07.20.22
Rank: #3 (Last year: #2)
$27.06 Billion ($93.7B total)
Prior Fiscal: $22.95 Billion
Percentage Change: +17.9%
R&D Expenditure: $2.37B ($14.7B)
Best FY21 Quarter: Q2 $6.98B
Latest Quarter: Q1 $6.97B ($23.4B)
No. of Employees: 144,300 (total)
Global Headquarters: New Brunswick, N.J.
KEY EXECUTIVES:
Alex Gorsky, Board Chairman
Joaquin Duato, CEO, Executive Committee Chairman, Board Director
Joseph J. Wolk, Exec. VP and CFO
Ashley McEvoy, Exec. VP, Worldwide Chairman, Medical Devices
Kathryn E. Wengel, Exec. VP, Chief Global Supply Chain Officer
Michael H. Ullmann, Exec. VP, General Counsel
Robert J. Decker Jr., Corporate Controller, Chief Accounting Officer
Matthew Orlando, Corporate Secretary and Worldwide VP, Corporate Governance
It was an intriguing question, to say the least.
And a surprising one, considering the source.
Nearly three years ago, Haworth President and CEO Franco Bianchi asked about the proper pace of innovation. Should it progress at warp speed, he wondered, as it did at the pandemic’s start (remember all those COVID-19 assays and makeshift ventilators?), or should it proceed more slowly, as his own company has often done in the past?
The answer, it seems, is not so simple.
“How do you strike the balance between the time needed to come up with an innovative idea and the time needed to develop and launch that idea into the market?” industrial designer and author Ayse Birsel asked in an October 2019 Inc.com column. “It’s a great question. Time is relative when it comes to innovation. Just like in Einstein’s Theory of Relativity, it’s both slow and fast, depending on where you are in the process.”
And like the gravity in Einstein’s famous theory, innovation often warps time, influencing the motion of other bodies at play.
Makes sense. Consider, for example, the rapid rate at which SARS-CoV-2 tests and vaccines were created. Assays were available within two months of the virus’s U.S. arrival, while ventilator development time—due largely to open-source designs—fell from years to weeks (Australian engineers reportedly built a model in 16 days).
Vaccine development was equally as fast. Barely three months after the deadly virus first surfaced in China, 52 vaccine candidates were in trial stages—among them, Pfizer-BioNTech’s Comirnaty, Moderna’s Spikevax, and Johnson & Johnson’s one-shot Janssen antidote, all of which received U.S. Food and Drug Administration (FDA) emergency use authorization in December 2020 and February 2021, respectively.
“...we’ve worked at breakneck speed during the Ebola crisis, but now we are working at lightning speed,” Seema Kumar, global head, Office of Innovation, Global Health and Scientific Engagement at J&J, said in an April 2020 Advisory Board daily briefing.
ANALYST INSIGHTS: New CEO Joaquin Duato has replaced longtime CEO Alex Gorsky. The question will be can Mr. Duato break-thru the large company inertia to challenge his company to innovate quicker (organically and/or inorganically) to keep pace with industry competitors in the enabling technology segments. In general surgery, Intuitive Surgical continues to dominate robotics. In orthopedics, Stryker is crushing it with their MAKO robotic platform for knee and hip replacement. With the spin-off of its consumer health portfolio in 2023, that should free-up capital for additional investment to energize this industry behemoth going forward.
Clearly, such velocity was necessary to battle COVID-19. But J&J did not accelerate immediately; like other vaccine developers, the healthcare behemoth proceeded gradually, first spending decades researching the structure, genome, and life cycle of existing coronaviruses and mapping out potential defense strategies.
Thus, it was able to innovate expeditiously once SARS-CoV-2 showed up.
J&J applied part of that same tactic to its contact lens technology. In 2011, the firm’s Vision franchise embarked on designing a multifocal lens that would provide clear sight from any distance, near or far (slightly more near than far, actually, owing to increased digital device use). Researchers meticulously studied the correlation between pupil size, age, and vision impairment to create unique, pupil-optimized designs for 183 different prescription types. Pupil Optimized Design lenses feature near vision power in the center and distance vision power on the periphery, much like the natural eye. In addition, its “hybrid back curve” mimics the cornea’s curvature, minimizing any distortion on the front part of the lens.
