Johnson & Johnson's Medical Devices & Diagnostics segment has received more than a dozen regulatory approvals so far this year, and it plans to make approximately 80 significant submissions across its seven franchises between 2010 and 2012. In fact, the MD&D business segment, which generated $23.6 billion in sales in 2009 and became Johnson & Johnson's largest business segment, holds the No. 1 or 2 market positions in the majority of its markets. These facts were emphasized Thursday in a business review, during which Alex Gorsky, worldwide chair of MM&D, said the company is "very pleased, but not satisfied."
The MD&D segment continues to roll out new products. In a statement, the company points to Ethicon Endo-Surgery's introduction of new energy instruments as part of its HARMONIC family. And Diabetes Care is rolling out a new blood glucose monitoring system, OneTouch Verio that provides the next generation of accuracy and precision, the number one need for diabetes patients.
During his presentation, Gorsky emphasized the number of positive factors the company faces, including an aging populations, a significant number of unmet medical needs, and growth in emerging markets. He discussed how he recently was in China, where he sees a major opportunity. Both China and India have growing middle classes, and this segment of the population tends to consume more healthcare products, he explained.
Meanwhile, the MD&D segment continues to expand its global manufacturing and training footprint to support emerging market growth, the company says in a statement. DePuy continues to increase capacity at its state-of-the-art manufacturing facility in Suzhou, China, and MD&D's most recent medical training center opened in Sao Paulo, Brazil, earlier this year and expects to train 4,000 doctors and nurses in the region each year, the company says in a statement.
The gradual economic recovery, increased access to healthcare, advancements in science and technology also weigh in the company's favor, he added. However, there are some challenges, including the economic challenges in Europe. Many in Big Pharma worry about price cuts in the individual countries. And some are even taking action. For example, Novo Nordisk said that instead of discounting its medicines by 25 percent as ordered in Greece, it's keeping prices the same on its newest insulin products. This forces Greek wholesalers to either take a loss or stop ordering them. Gorsky said the impact on devicemakers won't be immediate, but pricing pressures could come later. Other challenges he mentioned include evolving regulatory requirements, the influence of an increasing number of stakeholders, and a changing competitive landscape.
The presentation comes in the wake of J&J's recall problems with children's drugs. Prescription drugs account for about $22 billion in sales, while consumer products, including Tylenol, approach $16 billion, Reuters notes. Some industry experts say J&J's consumer unit problems could spill over into its other, more profitable, businesses if the FDA begins to scrutinize those divisions as well.
"If regulators start to distrust management, then they start being strict with everything, and checking and inspecting everything," Fred Hassan, former chief executive of Schering-Plough, tells Reuters. Hassan was hired by the company in 2003 to clean up a quality control disaster.
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