The healthcare devices market has been abuzz with mergers and acquisitions over the past 18 months and Cardinal Health's recent purchase of Johnson & Johnson's cardiovascular technologies business for $1.9 billion will have an impact on J&J's overall business going forward.
Johnson & Johnson has been exiting the cardiovascular business for a while, and rumors have been swirling about the Cordis sale since late 2014.
"The Cordis sale brings in $1.9 billion in terms of revenue, and this influx of revenue will leave room for growth in research and innovation for J&J," says Tara Shelton, a research analyst with Frost & Sullivan. "This is an exciting opportunity for J&J, as this cash influx can be used in one or multiple segments."
The company's orthopedics segment, DePuy Synthes, is expected to continue growing as minimally invasive surgeries and technologies become more prominent. In early February, DePuy Synthes acquired Olive Medical, a minimally invasive imaging equipment provider for operating rooms and physician offices. This move provides additional diversity in the segment.
"This is in line with Frost & Sullivan's analysis, which found physicians performing minimally invasive surgeries (MIS) in ambulatory or outpatient settings to reduce costs and hospital overhead," says Ms. Shelton. "We expect the MIS area to grow. With the broadened imaging portfolio from the Olive Medical acquisition, DePuy Synthes is better positioned to provide solutions to multiple healthcare settings."
Since acquiring Synthes in 2011, Johnson & Johnson has been the clear leader in the global orthopedic market. But recently, mid-sized orthopedic companies began merging to challenge the reigning giant.
"We have yet to see the full impact of Zimmer's acquisition of Biomet," says Ms. Shelton. "In the near future, J&J will see increased competition in the orthopedic market, however their future remains promising."
The company expects to launch 30 products this year and continue growing in the orthopedics market, which is a maturing market. The main growth drivers in the market are:
• Aging population
• Minimally invasive technology development
• Trauma markets
"Growth in the United States has been slowing, and companies are looking towards emerging markets for growth opportunities," says Ms. Shelton. "Stateside, companies are shifting their focus to the development of biologics and MIS. J&J is in a great position to expand these segments with the advancement of material and manufacturing technologies."