Pupil Optimized Design contact lenses entered the market last March under J&J’s ACUVUE brand.
“During the past few years, governments and regulators, private companies, and esteemed academics have all partnered together in unprecedented ways to deliver results at a speed and scale never before seen in our history...” former J&J CEO and Chairman Alex Gorsky wrote in his final shareholder letter, contained within the company’s 2021 annual report. “Forward-looking investments made years or even decades ago were the seeds for successful innovations that flowered across all our segments in 2021.”
ANALYST INSIGHTS: J&J is trying to figure out who they are in 2022. With the separation of each division into discrete companies, they need to determine what the future is for each new company and how they can ensure they’re relevant and impactful in the future. For such an incredible company with all of the resources at their disposal, they can continue to focus on health equity, at the depths of the organization and their product lines.
Those blooms produced quite a lush (and profitable) garden for J&J last year despite lingering reverberations from the COVID-19 pandemic. Overall sales swelled 9.6% to $93.77 billion, gross profit ballooned 18%, and net earnings surged 41.9%—its largest increase in four years. The company reseeded its garden, too, with a record $14.7 billion investment in research and development.
“R&D isn’t just the foundation of growth for our company—it’s the engine driving scientific progress in creating a healthier world,” Gorsky’s letter read. “The resources we are allocating to R&D now are what will help us move even more quickly in creating increasingly personalized medicines, advancing robotic surgery, deploying artificial intelligence, and leveraging data in ways that will benefit the patients, consumers, and families we serve for many years to come.”
In sowing its garden for future blooms, however, J&J modified its soil.
The 136-year-old company announced plans last fall to spin off its Consumer Health division to focus on Pharmaceuticals and Medical Devices (now renamed MedTech), which accounted for nearly 85% of total FY21 revenue. J&J expects the tax-free transaction to cost $500 million to $1 billion and be completed by November next year.
The spinoff ends years of speculation about a J&J breakup and follows the lead of General Electric and Toshiba, both of which divulged restructuring plans shortly before J&J last fall. GE’s plans entail hiving off its healthcare business in early 2023, and turning its renewable energy, power, and digital divisions into independent entities in 2024, leaving aviation as a standalone unit. Similarly, Toshiba is cutting ties with its energy infrastructure and computer devices businesses.
Like its comrades, J&J’s spinoff strategy is intended to streamline operations and boost overall growth. Separating consumer health from pharmaceuticals and medical devices will allow the firm to offload its liabilities from ongoing talc-related litigation (more than $2 billion in settlements thus far) and better support its drug and medical device research. “Our goal here,” Gorsky said in discussing the spinoff, “is to continue to drive great performance in each of the segments that Johnson & Johnson will...compete in.”
Each of the segments have already been driving such a performance: All three turned a profit in FY21 as the medtech industry recovered from major pandemic-induced sales losses in 2020. Consumer Health revenue rose 4.1% to $14.63 billion while Pharmaceutical sales mushroomed $14.3% to $52.08 billion and Medical Devices proceeds jumped 17.9% to $27.06 billion.
Empowering the Medical Devices segment to its best-in-company performance were robust rebounds in each of its four reporting divisions. Interventional Solutions led the charge with a 30.4% sales hike ($3.97 billion), driven by strong growth in the electrophysiology and stroke businesses.
Vision placed second with a 19.6% revenue increase ($4. 68 billion). Healthy showings from the contact lenses/other and surgical franchises helped Vision edge out the Surgery division; contact lenses/other proceeds swelled 14.9% to $3.44 billion, while surgical sales skyrocketed 34.9% to $1.24 billion. U.S. Vision growth (9.4%) came mainly from successful commercial campaigns and widespread adoption of ACUVUE OASYS Multifocal contact lenses with Pupil Optimized Design, though that growth was somewhat hampered by inventory fluctuations in both FY20 and FY21.
Surgical Vision’s segment-best performance arose from various product launches, including TECNIS Eyhance and TECNIS Synergy. Approved by the FDA in February 2021, the TECNIS Eyhance and TECNIS Eyhance Toric II intraocular lenses (IOL) for cataract treatment feature a refractive surface that slightly extends focus depth and delivers image contrast in low light. TECNIS Eyhance IOLs provide a 30% image contrast improvement compared to AcrySofIQ SN60WF at 5mm.
