07.28.10
$5.4 Billion
KEY EXECUTIVES:
William Weldon, Chairman and CEO, Johnson & Johnson
Michael Mahoney, Company Group Chairman, DePuy Family of Companies
David Floyd, U.S. President, DePuy Orthopaedics
Gordon Van Ummersen, Worldwide President, Trauma & Extremities, DePuy Orthopaedics
Mark Hanes, Worldwide Director of Research, DePuy Orthopaedics
Gary Fischetti, Worldwide President, DePuy Spine
Ian Lawson, Worldwide President, DePuy Mitek
P. Laxminarain, Worldwide President, Codman
NO. OF EMPLOYEES: 5,300
GLOBAL HEADQUARTERS: Warsaw, Ind. & Raynham, Mass.
It goes without saying that fiscal 2009 was a tough year for most. The world’s largest medical device company—Johnson & Johnson (J&J)—certainly was no exception. However, a broad range of product categories helped to balance the global healthcare firm’s losses in some sectors with gains (hopefully) in others.
One of the sectors that helped to deliver positive results for the company was its DePuy division, which includes DePuy Orthopaedics, DePuy Spine, DePuy Mitek and Codman & Shurtleff, Inc.
William Weldon, CEO of J&J, noted that it was a year of “tremendous challenge,” given the worldwide economic downturn. Weldon’s tone, however, during a conference call with investors and journalists at the end of the fiscal year was that things could have been a lot worse.
“We maintained our long-term focus while delivering solid results,” Weldon said. “We made important investments in acquisitions, strategic partnerships and launches of recently approved innovative products while preserving our financial flexibility to continue to invest in innovation.”
J&J’s worldwide sales for 2009 were $61.9 billion across the company’s multiple business units, a decrease of 2.9 percent. Overall domestic sales declined 4.4 percent, while international sales declined 1.4 percent, reflecting operational growth of 3.9 percent and a negative currency impact of 5.3 percent.
Net earnings and diluted earnings per share for 2009 were $12.3 billion and $4.40, respectively, down from fiscal 2008’s level of $12.9 billion. Full-year earnings results included an after-tax restructuring charge of $852 million and an after-tax gain of $212 million due to settled litigation matters. Excluding these special items, net earnings for the full-year 2009 were $12.9 billion, flat compared with last year.
Worldwide revenues for the company’s Medical Devices and Diagnostics unit, however, experienced modest growth. Sales were $23.6 billion for 2009, a gain of 1.9 percent. Domestic sales increased 4.5 percent, while international sales decreased 0.2 percent, including an operational increase of 4 percent and a negative currency impact of 4.2 percent. The company has spent $3.6 billion on research and development during the last two years and closed $2.7 billion worth of acquisitions. The medical device division accounted for 38 percent of J&J’s total sales last year and 43 percent of total operating profit (excluding special items).
DePuy’s orthopedic joint reconstruction, spine and sports medicine businesses continued to deliver strong results. DePuy companies achieved sales of $5.4 billion in 2009, a 4.6 percent gain compared with fiscal 2008.The company attributed the increase to growth in the spine, hip and knee product lines, in addition to new product launches in the Mitek sports medicine product line.
Part of the company’s growth strategy to keep it competitive in a tough market has been through aggressive new product development—organically and, more often, through acquisition.
In December last year, the company also completed the acquisitions of Finsbury Orthopaedics Limited, a privately held, United Kingdom-based manufacturer and global distributor of orthopedic implants. Financial terms of the transaction were not disclosed.
With the acquisition of Finsbury Orthopaedics, DePuy gained several key products, including the DeltaMotion ceramic-on-ceramic hip system, the Adept metal-on-metal hip resurfacing and total hip system, as well as the Medial Rotation Knee system, the Dual Bearing Knee system, the BOX total ankle replacement, Tuke Saw and multiple small-joint reconstructive implant lines. Finsbury Orthopaedics pioneered advanced high-performance, large-diameter hip bearings that feature proprietary ceramic-on-ceramic and metal-on-metal bearing technologies designed to address the unmet needs of active patients.
Throughout the year, there also were a number of new product introductions and approvals worth noting.
