07.27.10
1. Johnson & Johnson
$23.6 Billion ($61.9B total)
KEY EXECUTIVES:
William Weldon, Chairman and CEO
Dominic J. Caruso, VP, Finance and CFO
Alex Gorsky, Worldwide Chairman, Medical Devices and Diagnostics Group
NO. OF EMPLOYEES: 114,000 (total)
GLOBAL HEADQUARTERS: New Brunswick, N.J.
When caught in stormy waters in the middle of the ocean, a tanker will be jostled much less than a smaller, less-sturdy craft. The larger vessel, though not completely immune to the rolling seas, will have an easier time navigating through the rough weather.
Much like the tanker, New Brunswick, N.J.-based Johnson & Johnson (J&J) has been able to weather the economic tsunami of 2009. There certainly wasn’t double-digit growth—in fact, there was a 3 percent decrease in revenue compared to 2008—but as the company’s CEO, William Weldon, noted, it was a year of “tremendous challenge,” given the worldwide economic downturn. Weldon’s tone during a conference call with investors and journalists at the end of the fiscal year, was that things could have been a lot worse.
“We maintained our long-term focus while delivering solid results,” Weldon said. “We made important investments in acquisitions, strategic partnerships and launches of recently approved innovative products while preserving our financial flexibility to continue to invest in innovation.”
Worldwide sales for 2009 were $61.9 billion across the company’s multiple business units, a decrease of 2.9 percent. Overall domestic sales declined 4.4 percent, while international sales declined 1.4 percent, reflecting operational growth of 3.9 percent and a negative currency impact of 5.3 percent. Net earnings and diluted earnings per share for full-year 2009 were $12.3 billion and $4.40, respectively, down from fiscal 2008’s level of $12.9 billion. Full-year earnings results included an after-tax restructuring charge of $852 million and an after-tax gain of $212 million due to settled litigation matters. Excluding these special items, net earnings for full-year 2009 were $12.9 billion, flat compared with last year.
Sales for the company’s Medical Devices and Diagnostics unit, however, experienced modest growth. Revenues were $23.6 billion for 2009, a gain of 1.9 percent. Domestic sales increased 4.5 percent, while international sales decreased 0.2 percent, including an operational increase of 4 percent and a negative currency impact of 4.2 percent. The company has spent $3.6 billion on research and development during the last two years and closed $2.7 billion worth of acquisitions. The medical device division accounted for 38 percent of J&J’s total sales last year and 43 percent of total operating profit (excluding special items).
Primary contributors to the year’s gains included increased sales of surgical care and aesthetics products by the company’s Ethicon division. Orthopedics also played a strong role in keeping the device unit in the black—DePuy's orthopedic joint reconstruction, spine and sports medicine businesses. In addition, Ethicon Endo-Surgery's minimally invasive products and Ortho-Clinical Diagnostics’ professional products added to sales gains. Growth was partially offset by lower sales in the Cordis franchise, reflecting continued competition in the drug-eluting stent market.
Part of the company’s growth strategy to keep it competitive in a tough market has been through aggressive new product development—organically and, more often, through acquisition.
During the last quarter of the year, J&J announced a $785 million deal to buy Acclarent, Inc., a privately held medical technology company dedicated to designing, developing and commercializing devices that address conditions affecting the ear, nose and throat. The purchase was completed in January. The focus of Menlo Park, Calif.-based Acclarent’s technology is treating sinus conditions with novel, minimally invasive endoscopic devices. The company’s Balloon Sinuplasty technology provides an alternative to traditional medical therapy and conventional surgical approaches for those with sleep apnea and other obstructive sinus conditions.
The company also completed the acquisitions of Finsbury Orthopaedics Limited, a privately held, UK-based manufacturer and global distributor of orthopedic implants, and Gloster Europe, a privately held developer of innovative disinfection processes and technologies to prevent healthcare-acquired infections. Finsbury manufactures one of the only large-diameter, one-piece ceramic-on-ceramic hip bearing.
At the beginning of the year, the company concluded its $1 billion purchase of Mentor Corporation, a supplier of medical products for the global aesthetic market.