The TECNIS Synergy and TECNIS Synergy Toric II IOLs won FDA approval in May last year (the latter product also garnered Health Canada authorization). These presbyopia-correcting IOLs deliver the widest range of continuous vision with the best near vision and superior contrast in low-light conditions, according to J&J. The TECNIS Synergy lenses debuted on the U.S. and Canadian markets in June 2021.
Within a week of the TECNIS Synergy approval, J&J Vision received the FDA’s blessing for its ACUVUE Abiliti Overnight Therapeutic lenses for myopia management. Alibiti Overnight orthokeratology lenses are designed and fitted to match a patient’s eye based on its unique corneal shape. The lenses are optimized via corneal topography, refractive error, and other measurements connected to an experiential fitting software called FitAbiliti. The software guides eye care professionals through the fitting process and recommends a lens with a 90% first fit success rate. The lenses come in two designs—one for myopia management and one for myopia with astigmatism management.
“The prevalence of myopia in children is increasing, and as optometrists we are on the front lines of this epidemic that may threaten the vision of future generations,” Moshe Mendelson, O.D., said in announcing the ACUVUE Abiliti Overnight lenses’ FDA approval. “For too long we have relied on increasing the prescription of glasses for children, while having few resources to address the underlying disease and help change this worrying trajectory of eye health. The FDA approval of Abiliti Overnight will provide eye care professionals and parents with more options to manage myopia.”
Myopia, however, was not the only beneficiary of J&J’s treatment options last year. Additional choices in the OR provided patients and healthcare professionals with more tools for wound closure, tissue sealing, and joint repair—all of which helped boost profits in the Surgery and Orthopaedics divisions.
Surgery sales jumped 19.2% to $9.81 billion, owing to healthy performances in both Advanced and General Surgery. The latter improved proceeds 18.1% (to $5.19 billion) while the former grew revenue 20.4% (to $4.62 billion) by capitalizing on improving market conditions, expanding into Tier 2 and Tier 3 hospitals in China, and releasing new products such as the ENSEAL X1 Sealer and ECHELON+ Stapler.
J&J’s Ethicon subsidiary unveiled the ECHELON+ Stapler with GST (gripping surface technology) reloads in late March 2021. The device increases staple line security and reduces complications through more uniform tissue compression and better staple formation, according to the company. New design features include a re-engineered anvil that provides more uniform compression to better capture and form staples and a new motor that improves firing speed in thick tissue to enhance compression and improve audible feedback. In benchtop testing, the ECHELON+ stapler outperformed Medtronic’s Signia and EndoGIA staplers with tri-staple reloads, providing better staple formation and reducing leaks at the staple line.
Three months after releasing the ECHELON+ Stapler, Ethicon debuted the ENSEAL X1 Curved Jaw Tissue Sealer, an advanced bipolar energy device for colorectal, gynecological, and bariatric surgeries and thoracic procedures. Its 360-degree continuous shaft rotation provides easy targeted tissue access, and its Adaptive Tissue Technology enables the device to continuously sense changes in tissue condition and respond accordingly with the optimal energy amount to minimize lateral thermal spread. The device also features separate seal and cut capabilities as well as improved ergonomics and a one-handed operation.
“This is an intelligent and intuitive energy device that provides secure sealing and an ease of use that improves upon currently available advanced bipolar sealing devices,” Steven McCarus, M.D., chief of GYN Surgery at AdventHealth Celebration, said upon ENSEAL X1’s release last June. “...I think it will make a real difference in procedures in terms of patient outcomes and procedural efficiency.”
Also impacting patient outcomes and procedural efficiency was J&J’s MONARCH platform, a first-of-its-kind robotic technology cleared by the FDA in March 2018 for diagnostic and therapeutic bronchoscopies. Market demand for MONARCH continued to grow last year, as procedures topped 12,000—more than doubling those performed in 2020—and system orders reached a record high in Q4.
“Our MONARCH robotic system, it’s enabling in the luminal bronchoscopies. And...it’s progressing really well,” J&J CEO Joaquin Duato told investors during a FY21 earnings call in late January. Duato replaced Gorsky as chief executive on Jan. 3. “We are also studying our MONARCH robotic system to deliver energy and also a payload of pharmaceuticals for being able to do local treatment of early lung cancer lesions.
