'Light at the end of the COVID-19 tunnel' as J&J's medtech companies rebound to $7B in Q2 sales

Johnson & Johnson’s medtech companies have rebounded in a big way during this year’s second quarter, outpacing pre-pandemic earnings in some treatment areas, as the wider market continues to recover from last year’s COVID-19 lockdowns.

The completion of previously deferred procedures and the return of patients to the clinic as well as new product launches and geographic expansions drove J&J’s device revenues up to $6.98 billion—up 57.2% versus operational income for the same period in 2020, which was the first major wave of the pandemic, and up about 7% in adjusted sales compared to 2019’s second quarter.

“We’re seeing light at the end of the COVID-19 tunnel, but this remains a very fluid situation,” said J&J’s worldwide head of medical devices, Ashley McEvoy, on a call with investors. “The pace of continued recovery will depend on multiple factors including the speed at which global populations are vaccinated, healthcare capacity and the ability to manage through surges as well as the rate at which patients need treatment.”

In the U.S., medical procedures overall have picked up since the start of the year, according to McEvoy, with volumes down about 6% compared to 2019 in January, before accelerating to about 3% over those previous levels in May.

That has helped drive 74% growth in worldwide sales from electrophysiology procedures compared to 2020 plus a 53% increase from hips, knees, spine and trauma products. Together, that brings J&J’s orthopedics segment back up to nearly in line with 2019 levels, at about $2.2 billion in sales.

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Meanwhile, advanced surgery products—including endocutters, biosurgery and energy-based hardware—all posted operational gains of about 40%, while J&J’s vision division saw a 66% jump, up to $1.2 billion.

Still, some knee, spine and surgical procedures are still being viewed as deferrable, and the company expects to see slower growth there compared to other areas over the remainder of the year. 

In addition, certain geographic areas are rebounding from the coronavirus and its variants faster than others. Asia as a whole has surpassed 2019 procedure volumes, driven largely by reopenings in China, while countries such as Japan, Australia and India have been slower to recover.

And to help overcome some lockdowns over the past year, J&J developed a virtual education solution for electrophysiologists in China, driven by artificial intelligence and machine learning, which helped shorten training times from one year to four months. 

“In the first four months of launch, 150 newly trained physicians delivered care to 7,500 patients,” McEvoy said. 

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The first half of this year also saw the FDA approval and launch of the DePuy Synthes division’s Velys surgical robot for total knee replacements, expanding the digital platform’s reach from hip and shoulder procedures.

Meanwhile, Auris Health’s Monarch lung bronchoscopy robot, acquired by J&J in early 2019, has since passed 100 customers and 8,000 procedures to examine hard-to-reach organ nodules suspected of harboring cancer.