businesses that don’t meet these requirements, we’re committed to considering strategic options for them.” Expected potential sales impact is described as minimal.
In October, leadership noted that in areas the company divests assets, it might look for acquisition opportunities. JNJ expects to accelerate the pace of tuck-in deals in the next 12 to 18 months in orthopaedics and surgery.
Since its purchase of Synthes, DePuy has been the largest player in the orthopaedic industry with revenue of $9.6 billion in 2014 and projected revenue of $9.4 billion in 2015.
In its claim of the top spots in orthopaedics, according to ORTHOWORLD estimates in, DePuy Synthes ranks:
- #2 in Joint Replacement
- #1 in Trauma
- #3 in Arthroscopy/Soft Tissue
- #2 in Spine
- #3 in Orthobiologics
In October, leadership noted that JNJ was prioritizing its knee and trauma platforms and hip remains a key focus.
As of 4Q15, JNJ will adopt a new reporting format for the Medical Devices segment, including visibility into orthopaedic revenue segments of Hips, Knees, Trauma, Spine & Other, with Other comprising Sports Medicine, Neuro, Shoulders, CMF and Power Tools.
Orthopaedic Revenue, YTD15 vs. YTD14
(Growth as reported)
$6,839MM, -5.5%
- Hips $978MM, -3.9%
- Knees $1,091MM, -3.6%
- Trauma $1,884MM, -5.8%
- Spine & Other* $2,886MM, -6.3%
*Other = Sports Medicine, Neuro, Shoulders, CMF and Power Tools
DePuy Synthes posted positive U.S. growth in each of the first three quarters of 2015. That growth has been offset by lower ex-U.S. sales in the second and third quarter and a reduction in inventory in China.
Cardiovascular Revenue YTD15 vs. YTD14 is $1,597MM, -4.1%, and Surgery Revenue is $6,804MM, -6%.
A reduction of four to six percent of the global Medical Devices segment headcount is expected, translating to ~2,400 to 3,600 positions out of ~60,000.
In 2Q15, JNJ combined its orthopaedics and surgery divisions into the present single Medical Device group and named new leadership, including the appointment of Gary Pruden as Worldwide Chairman, JNJ Medical Devices. The move reflected previous comments from JNJ leadership regarding a holistic look at its breadth of products when working with partners around the world.
Julie Vetalice is ORTHOWORLD’s Editorial Assistant. She can be reached by email.
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Julie Vetalice is ORTHOWORLD's Editorial Assistant. She has covered the orthopedic industry for over 20 years, having joined the company in 1999.