At the same time, we have also submitted a 510(k) expansion of MONARCH for a potential treatment in kidney stones that will give us an expanded market in this area.”
“We have had the highest level of innovation in our medtech business in 2021 ever,” Duato continued, “and our pipeline today has the highest value as measured by net present value that we have ever had.”
Orthopaedics enhanced that value last year with its new Compression Plate Clavicle System, new shoulder implant, and advanced power tools for trauma and small bone procedures. The division also shored up net future value via an acquisition, FDA clearance, and exclusive distribution agreement.
The latter two moves occurred just two weeks apart in early 2021. The division’s DePuy Synthes subsidiary gained FDA clearance in mid-January to use its robotic-assisted orthopedic surgical platform for total knee replacements. The VELYS digital joint reconstruction system, also used for hip and shoulder procedures, employs advanced planning capabilities to help surgeons make precise bone cuts and accurately position the replacement joint relative to the knee’s surrounding muscles, tendons, and ligaments.
DePuy designed the VELYS solution from technology it acquired through J&J’s 2018 buyout of French surgical technology firm Orthotaxy. VELYS mounts onto an OR table and links to joint assessment data to help clinicians correctly balance the implant and verify its position.
Two weeks after receiving the VELYS clearance, DePuy Synthes forged an agreement to distribute Expanding Innovations Inc.’s X-Pac Expandable Lumbar Cage in the United States. The cage, which supplements DePuy’s lumbar degenerative and minimally invasive spine portfolio, provides controlled height and lordosis expansion to allow for intraoperative adjustment, depending on patient anatomy. A lock ramp-feature built into the endplates offers a large graft space inside the cage for post-graft packing.
DePuy bookended the VELYS clearance and X-Pac distribution pact with the $79.5 million purchase of OrthoSpin Ltd. in December 2021. The Israeli firm’s robot-assisted external fixation system is used in conjunction with DePuy Synthes’ Maxframe multi-axial correction system, an external ring fixation system designed to rectify bone or soft tissue deformities in the leg, foot, or ankle. The FDA cleared OrthoSpin’s G2 fixation system in January last year.
“DePuy Synthes is committed to patients who need deformity correction surgery,” Oray Boston, worldwide president of DePuy Synthes Trauma, Extremities, Craniomaxillofacial and Animal Health, said in announcing the OrthoSpin deal. “The acquisition of OrthoSpin demonstrates our desire to help these patients navigate their recovery with more confidence and less uncertainty with their strut adjustments. It also demonstrates our commitment to bringing transformative medtech advancements to the industry through the application of automated technology that addresses a wide range of orthopedic challenges.”
DePuy addressed some of those challenges through non-automated technology as well. Its launches last summer of the 2.7mm Variable Angle Locking Compression Plate Clavicle Plate System and INHANCE Shoulder System helped boost Orthopaedics FY21 sales 10.8% to $8.58 billion.
The Clavicle Plate System features thinner plates, a more accurate plate-to-bone fit, and reduced prominence; the INHANCE System, meanwhile, has an intuitive stemless-first surgical approach that offers surgeons the ability to seamlessly transition from stemless to stemmed implants during procedures.
The INHANCE system preserves bone, provides immediate and long-term fixation, and facilitates intra-operative flexibility to simplify preparation for surgical treatment options. It includes reusable instruments, a comprehensive size range of anatomic stemless and stemmed inlay humeral implants, and a circular anatomic glenoid component that is compatible with any sized humeral head.
DePuy’s other product launch—the UNIUM System—bolstered both the company’s power tools portfolio and the Trauma franchise’s 2021 revenue. Trauma sales swelled 10.4% to $2.88 billion due to new product introductions and the global market recovery.
Those same factors drove a 13.3% increase in Knee revenue (to $1.32 billion) and 7.2% expansion in Spine, Sports & Other proceeds (to $2.89 billion). Hips sales, on the other hand, benefitted from existing technologies, including the ACTIS stem, KINCISE Surgical Automated System, and VELYS Hip Navigation, which helps enhance precise implant selection and placement. Hips revenue surged 16% to $1.48 billion.