In February, DePuy Orthopaedics launched the aSphere M-Spec Femoral Head, a new metal hip bearing that company officials claim potentially could reduce cumulative wear by 80 percent and associated ion release by 77 percent compared with conventional metal-on-metal technology. The aSphere head, combined with DePuy’s TrueGlide technology, facilitates a more fluid range of natural motion and up to 159 degrees range of motion, according to the company. The aSphere head was cleared for marketing by the U.S. Food and Drug Administration (FDA) in December 2008, adding another advanced option to DePuy’s Pinnacle Hip Solutions bearing system. According to one study cited by DePuy, since the Pinnacle Hip originally was approved in 2002, an estimated 99.9 percent of Pinnacle Hip components remain in use.
In August, an FDA panel unanimously recommended approval of DePuy’s Pinnacle CoMplete Acetabular Hip System, the first ceramic-on-metal hip bearing to be considered for approval in the United States. The company is still waiting for a final OK from the FDA. The panel’s recommendation was based in part on results from a two-year clinical study that compared the safety and effectiveness of the Pinnacle CoMplete System to a commonly used DePuy metal-on-metal implant. The study showed no significant difference in adverse events, revision rates and survivorship after two years, and patients experienced similar pain relief, improved function and range of motion. Laboratory testing on the Pinnacle CoMplete System showed a greater than 90 percent reduction in wear compared with the metal-on-metal system under normal gait conditions and a more than 80 percent reduction in wear under adverse conditions.
If approved by the FDA, the Pinnacle CoMplete System would be used in adult patients who suffer from severe pain and disability due to osteoarthritis or post-traumatic arthritis. Conditions for approval recommended by the panel included refinements to the proposed product labeling and a post-approval study. The device remains an investigational device in the United States. Since 2007, the ceramic-on-metal bearing has been marketed in 40 countries.
According to the American Academy of Orthopaedic Surgeons, about 33 million Americans are affected by osteoarthritis, a degenerative joint disease, and more than 193,000 total hip replacements are performed each year in the United States, mostly due to some form of degenerative arthritis.
In addition, in 2009, DePuy launched the Silent Hip, a minimally invasive hip stem available outside the United States only. The Silent stem, which is inserted into the femur, is more bone-preserving than traditional stems, according to J&J.
New product rollouts clearly are part of the company’s strategy to take on the competition.
This summer, J&J’s leadership told analysts that the company would roll out 80 new products from its medical devices and diagnostics unit through 2012 and expand in markets including biosurgicals and electrophysiology. The division has received more than a dozen regulatory approvals so far in 2010. Overall, Johnson & Johnson claims to account for roughly 62 percent of the $350 billion worldwide medical device and diagnostics market. J&J expects medical device sales to grow an average of 6 percent each year through 2014.
To continue to foster innovation and education in patient care, the company opened the DePuy Institute at DePuy’s worldwide headquarters in Raynham, Mass., in August. The new facility provides education, training and research on non-surgical early interventions to complex surgery in the areas of orthopedics, spinal care, sports medicine, soft tissue repair, trauma and neurosciences. The goal is to help healthcare professionals enhance their skills and gain new insights on filling unmet clinical needs across a range of conditions, officials said.
“Education, training and research are the cornerstones of success both inside and outside the operating room and are essential to the advancement of care and the improvement of patient outcomes,” said Mike Mahoney, worldwide company group chairman, DePuy. “The DePuy Institute reflects our ongoing commitment to education throughout the continuum of orthopedic and neurological care and creates an environment and sense of community conducive to learning, connecting and sharing knowledge across disciplines.”
The institute will offer year-round educational programs on the latest concepts, techniques and technologies in the areas of minimally invasive surgery, aging spine, deformity, neurological disease, joint replacement and trauma care, featuring faculty from leading teaching institutions and academic centers in the Boston area and throughout the world. Officials hope the center will encourage collaboration between specialties to develop innovative solutions that improve patient care.
“Each surgeon, resident, fellow, hospital administrator, nurse or other healthcare professional who visits the DePuy Institute will engage in a personalized learning experience based on his or her individual skill set, background and interests,” said Diana Bacci-Walsh, worldwide vice president of Professional
Education for DePuy.
Despite overall gains in the device sector for the year, the company was not able to avoid restructuring in the face of increased economic pressures. In 2009, J&J officials said they hoped to save up to $1.7 billion by 2011 (approximately $900 million in 2010). The primary cost savings would come from
layoffs. The firm estimated it would reduce its global workforce by 6-7 percent. Leadership also hopes to simplify business structures and processes for additional savings. The associated savings will provide additional resources to invest in new growth platforms, launch new products, continue to grow core business, and provide flexibility to adjust to the evolving global environment.
