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J&J CEO: We Know We Still Have More Work to Do [in Devices]

Johnson & Johnson did improve performance in its medical device business last year, but CEO Alex Gorsky said the company has more work ahead to return to above-market growth in 2020.

Johnson & Johnson promised investors improved performance in medical devices in 2018, and the company clearly made significant moves to deliver on that promise through divestitures, acquisitions, and strategic partnerships

But the company's work in the medical devices segment is far from over.

"We know we still have more work to do, and we are committed to continuing to build upon this momentum and return to above-market growth in 2020," CEO Alex Gorsky told investors Tuesday during J&J's fourth-quarter earnings call.

Looking ahead, Gorsky said the company expects to accelerate growth in medical devices this year through improved execution and enhance the flow and value of innovation, which includes the progression of digital surgery platforms. He said the company expects to further improve performance in the segment in 2019 as it did in 2018. J&J improved operational growth, excluding acquisitions and divestitures, by 1.1% in medical devices compared to 2017. Gorsky also noted that in 2018 the company launched 21 new medical device products.

"Still, we fully recognize that our progress has not been uniform across the entire portfolio," Gorsky said during the call, as transcribed by Seeking Alpha. "There are areas where we must and we will improve, specifically in orthopedics. We demonstrated positive progress throughout 2018 in our knees and spine businesses, and we believe this sets us up well for 2019 and beyond."

We can expect to see more strategic partnerships this year, such as the company's recently announced collaboration with Apple, portfolio management, and new business models. Gorsky said the key catalyst for growth in medical devices include fueling growth from top platforms, such as electrophysiology, advanced surgery, and vision; launching 20 to 25 major new products across the orthopedics, surgery, interventional, and vision portfolios; and by maximizing new market growth opportunities, such as stroke, and sites of care beyond the hospital, and simplifying operations while "relentlessly focusing" on execution.

"We will do this while progressing our efforts in digital surgery including robotics, which is a critical element to our future success, not just in the near term, but as we look to the next decade and beyond," Gorsky said.

CFO Joseph Wolk added that in medical devices the company expects to see improved quarterly upticks with respect to growth this year, getting the business on a path of being at or above market in 2020.

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