$27.06 Billion ($93.7B total)
Prior Fiscal: $22.95 Billion
Percentage Change: +17.9%
R&D Expenditure: $2.37B ($14.7B)
Best FY21 Quarter: Q2 $6.98B
Latest Quarter: Q1 $6.97B ($23.4B)
No. of Employees: 144,300 (total)
Global Headquarters: New Brunswick, N.J.
KEY EXECUTIVES:
Alex Gorsky, Board Chairman
Joaquin Duato, CEO, Executive Committee Chairman, Board Director
Joseph J. Wolk, Exec. VP and CFO
Ashley McEvoy, Exec. VP, Worldwide Chairman, Medical Devices
Kathryn E. Wengel, Exec. VP, Chief Global Supply Chain Officer
Michael H. Ullmann, Exec. VP, General Counsel
Robert J. Decker Jr., Corporate Controller, Chief Accounting Officer
Matthew Orlando, Corporate Secretary and Worldwide VP, Corporate Governance
It was an intriguing question, to say the least.
And a surprising one, considering the source.
Nearly three years ago, Haworth President and CEO Franco Bianchi asked about the proper pace of innovation. Should it progress at warp speed, he wondered, as it did at the pandemic’s start (remember all those COVID-19 assays and makeshift ventilators?), or should it proceed more slowly, as his own company has often done in the past?
The answer, it seems, is not so simple.
“How do you strike the balance between the time needed to come up with an innovative idea and the time needed to develop and launch that idea into the market?” industrial designer and author Ayse Birsel asked in an October 2019 Inc.com column. “It’s a great question. Time is relative when it comes to innovation. Just like in Einstein’s Theory of Relativity, it’s both slow and fast, depending on where you are in the process.”
And like the gravity in Einstein’s famous theory, innovation often warps time, influencing the motion of other bodies at play.
Makes sense. Consider, for example, the rapid rate at which SARS-CoV-2 tests and vaccines were created. Assays were available within two months of the virus’s U.S. arrival, while ventilator development time—due largely to open-source designs—fell from years to weeks (Australian engineers reportedly built a model in 16 days).
Vaccine development was equally as fast. Barely three months after the deadly virus first surfaced in China, 52 vaccine candidates were in trial stages—among them, Pfizer-BioNTech’s Comirnaty, Moderna’s Spikevax, and Johnson & Johnson’s one-shot Janssen antidote, all of which received U.S. Food and Drug Administration (FDA) emergency use authorization in December 2020 and February 2021, respectively.
“...we’ve worked at breakneck speed during the Ebola crisis, but now we are working at lightning speed,” Seema Kumar, global head, Office of Innovation, Global Health and Scientific Engagement at J&J, said in an April 2020 Advisory Board daily briefing.
ANALYST INSIGHTS: New CEO Joaquin Duato has replaced longtime CEO Alex Gorsky. The question will be can Mr. Duato break-thru the large company inertia to challenge his company to innovate quicker (organically and/or inorganically) to keep pace with industry competitors in the enabling technology segments. In general surgery, Intuitive Surgical continues to dominate robotics. In orthopedics, Stryker is crushing it with their MAKO robotic platform for knee and hip replacement. With the spin-off of its consumer health portfolio in 2023, that should free-up capital for additional investment to energize this industry behemoth going forward.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
Clearly, such velocity was necessary to battle COVID-19. But J&J did not accelerate immediately; like other vaccine developers, the healthcare behemoth proceeded gradually, first spending decades researching the structure, genome, and life cycle of existing coronaviruses and mapping out potential defense strategies.
Thus, it was able to innovate expeditiously once SARS-CoV-2 showed up.
J&J applied part of that same tactic to its contact lens technology. In 2011, the firm’s Vision franchise embarked on designing a multifocal lens that would provide clear sight from any distance, near or far (slightly more near than far, actually, owing to increased digital device use). Researchers meticulously studied the correlation between pupil size, age, and vision impairment to create unique, pupil-optimized designs for 183 different prescription types. Pupil Optimized Design lenses feature near vision power in the center and distance vision power on the periphery, much like the natural eye. In addition, its “hybrid back curve” mimics the cornea’s curvature, minimizing any distortion on the front part of the lens.
