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Johnson & Johnson’s Medical Devices Segment

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Medical Devices segment

Johnson & Johnson’s (JNJ) Medical Devices segment revenues decreased ~0.1% to ~$25.1 billion for 2016, compared to 2015. This included an operational increase of 0.9%, offset by a negative impact of foreign exchange. The chart below shows the quarterly revenues for JNJ’s Medical Devices segment.

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Cardiovascular Care franchise

Johnson & Johnson’s Cardiovascular Care franchise’s sales fell 9.2% to ~$1.9 billion for 2016. The decrease was driven by the divestiture of its Cordis business, partially offset by the strong performance of the Electrophysiology business, specifically the ThermoCool SmartTouch contact force sensing catheter.

Diabetes Care franchise

JNJ’s Diabetes Care franchise’s sales decreased 7.2% to ~$1.8 billion for 2016, due to the pricing pressure and competition from new pumps in the market. The franchise’s revenues decreased due to a lower price and rebates for self-monitoring blood glucose (or SMBG) devices, partially offset by increased sales of the strip for SMBG devices.

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Orthopedics franchise

Johnson & Johnson’s Orthopedics franchise reported an increase of 0.8% in revenues to ~$9.3 billion during 2016, due to higher sales of its Hips, Knees, and Trauma products and partially offset by Spine products. The revenues included an operational increase of 1.8%.

Surgery franchise

JNJ’s Surgery franchise sales increased 0.9% to ~$9.3 billion for 2016, driven by increased sales of Endocutters, Energy, and Biosurgery products in the Advanced Surgery category. The franchise’s sales were partially offset by lower hernia sales in General Surgery products, and lower Mentor and Sterilmed sales in Specialty Surgery products.

Vision Care franchise

Johnson & Johnson’s Vision Care franchise sales increased 6.8% to ~$2.8 billion during 2016, following the strong performance in all major markets worldwide. On an operational basis, the revenue growth for this franchise was 6.4%.

In the medical devices sector, other major companies include Medtronic (MDT), Boston Scientific (BSX), Stryker (SYK), and Zimmer Holdings (ZMH). For broad-based exposure to the industry, investors can consider the iShares US Healthcare ETF (IYH), which holds 10.8% of its total assets in Johnson & Johnson (JNJ).

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