J&J Sees Device Growth Via New Products, Emerging Markets


Johnson & Johnson (NYSE:JNJ) said on Thursday it would file for approvals of more than 30 major products by the end of 2016 as it looks to restore growth to a medical device division that has been overshadowed by its drugs business.

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The diversified healthcare company said it was positioned for growth through new products and would place significant focus on fast-growing emerging markets, particularly China and Russia.

"We are capitalizing on our established footprint to grow and expand our overall business (in China)," Chief Financial Officer Dominic Caruso said during a device business review for analysts and investors at its New Jersey headquarters.

J&J said it signed an exclusive agreement with Nova Biomedical Corp to sell blood glucose testing systems to hospitals in China, which account for about 60 percent of diabetes care in the country.

The company also said there is a large need for minimally invasive surgical products for lung cancer surgeries in China that it believes it can address.

Michel Orsinger, head of global orthopedics, said 40 percent of projected future growth from his division will come from emerging markets.

In Russia, building the vision care business will be a priority, the company said.

J&J is hoping to jumpstart growth in the device and diagnostics business that saw flat first-quarter sales of $7.06 billion. Its pharmaceuticals division by comparison grew nearly 11 percent in the first quarter.

Gary Pruden, head of global surgical products, forecast compound annual growth of 4 percent to 6 percent from 2013-2018 for his division.

He projected between 21 and 25 new product launches over the next 18 months to two years in areas such as catheter ablation, biosurgery products and other surgical devices.

The company is awaiting approval for automated manufacture of its Evarrest patch to stop surgical bleeding that should help spur growth of that biosurgical product.

He said business was stabilizing in Europe. "Countries in Europe are starting to pay their bills, which is a good thing."

Ashley McEvoy, head of diabetes and vision care, said J&J expects to launch in 2015 a new contact lens for presbyopia, in which aging eyes have trouble focusing on close objects, and a new insulin delivery patch in the next two years.

J&J said its DePuy Synthes orthopedics unit was launching new products, including a shoulder repair system and a hip replacement system designed to preserve bone. In recent years the unit had been plagued by major recalls and law suits involving some of its older hip replacements.

Orsinger said the orthopedics unit was going to centralize some operations from its eight companies in part to help sales representatives combine multiple product offerings in a single customer visit.

The medical device segment posted 2013 sales of $28.5 billion - about 40 percent of the company's total business.

J&J shares closed up 52 cents, or 0.5 percent, on Thursday at $100.96 on the New York Stock Exchange.

(Reporting by Bill Berkrot; Editing by Meredith Mazzilli and Chris Reese)