J&J; Renews Commitment To Devices With Synthes Deal

Article preview from IN VIVO - May 1, 2011

Rumors that Johnson & Johnson was looking to exit cardiovascular devices and perhaps go so far as to divest their entire device business apparently can be put to rest in light of the company's recently announced plans to acquire orthopedics leader Synthes Inc.

J&J Renews Commitment To Devices With Synthes Deal

Article preview from IN VIVO - May 1, 2011

Rumors that Johnson & Johnson was looking to exit cardiovascular devices and perhaps go so far as to divest its entire device business apparently can be put to rest in light of the company's recently announced plans to acquire orthopedics leader Synthes Inc.  The $21.7 billion deal – the largest acquisition in J&J's history – bolsters the company's lagging DePuy Inc. orthopedics division by enhancing its spine business and making it the leader in the trauma market, a relatively small but fast-growing orthopedic sector.

J&J's support for orthopedics is also notable for coming at a time when DePuy is facing internal challenges related to the recent recall of a hip implant system. In response to a question about why his company would make a deal in orthopedics rather than in one of its other signature sectors, William Weldon, chairman and CEO of Johnson & Johnson, called orthopedics "an extraordinary opportunity" with a market potential he estimated at $37 billion, terming it "probably the largest opportunity in the whole medical device area."

The deal, which isn't expected to close until 2012 after the requisite regulatory review, also provided some badly needed good news to an orthopedics sector that's been caught in a bit of a tailspin of late. Indeed, some analysts believe the acquisition could not only help J&J but also could provide a needed financial boost to the entire orthopedics space. Michael Matson, senior analyst at Mizuho Securities USA Inc., called the deal a "vote of confidence in orthopedics."

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