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Why J&J Expects 2018 to be a Growth Year

Why J&J Expects 2018 to be a Growth Year

Johnson & Johnson CEO Alex Gorsky told analysts on Tuesday that 2017 was a transition year for its medical device business, but 2018 should be a growth year.

Johnson & Johnson CEO Alex Gorsky characterized 2017 as a transition year for the company's medical device business, which is currently undergoing a transformation as J&J tries to shift its medical device portfolio to higher-growth products. So what does that mean for 2018?

"Overall, we remain very confident in these businesses, but clearly we've taken a lot of action regarding innovation, taken a lot of action regarding pruning the portfolio, and we've taken some action as well to improve execution in the field," Gorsky said in response to a question from analyst Joanne Wuensch of BMO Capital Markets during J&J's fourth-quarter earnings call Tuesday. "We think overall it will result in accelerated growth rate in 2018."

Reflecting on 2017, Gorsky said J&J's medical device businesses launched 16 new products, most of which came in the back-end of the year.  He highlighted some of the device businesses that are performing particularly well, including EP, which he said is growing at about 19%, endosurgery growing at 14%, biosurgery growing at 8%, and vision care growing at about 6%.

Offsetting that, he said, has been the performance of J&J's diabetes business and some of the company's specialty surgery areas. 

Wuensch also wanted to know about J&J's orthopedic business, asking Gorsky, "What's really going on in the spine business, and in your knee franchise?"

Gorsky said the spine business has experienced a delay in some product launches.

"We’ve seen an overall slowdown in this marketplace due to reimbursement issues," he said. "So, clearly, we are focused on continuing to launch new innovation and work our way through some of the disruption that we saw earlier."

J&J does have product launches planned for the back-end of this year to improve performance in the spine business, Gorsky said, including an interspace cage; some additional plates and screws; and visioning devices.

"So, again, we think there remains a lot of unmet medical need there in an area where we can clearly improve our performance," he added.

In the knee business, J&J's DePuy Synthes unit is currently in the midst of launching the Attune revision technology, and Gorsky said that is expected to be an important addition to the Attune platform.

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