Johnson & Johnson's ($JNJ) device strategy of divesting its worst performing businesses--while pushing forward with the rollout of innovative products--has yet to pay off. But the company is hopeful that it can return the business to sales growth over the next year.
On an April 14 earnings call, J&J reiterated its plan to launch 30 new medical device products by 2016. The company also pointed to its recent partnership with Google ($GOOG) on surgical robotics as a source of real advancement for J&J on the medical device front.
"We've now obviously partnered with Google to gain their expertise in technology and visualization and in robotics," J&J CFO and VP of Finance Dominic Caruso said on the conference call. "And I think that's going to provide us some acceleration to the plans we were already anticipating."
But he cautioned not to expect products from the Google deal anytime soon. "We would expect this collaboration would take I would say several years for us to come to market with the new type of robotic surgery that we think will dramatically revolutionize surgery," Caruso added.
Device sales declined 11.4% on an operational basis to $6.3 billion during the first quarter of 2015. But excluding the net impact of acquisitions and divestitures, device sales grew 1.3% on an operational basis. Strength in orthopedics, cardiovascular electrophysiology products, and insulin delivery devices led the way, while vision care proved a drag on sales due to changes in buying patterns and competitive pricing.
Last quarter, J&J agreed to sell its Cordis business to Cardinal Health ($CAH) for about $2 billion. The company is focused on cardiovascular, endovascular and biliary duct products including drug-eluting stents, catheters and guidewires.
"Orthopedic sales growth was driven by Orthovisc and Monovisc in sports medicine as well as trauma, hips, and knees partially offset by competitive and pricing challenges in the U.S. in Spine," J&J VP of Investor Relations Louise Mehrotra said on the call.
"Cardiovascular growth was driven by a 12% worldwide increase in electrophysiology business due to strong sales of the ThermoCool SmartTouch catheter," she added.
In contrast to devices, J&J's pharma business grew 10.2% on an operational basis to $7.7 billion in the first quarter, although these results were dampened by increased competition among hepatitis C treatments.
- here is the release