Johnson & Johnson (JNJ) is a leading US company engaged in the pharmaceuticals, medical device, and consumer products businesses. In the past few years, the company’s medical device business witnessed weakness and revenue declines due to various factors like pricing pressures, business model disruption in the healthcare industry amid recent consolidation, intense competition, and various regulatory issues around the world. The company laid out a strategic restructuring plan for its medical device unit, which has yielded significant growth in recent quarters and has driven sales recovery in its medical device business. The company has been focused on innovation, portfolio management, partnerships, and developing new business models as the near-term priorities for steady growth across its medical device business.
Innovation and partnerships
Johnson & Johnson has launched a number of key products and has entered into some strategic partnerships and collaborations that have helped the company accelerate the growth of its medical device business. Recently, in October 2017, J&J launched its Viper Prime System and the Concorde Clear MIS Discectomy Tool in its spine business segment. The launches are expected to fill the portfolio gaps in the business and drive the company’s medical device sales growth going forward. J&J also launched its new TFNA Augmentation system and MAXFRAM Multi-Axial Correction System in October 2017.
Portfolio management and new business models
Johnson & Johnson has implemented some key strategic restructuring initiatives across its medical device business recently. The company has undertaken a number of key acquisitions and divestitures that have helped the company focus on its profitable high growth segments and core businesses. The company has recently divested its neurosurgery business and exited the insulin pump business, which was facing intense competition. The company plans to make some further divestitures in its ailing diabetes business.
Peers Abbott Laboratories (ABT), Medtronic (MDT), and Zimmer Biomet Holdings (ZBH) have some of the competing medical devices in the market and present intense competition to J&J. Abbott Laboratories registered sales growth of ~42.3% in its recently ended quarter. Medtronic and ZBH are expected to post sales growth of -1.1% and 0.69%, respectively, in their most recent quarters. The Vanguard High Dividend Yield ETF (VYM) holds ~3.7% of its total portfolio in JNJ.