In search of top and bottom-line growth, medical technology companies have been trying to get bigger by merging with other players, divesting non-core businesses and looking for ways to access global markets.
On Tuesday, as part of Johnson & Johnson's earnings call with analysts, Dominic Caruso, vice president of finance and the company's chief financial officer, provided a glimpse of where the opportunity for growth lies in medtech - he believes it to be primarily in surgery.
Caruso was responding to an analyst's question about whether the thinking has changed within J&J regarding having a broad-based medical device and diagnostic business.
Here's what Caruso said, according to a webcast of the call and a transcript:
We are looking at areas where we think there will be strong market growth either because of demographics or because of innovation or because of our own ability to compete in the market, bringing in new technologies with our current presence.
As you know, we made the determination some time ago that we’re going to focus on surgery, general surgery, and specialty surgery, and orthopedics and have less of a focus on cardiovascular and we got out of the drug-eluting stent business as we saw that become a commoditized business.
In 2011, J&J made the astounding announcement that it would cease making drug-eluting cardiac stents, closing that operation within its Cordis business unit. Drug eluting stents was a category that J&J had pioneered.
Caruso continued on the theme that surgery holds a big promise as does orthopedics in terms of future growth. He even pointed to Medtronic buying Covidien as a confirmation of his belief in where future growth lies.
Within the overall approach to medical devices, we still believe surgery is the place to be. We’re obviously very happy with our market position there. We made a big bet as you know in orthopedics and we’re continuing to see the benefits of that combination with Synthes. And with respect to cardiology, we believe that there are specific areas of focus within cardiology that are important. And for example, electrophysiology where we’re a leader there and we've seen very good growth, I think nearly 18% growth this quarter from our Biosense Webster business. [Biosense Webster makes electrophysiology catheters to treat cardiac arrhythmias]
So nothing has really changed. We believe these are the two main areas in MD&D that we’re going to focus on: surgery and orthopedics with selective investments in selective growth areas within cardiovascular medicine.
I think our competitors have basically followed suit in terms of these combinations in orthopedics as you know, and there is also combinations along with a current large player in cardiology [read Medtronic] now acquiring a major player in surgery [read Covidien], again confirming our approach that in fact surgery is the place that we’re going to see sustainable growth going forward. So nothing has changed and I hope that overall picture that I gave you is consistent with the previous discussions we've had and we’re moving along that strategy.
[Photo Credit: iStockphoto.com user draco77]
-- By Arundhati Parmar, Senior Editor, MD+DI