Pupil Optimized Design contact lenses entered the market last March under J&J’s ACUVUE brand.
“During the past few years, governments and regulators, private companies, and esteemed academics have all partnered together in unprecedented ways to deliver results at a speed and scale never before seen in our history...” former J&J CEO and Chairman Alex Gorsky wrote in his final shareholder letter, contained within the company’s 2021 annual report. “Forward-looking investments made years or even decades ago were the seeds for successful innovations that flowered across all our segments in 2021.”
ANALYST INSIGHTS: J&J is trying to figure out who they are in 2022. With the separation of each division into discrete companies, they need to determine what the future is for each new company and how they can ensure they’re relevant and impactful in the future. For such an incredible company with all of the resources at their disposal, they can continue to focus on health equity, at the depths of the organization and their product lines.
— Marissa Fayer, CEO, HERhealthEQ
Those blooms produced quite a lush (and profitable) garden for J&J last year despite lingering reverberations from the COVID-19 pandemic. Overall sales swelled 9.6% to $93.77 billion, gross profit ballooned 18%, and net earnings surged 41.9%—its largest increase in four years. The company reseeded its garden, too, with a record $14.7 billion investment in research and development.
“R&D isn’t just the foundation of growth for our company—it’s the engine driving scientific progress in creating a healthier world,” Gorsky’s letter read. “The resources we are allocating to R&D now are what will help us move even more quickly in creating increasingly personalized medicines, advancing robotic surgery, deploying artificial intelligence, and leveraging data in ways that will benefit the patients, consumers, and families we serve for many years to come.”
In sowing its garden for future blooms, however, J&J modified its soil.
The 136-year-old company announced plans last fall to spin off its Consumer Health division to focus on Pharmaceuticals and Medical Devices (now renamed MedTech), which accounted for nearly 85% of total FY21 revenue. J&J expects the tax-free transaction to cost $500 million to $1 billion and be completed by November next year.
The spinoff ends years of speculation about a J&J breakup and follows the lead of General Electric and Toshiba, both of which divulged restructuring plans shortly before J&J last fall. GE’s plans entail hiving off its healthcare business in early 2023, and turning its renewable energy, power, and digital divisions into independent entities in 2024, leaving aviation as a standalone unit. Similarly, Toshiba is cutting ties with its energy infrastructure and computer devices businesses.
Like its comrades, J&J’s spinoff strategy is intended to streamline operations and boost overall growth. Separating consumer health from pharmaceuticals and medical devices will allow the firm to offload its liabilities from ongoing talc-related litigation (more than $2 billion in settlements thus far) and better support its drug and medical device research. “Our goal here,” Gorsky said in discussing the spinoff, “is to continue to drive great performance in each of the segments that Johnson & Johnson will...compete in.”
Each of the segments have already been driving such a performance: All three turned a profit in FY21 as the medtech industry recovered from major pandemic-induced sales losses in 2020. Consumer Health revenue rose 4.1% to $14.63 billion while Pharmaceutical sales mushroomed $14.3% to $52.08 billion and Medical Devices proceeds jumped 17.9% to $27.06 billion.
Empowering the Medical Devices segment to its best-in-company performance were robust rebounds in each of its four reporting divisions. Interventional Solutions led the charge with a 30.4% sales hike ($3.97 billion), driven by strong growth in the electrophysiology and stroke businesses.
Vision placed second with a 19.6% revenue increase ($4. 68 billion). Healthy showings from the contact lenses/other and surgical franchises helped Vision edge out the Surgery division; contact lenses/other proceeds swelled 14.9% to $3.44 billion, while surgical sales skyrocketed 34.9% to $1.24 billion. U.S. Vision growth (9.4%) came mainly from successful commercial campaigns and widespread adoption of ACUVUE OASYS Multifocal contact lenses with Pupil Optimized Design, though that growth was somewhat hampered by inventory fluctuations in both FY20 and FY21.
Surgical Vision’s segment-best performance arose from various product launches, including TECNIS Eyhance and TECNIS Synergy. Approved by the FDA in February 2021, the TECNIS Eyhance and TECNIS Eyhance Toric II intraocular lenses (IOL) for cataract treatment feature a refractive surface that slightly extends focus depth and delivers image contrast in low light. TECNIS Eyhance IOLs provide a 30% image contrast improvement compared to AcrySofIQ SN60WF at 5mm.
