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| DePuy Synthes Chairman Michel Orsinger |
A year after Johnson & Johnson ($JNJ) snatched up Swiss orthopedic devicemaker Synthes for an astounding $21.3 billion, the merging of operations is incredibly slow-going and has cost the combined company some business and research talent, the Swiss publication Finanz und Wirtschaft (Finance and Economics) reports. But a leading executive insists the integration will lead to a more successful combined operation down the line.
Michel Orsinger, head of the J&J orthopedics business now known as DePuy Synthes, tells the publication in a wide-ranging interview that "less than half of the necessary work is done" in combining the two companies. He also said that staff turnover in the company's Swiss operations has hit the 20% mark, though he noted it reflects about 5% of the 18,000 employees now part of DePuy Synthes overall. Orsinger added that some of the turnover was expected, as the company merged sites and faced DePuy/Synthes overlap in its spinal implant division.
Johnson & Johnson's largest-ever acquisition has had some catches along the way. Last year, for example, Synthes launched a recall of its Hemostatic Bone Putty, warning that the implant could catch fire if exposed to cauterization systems during surgery. And while Johnson & Johnson acquired the company in part to boost its trauma offerings, the article notes that DePuy/Synthes has lost customers since the merger in areas such as trauma – dipping from 50% of the global market to between 40% and 45%. Another problem area: child orthopedics. Orsinger acknowledges this but says the combined company still retains a large market share in both areas.
"It is true that the merger has given us some instability at the customer front and we have easily lost some market share," Orsinger is quoted as saying. He added that child orthopedics remains high, for example, at 20%, behind only Medtronic ($MDT), with 40% of the market. And emerging markets such as China, he noted, are helping propel rapid growth that will contribute to filling the gap.
But Orsinger said the merger, while taking long to complete, remains on schedule. And while Western economies continue to struggle and sales remain sluggish in those areas, Orsinger said China and other emerging market regions will supply a growing customer and employee talent base that will address any short-term setbacks.
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