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JNJ’s Recent Spine Business Developments: 4Q17 Expectations

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Jan. 19 2018, Updated 11:20 a.m. ET

Overview

Johnson & Johnson (JNJ) reported weakness in its spine business for the past few quarters. In 3Q17, JNJ reported sales growth of ~7.1% in its Medical Devices segment, but this growth was negatively impacted by weakness in the company’s knee and spine sales.

The knee business was impacted by knee implant price regulation in India, while the company’s spine sales were impacted by the continued gap in JNJ’s spine product portfolio. (For more, read “This Drove Down JNJ’s Orthopedic Segment Performance in 3Q17“)

As a result, the company has been losing US spine market share to players including Stryker (SYK), Medtronic (MDT), and Zimmer Biomet Holdings (ZBH).

J&J is making continued efforts and implementing a strategic plan to improve its product portfolio and market presence, however, through various launches and collaborations. (For details, read “How JNJ Plans to Address the Portfolio Gaps in its Spine Business?“)

Notably, investors looking to gain diversified exposure to JNJ stock can consider investing in the iShares Core S&P 500 ETF (IVV), which has ~1.7% of its total portfolio holdings in JNJ.

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Recent launches

J&J announced the launch of its Concorde Clear MIS (minimally invasive surgery) discectomy device in the Middle East, Europe, and Africa in December 2017. Discectomy refers to the surgical removal of a part of the herniated disc that presses on the spinal cord or a nerve root.

The newly launched device is a single-use instrument that removes the degenerated disc and, using standard hospital suction, prepares the endplates. Compared with traditional techniques, this tool requires fewer instruments exchanges and tool passes due to features such as its clear handle, which enables the surgeon to see collected disc material.

Recently, Depuy Synthes sold its Prodisc assets, including Prodisc-L, Prodisc-C, Prodisc-C Vivo, Prodisc-C Nova, Prodisc-O, and Discover cervical and lumbar artificial disc systems, to Centinal Spine. While Prodisc C and Prodisc L are FDA (US Food and Drug Administration) approved devices, other devices have yet to gain approval, and Centinal Spine plans to launch clinical studies soon.

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