KEY EXECUTIVES:
William Weldon, Chairman and CEO, Johnson & Johnson
Michael Mahoney, Company Group Chairman, DePuy Family of Companies
David Floyd, U.S. President, DePuy Orthopaedics
Gordon Van Ummersen, Worldwide President, Trauma & Extremities, DePuy Orthopaedics
Mark Hanes, Worldwide Director of Research, DePuy Orthopaedics
Gary Fischetti, Worldwide President, DePuy Spine
Ian Lawson, Worldwide President, DePuy Mitek
P. Laxminarain, Worldwide President, Codman
NO. OF EMPLOYEES: 5,300
GLOBAL HEADQUARTERS: Warsaw, Ind. & Raynham, Mass.
It goes without saying that fiscal 2009 was a tough year for most. The world’s largest medical device company—Johnson & Johnson (J&J)—certainly was no exception. However, a broad range of product categories helped to balance the global healthcare firm’s losses in some sectors with gains (hopefully) in others.
One of the sectors that helped to deliver positive results for the company was its DePuy division, which includes DePuy Orthopaedics, DePuy Spine, DePuy Mitek and Codman & Shurtleff, Inc.
William Weldon, CEO of J&J, noted that it was a year of “tremendous challenge,” given the worldwide economic downturn. Weldon’s tone, however, during a conference call with investors and journalists at the end of the fiscal year was that things could have been a lot worse.
“We maintained our long-term focus while delivering solid results,” Weldon said. “We made important investments in acquisitions, strategic partnerships and launches of recently approved innovative products while preserving our financial flexibility to continue to invest in innovation.”
J&J’s worldwide sales for 2009 were $61.9 billion across the company’s multiple business units, a decrease of 2.9 percent. Overall domestic sales declined 4.4 percent, while international sales declined 1.4 percent, reflecting operational growth of 3.9 percent and a negative currency impact of 5.3 percent.
Net earnings and diluted earnings per share for 2009 were $12.3 billion and $4.40, respectively, down from fiscal 2008’s level of $12.9 billion. Full-year earnings results included an after-tax restructuring charge of $852 million and an after-tax gain of $212 million due to settled litigation matters. Excluding these special items, net earnings for the full-year 2009 were $12.9 billion, flat compared with last year.
Worldwide revenues for the company’s Medical Devices and Diagnostics unit, however, experienced modest growth. Sales were $23.6 billion for 2009, a gain of 1.9 percent. Domestic sales increased 4.5 percent, while international sales decreased 0.2 percent, including an operational increase of 4 percent and a negative currency impact of 4.2 percent. The company has spent $3.6 billion on research and development during the last two years and closed $2.7 billion worth of acquisitions. The medical device division accounted for 38 percent of J&J’s total sales last year and 43 percent of total operating profit (excluding special items).
DePuy’s orthopedic joint reconstruction, spine and sports medicine businesses continued to deliver strong results. DePuy companies achieved sales of $5.4 billion in 2009, a 4.6 percent gain compared with fiscal 2008.The company attributed the increase to growth in the spine, hip and knee product lines, in addition to new product launches in the Mitek sports medicine product line.
Part of the company’s growth strategy to keep it competitive in a tough market has been through aggressive new product development—organically and, more often, through acquisition.
In December last year, the company also completed the acquisitions of Finsbury Orthopaedics Limited, a privately held, United Kingdom-based manufacturer and global distributor of orthopedic implants. Financial terms of the transaction were not disclosed.
With the acquisition of Finsbury Orthopaedics, DePuy gained several key products, including the DeltaMotion ceramic-on-ceramic hip system, the Adept metal-on-metal hip resurfacing and total hip system, as well as the Medial Rotation Knee system, the Dual Bearing Knee system, the BOX total ankle replacement, Tuke Saw and multiple small-joint reconstructive implant lines. Finsbury Orthopaedics pioneered advanced high-performance, large-diameter hip bearings that feature proprietary ceramic-on-ceramic and metal-on-metal bearing technologies designed to address the unmet needs of active patients.
Throughout the year, there also were a number of new product introductions and approvals worth noting.