The TECNIS Synergy and TECNIS Synergy Toric II IOLs won FDA approval in May last year (the latter product also garnered Health Canada authorization). These presbyopia-correcting IOLs deliver the widest range of continuous vision with the best near vision and superior contrast in low-light conditions, according to J&J. The TECNIS Synergy lenses debuted on the U.S. and Canadian markets in June 2021.
Within a week of the TECNIS Synergy approval, J&J Vision received the FDA’s blessing for its ACUVUE Abiliti Overnight Therapeutic lenses for myopia management. Alibiti Overnight orthokeratology lenses are designed and fitted to match a patient’s eye based on its unique corneal shape. The lenses are optimized via corneal topography, refractive error, and other measurements connected to an experiential fitting software called FitAbiliti. The software guides eye care professionals through the fitting process and recommends a lens with a 90% first fit success rate. The lenses come in two designs—one for myopia management and one for myopia with astigmatism management.
“The prevalence of myopia in children is increasing, and as optometrists we are on the front lines of this epidemic that may threaten the vision of future generations,” Moshe Mendelson, O.D., said in announcing the ACUVUE Abiliti Overnight lenses’ FDA approval. “For too long we have relied on increasing the prescription of glasses for children, while having few resources to address the underlying disease and help change this worrying trajectory of eye health. The FDA approval of Abiliti Overnight will provide eye care professionals and parents with more options to manage myopia.”
Myopia, however, was not the only beneficiary of J&J’s treatment options last year. Additional choices in the OR provided patients and healthcare professionals with more tools for wound closure, tissue sealing, and joint repair—all of which helped boost profits in the Surgery and Orthopaedics divisions.
Surgery sales jumped 19.2% to $9.81 billion, owing to healthy performances in both Advanced and General Surgery. The latter improved proceeds 18.1% (to $5.19 billion) while the former grew revenue 20.4% (to $4.62 billion) by capitalizing on improving market conditions, expanding into Tier 2 and Tier 3 hospitals in China, and releasing new products such as the ENSEAL X1 Sealer and ECHELON+ Stapler.
J&J’s Ethicon subsidiary unveiled the ECHELON+ Stapler with GST (gripping surface technology) reloads in late March 2021. The device increases staple line security and reduces complications through more uniform tissue compression and better staple formation, according to the company. New design features include a re-engineered anvil that provides more uniform compression to better capture and form staples and a new motor that improves firing speed in thick tissue to enhance compression and improve audible feedback. In benchtop testing, the ECHELON+ stapler outperformed Medtronic’s Signia and EndoGIA staplers with tri-staple reloads, providing better staple formation and reducing leaks at the staple line.
Three months after releasing the ECHELON+ Stapler, Ethicon debuted the ENSEAL X1 Curved Jaw Tissue Sealer, an advanced bipolar energy device for colorectal, gynecological, and bariatric surgeries and thoracic procedures. Its 360-degree continuous shaft rotation provides easy targeted tissue access, and its Adaptive Tissue Technology enables the device to continuously sense changes in tissue condition and respond accordingly with the optimal energy amount to minimize lateral thermal spread. The device also features separate seal and cut capabilities as well as improved ergonomics and a one-handed operation.
“This is an intelligent and intuitive energy device that provides secure sealing and an ease of use that improves upon currently available advanced bipolar sealing devices,” Steven McCarus, M.D., chief of GYN Surgery at AdventHealth Celebration, said upon ENSEAL X1’s release last June. “...I think it will make a real difference in procedures in terms of patient outcomes and procedural efficiency.”
Also impacting patient outcomes and procedural efficiency was J&J’s MONARCH platform, a first-of-its-kind robotic technology cleared by the FDA in March 2018 for diagnostic and therapeutic bronchoscopies. Market demand for MONARCH continued to grow last year, as procedures topped 12,000—more than doubling those performed in 2020—and system orders reached a record high in Q4.
“Our MONARCH robotic system, it’s enabling in the luminal bronchoscopies. And...it’s progressing really well,” J&J CEO Joaquin Duato told investors during a FY21 earnings call in late January. Duato replaced Gorsky as chief executive on Jan. 3. “We are also studying our MONARCH robotic system to deliver energy and also a payload of pharmaceuticals for being able to do local treatment of early lung cancer lesions.
