Johnson & Johnson has announced plans to separate its Orthopaedics business, aiming to enhance strategic and operational focus for both the parent company and the new entity. The move is expected to allow Johnson & Johnson to concentrate on areas with high unmet medical needs within its Innovative Medicine and MedTech divisions.
According to the company, the standalone orthopaedics business will operate as DePuy Synthes. It is projected to become the largest orthopaedics-focused company, holding leading market share positions across major categories.
“This transaction enables Johnson & Johnson to further strengthen its focus and investment toward higher-growth areas where we can meaningfully extend and improve patient lives,” said Joaquin Duato, Chairman and Chief Executive Officer of Johnson & Johnson. “The planned separation reflects our long-standing commitment to portfolio optimization and value creation. We are confident that our Orthopaedics business will be better positioned to improve top-line growth and operating margins as a standalone business.”
Following the separation, Johnson & Johnson intends to retain leadership in six key growth sectors: Oncology, Immunology, Neuroscience, Cardiovascular, Surgery, and Vision. The company anticipates that this step will help increase both revenue growth and operating margins while maintaining a strong balance sheet.
“This move would further enhance the market-leading position for DePuy Synthes and strengthen our overall MedTech business with a focus on Cardiovascular, Surgery and Vision,” said Tim Schmid, Executive Vice President, Worldwide Chairman of MedTech at Johnson & Johnson. “Through the separation process, we will remain focused on setting our talented teams up for long-term success, while continuing to serve our customers and create healthier futures for patients around the world.”
DePuy Synthes is expected to continue addressing a global market opportunity estimated at over $50 billion annually by serving approximately seven million patients each year through a broad range of products. In fiscal year 2024, sales from the Orthopaedics division were about $9.2 billion.
As part of this transition, Namal Nawana has been appointed Worldwide President of DePuy Synthes effective immediately. He will oversee operations during the separation process and is expected to lead DePuy Synthes once it becomes an independent entity.
“Namal brings extensive experience leading global public companies and a demonstrated track record of success in growing medical devices businesses. We are pleased to have an executive of Namal’s caliber step into this role and are confident he is the ideal leader to guide the new DePuy Synthes into the future,” Duato said.
Nawana commented on his appointment: “I am honored to take on this role to lead the new DePuy Synthes, a global market leader with a deep heritage of innovation and a strong commercial platform that is well positioned to succeed as a standalone company. I look forward to working together with the broader team to meet our mission and keep people around the globe moving.”
Johnson & Johnson aims for completion of this separation within 18–24 months but notes that finalization depends on several conditions including regulatory approvals and consultations with employee representative bodies.
During this period, Citi and Goldman Sachs & Co. LLC are acting as financial advisors while Freshfields LLP serves as legal counsel.
In addition, Johnson & Johnson reported its third-quarter results in a separate announcement today. The company scheduled an investor conference call at 8:30 a.m., Eastern Time; details can be found on their website (https://www.jnj.com/).
For more information about Johnson & Johnson’s healthcare innovation activities or recent filings with regulatory authorities such as Form 10-K or Form 10-Q reports required by U.S. securities law (https://www.sec.gov), visit www.jnj.com.