In February, DePuy Orthopaedics launched the aSphere M-Spec Femoral Head, a new metal hip bearing that company officials claim potentially could reduce cumulative wear by 80 percent and associated ion release by 77 percent compared with conventional metal-on-metal technology. The aSphere head, combined with DePuy’s TrueGlide technology, facilitates a more fluid range of natural motion and up to 159 degrees range of motion, according to the company. The aSphere head was cleared for marketing by the U.S. Food and Drug Administration (FDA) in December 2008, adding another advanced option to DePuy’s Pinnacle Hip Solutions bearing system. According to one study cited by DePuy, since the Pinnacle Hip originally was approved in 2002, an estimated 99.9 percent of Pinnacle Hip components remain in use.
In August, an FDA panel unanimously recommended approval of DePuy’s Pinnacle CoMplete Acetabular Hip System, the first ceramic-on-metal hip bearing to be considered for approval in the United States. The company is still waiting for a final OK from the FDA. The panel’s recommendation was based in part on results from a two-year clinical study that compared the safety and effectiveness of the Pinnacle CoMplete System to a commonly used DePuy metal-on-metal implant. The study showed no significant difference in adverse events, revision rates and survivorship after two years, and patients experienced similar pain relief, improved function and range of motion. Laboratory testing on the Pinnacle CoMplete System showed a greater than 90 percent reduction in wear compared with the metal-on-metal system under normal gait conditions and a more than 80 percent reduction in wear under adverse conditions.
If approved by the FDA, the Pinnacle CoMplete System would be used in adult patients who suffer from severe pain and disability due to osteoarthritis or post-traumatic arthritis. Conditions for approval recommended by the panel included refinements to the proposed product labeling and a post-approval study. The device remains an investigational device in the United States. Since 2007, the ceramic-on-metal bearing has been marketed in 40 countries.
According to the American Academy of Orthopaedic Surgeons, about 33 million Americans are affected by osteoarthritis, a degenerative joint disease, and more than 193,000 total hip replacements are performed each year in the United States, mostly due to some form of degenerative arthritis.
In addition, in 2009, DePuy launched the Silent Hip, a minimally invasive hip stem available outside the United States only. The Silent stem, which is inserted into the femur, is more bone-preserving than traditional stems, according to J&J.
New product rollouts clearly are part of the company’s strategy to take on the competition.
This summer, J&J’s leadership told analysts that the company would roll out 80 new products from its medical devices and diagnostics unit through 2012 and expand in markets including biosurgicals and electrophysiology. The division has received more than a dozen regulatory approvals so far in 2010. Overall, Johnson & Johnson claims to account for roughly 62 percent of the $350 billion worldwide medical device and diagnostics market. J&J expects medical device sales to grow an average of 6 percent each year through 2014.
To continue to foster innovation and education in patient care, the company opened the DePuy Institute at DePuy’s worldwide headquarters in Raynham, Mass., in August. The new facility provides education, training and research on non-surgical early interventions to complex surgery in the areas of orthopedics, spinal care, sports medicine, soft tissue repair, trauma and neurosciences. The goal is to help healthcare professionals enhance their skills and gain new insights on filling unmet clinical needs across a range of conditions, officials said.
“Education, training and research are the cornerstones of success both inside and outside the operating room and are essential to the advancement of care and the improvement of patient outcomes,” said Mike Mahoney, worldwide company group chairman, DePuy. “The DePuy Institute reflects our ongoing commitment to education throughout the continuum of orthopedic and neurological care and creates an environment and sense of community conducive to learning, connecting and sharing knowledge across disciplines.”
The institute will offer year-round educational programs on the latest concepts, techniques and technologies in the areas of minimally invasive surgery, aging spine, deformity, neurological disease, joint replacement and trauma care, featuring faculty from leading teaching institutions and academic centers in the Boston area and throughout the world. Officials hope the center will encourage collaboration between specialties to develop innovative solutions that improve patient care.
“Each surgeon, resident, fellow, hospital administrator, nurse or other healthcare professional who visits the DePuy Institute will engage in a personalized learning experience based on his or her individual skill set, background and interests,” said Diana Bacci-Walsh, worldwide vice president of Professional
Education for DePuy.
Despite overall gains in the device sector for the year, the company was not able to avoid restructuring in the face of increased economic pressures. In 2009, J&J officials said they hoped to save up to $1.7 billion by 2011 (approximately $900 million in 2010). The primary cost savings would come from
layoffs. The firm estimated it would reduce its global workforce by 6-7 percent. Leadership also hopes to simplify business structures and processes for additional savings. The associated savings will provide additional resources to invest in new growth platforms, launch new products, continue to grow core business, and provide flexibility to adjust to the evolving global environment.