At the same time, we have also submitted a 510(k) expansion of MONARCH for a potential treatment in kidney stones that will give us an expanded market in this area.”
“We have had the highest level of innovation in our medtech business in 2021 ever,” Duato continued, “and our pipeline today has the highest value as measured by net present value that we have ever had.”
Orthopaedics enhanced that value last year with its new Compression Plate Clavicle System, new shoulder implant, and advanced power tools for trauma and small bone procedures. The division also shored up net future value via an acquisition, FDA clearance, and exclusive distribution agreement.
The latter two moves occurred just two weeks apart in early 2021. The division’s DePuy Synthes subsidiary gained FDA clearance in mid-January to use its robotic-assisted orthopedic surgical platform for total knee replacements. The VELYS digital joint reconstruction system, also used for hip and shoulder procedures, employs advanced planning capabilities to help surgeons make precise bone cuts and accurately position the replacement joint relative to the knee’s surrounding muscles, tendons, and ligaments.
DePuy designed the VELYS solution from technology it acquired through J&J’s 2018 buyout of French surgical technology firm Orthotaxy. VELYS mounts onto an OR table and links to joint assessment data to help clinicians correctly balance the implant and verify its position.
Two weeks after receiving the VELYS clearance, DePuy Synthes forged an agreement to distribute Expanding Innovations Inc.’s X-Pac Expandable Lumbar Cage in the United States. The cage, which supplements DePuy’s lumbar degenerative and minimally invasive spine portfolio, provides controlled height and lordosis expansion to allow for intraoperative adjustment, depending on patient anatomy. A lock ramp-feature built into the endplates offers a large graft space inside the cage for post-graft packing.
DePuy bookended the VELYS clearance and X-Pac distribution pact with the $79.5 million purchase of OrthoSpin Ltd. in December 2021. The Israeli firm’s robot-assisted external fixation system is used in conjunction with DePuy Synthes’ Maxframe multi-axial correction system, an external ring fixation system designed to rectify bone or soft tissue deformities in the leg, foot, or ankle. The FDA cleared OrthoSpin’s G2 fixation system in January last year.
“DePuy Synthes is committed to patients who need deformity correction surgery,” Oray Boston, worldwide president of DePuy Synthes Trauma, Extremities, Craniomaxillofacial and Animal Health, said in announcing the OrthoSpin deal. “The acquisition of OrthoSpin demonstrates our desire to help these patients navigate their recovery with more confidence and less uncertainty with their strut adjustments. It also demonstrates our commitment to bringing transformative medtech advancements to the industry through the application of automated technology that addresses a wide range of orthopedic challenges.”
DePuy addressed some of those challenges through non-automated technology as well. Its launches last summer of the 2.7mm Variable Angle Locking Compression Plate Clavicle Plate System and INHANCE Shoulder System helped boost Orthopaedics FY21 sales 10.8% to $8.58 billion.
The Clavicle Plate System features thinner plates, a more accurate plate-to-bone fit, and reduced prominence; the INHANCE System, meanwhile, has an intuitive stemless-first surgical approach that offers surgeons the ability to seamlessly transition from stemless to stemmed implants during procedures.
The INHANCE system preserves bone, provides immediate and long-term fixation, and facilitates intra-operative flexibility to simplify preparation for surgical treatment options. It includes reusable instruments, a comprehensive size range of anatomic stemless and stemmed inlay humeral implants, and a circular anatomic glenoid component that is compatible with any sized humeral head.
DePuy’s other product launch—the UNIUM System—bolstered both the company’s power tools portfolio and the Trauma franchise’s 2021 revenue. Trauma sales swelled 10.4% to $2.88 billion due to new product introductions and the global market recovery.
Those same factors drove a 13.3% increase in Knee revenue (to $1.32 billion) and 7.2% expansion in Spine, Sports & Other proceeds (to $2.89 billion). Hips sales, on the other hand, benefitted from existing technologies, including the ACTIS stem, KINCISE Surgical Automated System, and VELYS Hip Navigation, which helps enhance precise implant selection and placement. Hips revenue surged 16% to $1.48 billion.