By Jof Enriquez – July 21, 2016
Johnson & Johnson CEO Alex Gorsky says that J&J is on track and reaping gains from the restructuring of its medical device business, six months after it announced accelerated innovation to keep up with market changes. Senior leadership also will continue to be very disciplined in evaluating M&A deals, in spite of the company’s deep pockets.
In January, J&J announced that it will streamline its workforce and certain offerings in the orthopedics, surgery, and cardiovascular segments in order to increase investments in innovation and to drive growth. Device sales had fallen 2.9 percent overall at the time of the announcement.
Fast forward six months, and the restructuring activities are beginning to help revive J&J’s device business. Worldwide device sales grew 0.8 percent in the second quarter to $6.4 billion, according to a press release. Excluding the net impact of acquisitions and divestitures, on an operational basis, worldwide sales rose 3.9 percent, domestic sales increased 1.9 percent, and international sales grew 5.8 percent. Overall sales increased 3.9 percent to $18.5 billion during the second quarter.
J&J says growth was driven by endocutters, energy and biosurgical products in the Advanced Surgery business; electrophysiology products in the Cardiovascular business; joint reconstruction and U.S. trauma products in the Orthopaedics business; and ACUVUE contact lenses in the Vision Care business.
“We’re gaining momentum and accelerating growth through our unique and broad-based approach to innovation. Our performance this quarter was roughly in-line with market growth, and we’re pleased with the progress here, but far from satisfied,” J&J CEO Alex Gorsky said during a conference call. He said he is confident about achieving above-market growth globally, which the company projects to be 3 percent to 5 percent annually over the next five years.
