“China is important to every medical
device company given the number of peo-
ple and the size of the market opportunity,”
Glenn Novarro, an analyst with RBC Capi-
tal Markets in New York, told Bloomberg
Business. “JNJ is one of the early investors
in China and it’s paying off. They are ahead
of the curve.”
And the company has managed to stay
ahead of the curve by avoiding the bribery
probes that have snared the likes of Glaxo-
SmithKline, and taking advantage of the
Middle Kingdom’s growing middle class,
government investments, and prevalence of traditionally West-
ern diseases. The company partnered with Waltham, Mass.-based
Nova Biomedical Corp. last spring to sell its StatStrip, a blood
glucose testing system, to Chinese hospitals, where 60 percent
of care occurs. Wise move, considering the country now lodges
roughly one-quarter of the planet’s diabetics, whose rising in-
comes are allowing them greater access to medical care to treat
“It’s unfortunate that a lot of Western habits are being taken
up in China, and incidence of diabetes is going up,” said Ashley,
McEvoy, JNJ’s group chair- man for diabetes and vision care.
JNJ is eyeing China’s $250 million vision market as well, intent
on capitalizing on the government’s commitment to vision care
coverage, including contact lenses for those younger than 18.
Bone plates and screws are part of the company’s“one step
ahead” plan too: The firm conducted clinical trials with the bone
repair devices manufactured at its Suzhou facility, and is branding
them as locally made products to make them eligible for higher
reimbursement from the Chinese government.
“My personal vision is to innovate more out of China, tak-
ing advantage of new thinking within R&D [research and devel-
opment] to develop simpler, easier to use and more affordable
products,” Michel Orsinger, worldwide chairman of JNJ’s global
orthopedics group, told Bloomberg. “And we want to launch
them not only in China but bring them into western countries, a
Orsinger’s vision could soon become a reality: Last fall, JNJ
opened the Asia Pacific Innovation Center, a Shanghai-based
medtech incubator with satellite hubs in Singapore, Australia
and Japan. Armed with local science and technology experts and
deal-making capabilities, the center is tasked with identifying
and developing promising early-stage opportunities in drugs,
medical devices/diagnostics, and consumer healthcare products.
The Center already has fostered several new collaborations
in both Australia and China, including the establishment of a
partnering office at Suzhou BioBAY, an incubator with more than
400 companies in the areas of drug discovery, biotech, in-vitro
diagnostics, medical devices and nanotechnology. The office, according to executives, will function as an extension of the Center
to work with academics and entrepreneurs on a more local basis.
The Center’s partnering offices are part of
a broader strategy to interact more directly
with life science clusters worldwide.
“The Johnson & Johnson Family of
Companies has a long standing presence in China extending back almost 30
years. Our on the ground presence across
the region allows us to work side by side
with our partners with speed, agility, and
insight to translate innovations into new
products,”noted Jesse Wu, chairman, Johnson & Johnson China.“The Asia Pacific Innovation Center supports our larger goal
to address China’s specific healthcare needs, invest in local capabilities, and increase our external collaborations.”
The Numbers Game
JNJ’s Medical Devices division accounted for 37 percent of the
firm’s total worldwide sales in fiscal year 2014 (ended Dec. 31).
The segment houses 11 businesses under its roof, including BioSense Webster; the troubled orthopedic and neurological focused
DePuy Synthes; Janssen Diagnostics; and advanced surgical care
units Ethicon and Ethicon Endo-Surgery.
The division’s best performers were its orthopedic, specialty
surgery and cardiovascular care franchises, the latter of which
outpaced its running mates in sales growth. Cardiovascular revenue swelled 6. 3 percent to $2.2 billion, due mostly to the 18 percent growth of Biosense Webster electrophysiology products.
The company overcame lingering pricing pressure to increase
orthopedic revenue by 1.7 percent to $9.67 billion—roughly one-third of the Medical Devices segment’s 2014 gross. Executives attributed the gain to robust sales of trauma, sports medicine, hip
and knee products, some of which made their debut last spring.
The company launched a bevy of new joint replacement parts
within a two-month period, adding a rotating platform design
and anatomic patella to the Attune Knee System lineup in March
and debuting a hip system and anatomic shoulder in May.
The Attune rotating platform design increases the level of
conformity to provide stability while delivering freedom of mobility, DePuy Synthes bigwigs noted. Rotating platform knees
aim to restore more natural movement to the joint by allowing
the bearing to rotate in the same manner as an anatomical knee.
Rotating knees also are designed to reduce stress and wear on the
implant by 94 percent.
The anatomic patella—unique to DePuy Synthes—works
with the Attune knee femoral components and is compatible
with both the Attune fixed bearing and rotating platform knees.
It is designed to have more natural sagittal plane kinematics than
traditional dome style patella components; the more natural kinematics can reduce soft tissue interaction with the femoral component and thereby help prevent soft tissue irritation, according to product spec sheets. Also, the unique kinematics of the
anatomic patella are designed to increase quadriceps efficiency
Number of consecutive
years of dividend