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How Johnson & Johnson Is Cashing in on Medical Devices

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Part 4
How Johnson & Johnson Is Cashing in on Medical Devices PART 4 OF 4

Inside JNJ’s Inorganic Strategy in Medical Devices: The Latest Acquisitions

Overview

For 1Q17, Johnson & Johnson (JNJ) reported sales of ~$17.8 billion, with its Medical Devices segment registering the highest YoY (year-over-year) growth driven by innovation in new product launches, investments in research and development, and strategic acquisitions.

In February 2017, JNJ completed its acquisition of Abbott Medical Optics, and the parent company’s 1Q17 results included ~$124 million of Abbott Medical Optics’ business sales. In its advanced surgery business, energy sales saw 7% growth, driven by the acquisition of Megadyne Medical Products in January 2017.

Inside JNJ&#8217;s Inorganic Strategy in Medical Devices: The Latest Acquisitions

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Sentio in JNJ’s spine surgery segment

On June 27, 2017, JNJ’s subsidiary Depuy Synthes announced the acquisition of Sentio, a Michigan-based, privately held company that develops innovative nerve localization technology for spine surgery. The acquisition is expected to strengthen JNJ’s position in the minimally invasive surgery market and accelerates its strategy to grow in faster growth segments and divest its slower businesses.

Though the financial terms of this transaction have yet to be disclosed, it’s expected to boost JNJ’s spine business, which is the second-largest in the world. (For more on the acquisition, check out Market Realist’s “DePuy Synthes Acquires Sentio, LLC.”)

Acquisition of 3D printing technology from TRS

In April 2017, Depuy Synthes announced the acquisition of Tissue Regeneration Systems’ 3D printing technology, which aims to will add to JNJ’s trauma platform capabilities. The technology will help support bone healing in patients with craniomaxillofacial and orthopedic injuries and with deformities by creating bioresorbable implants specific to patients.

JNJ has entered into more than 50 strategic collaborations for growing its 3D capabilities across different disease areas. JNJ had been collaborating with TRC since 2014.

Acquisition of Neuravi Limited

In April 2017, JNJ’s subsidiary Codman Neuro announced the acquisition of Neuravi, an Ireland-based, privately held company providing neurovascular therapies for acute ischemic stroke patients. JNJ expects the new products added through the acquisition to accelerate its growth in 2017 by 1.5–2 basis points.

Notably, Medtronic (MDT), Stryker (SYK), and Integra Lifesciences (IART) also provide technology solutions for Ischemic stroke patients.

To participate in the growth potential of Johnson & Johnson while diversifying company-specific risks, investors can consider investing in the Vanguard S&P 500 ETF (VOO), which has ~1.7% of its total holdings in JNJ.

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