In the new product category, the company received U.S. Food and Drug Administration (FDA) clearance for its Carto 3 System 3-D imaging system for use by electrophysiologists in treating irregular heart rhythms. In August, an FDA panel recommended approval of the DePuy’s Pinnacle CoMplete Acetabular Hip System, the first ceramic-on-metal hip bearing to be considered for approval in the United States. The company is still waiting for a final OK from the FDA. The device remains an investigational device in the Unites States. Since 2007, the ceramic-on-metal bearing has been marketed in 40 countries. In addition, in 2009, DePuy launched the Silent Hip, a minimally invasive hip stem available outside the United States only. The Silent stem, which is inserted into the femur, is more bone-preserving than traditional stems, according to J&J.
In the ultra-competitive stent market, J&J’s Cordis division received FDA approval for a smaller version of the Cypher Sirolimus-eluting coronary stent. The new 2.25 mm stent is indicated for treatment of coronary blockages in small vessels, an often difficult-to-treat situation. The previous version has been used to treat more than 4 million patients worldwide, according to J&J estimates. This move provides clinicians with an improved option for smaller vessels, which clinically can be more complex to treat.Small coronary vessels have been associated with an increased risk of re-blockage after stent implantation, which requires another procedure to re-open the vessel. The smaller the artery, the more the regrowth of cells within a stent, and stent recoil narrows the lumen.
Other companies also received FDA approval for similar devices in 2009, notably Boston Scientific’s Taxus Liberté Atom and the Taxus Express Atom. Stents are available in numerous diameters, with sizes up to 4 mm.
New product rollouts clearly are part of the company’s take on the competition. This summer, J&J’s leadership told analysts that the company will roll out 80 new products from its medical devices and diagnostics unit through 2012 and plans to expand in markets including biosurgicals and electrophysiology. The division has received more than a dozen regulatory approvals so far in 2010. Overall, Johnson & Johnson claims to account for roughly 62 percent of the $350 billion worldwide medical device and diagnostics market. J&J expects medical device sales to grow an average of 6 percent each year through 2014.
Despite device sector gains, the company was not able to avoid restructuring in the face of increased economic pressures. In 2009, officials said it hoped to save up to $1.7 billion by 2011 (approximately $900 million in 2010). The primary cost savings would come from layoffs. The firm estimated it would reduce its global workforce by 6-7 percent. Leadership also hopes to simplify business structures and processes for additional savings.
$23.6 Billion ($61.9B total)
KEY EXECUTIVES:
William Weldon, Chairman and CEO
Dominic J. Caruso, VP, Finance and CFO
Alex Gorsky, Worldwide Chairman, Medical Devices and Diagnostics Group
NO. OF EMPLOYEES: 114,000 (total)
GLOBAL HEADQUARTERS: New Brunswick, N.J.
When caught in stormy waters in the middle of the ocean, a tanker will be jostled much less than a smaller, less-sturdy craft. The larger vessel, though not completely immune to the rolling seas, will have an easier time navigating through the rough weather.
Much like the tanker, New Brunswick, N.J.-based Johnson & Johnson (J&J) has been able to weather the economic tsunami of 2009. There certainly wasn’t double-digit growth—in fact, there was a 3 percent decrease in revenue compared to 2008—but as the company’s CEO, William Weldon, noted, it was a year of “tremendous challenge,” given the worldwide economic downturn. Weldon’s tone during a conference call with investors and journalists at the end of the fiscal year, was that things could have been a lot worse.
“We maintained our long-term focus while delivering solid results,” Weldon said. “We made important investments in acquisitions, strategic partnerships and launches of recently approved innovative products while preserving our financial flexibility to continue to invest in innovation.”
Worldwide sales for 2009 were $61.9 billion across the company’s multiple business units, a decrease of 2.9 percent. Overall domestic sales declined 4.4 percent, while international sales declined 1.4 percent, reflecting operational growth of 3.9 percent and a negative currency impact of 5.3 percent. Net earnings and diluted earnings per share for full-year 2009 were $12.3 billion and $4.40, respectively, down from fiscal 2008’s level of $12.9 billion. Full-year earnings results included an after-tax restructuring charge of $852 million and an after-tax gain of $212 million due to settled litigation matters. Excluding these special items, net earnings for full-year 2009 were $12.9 billion, flat compared with last year.
Sales for the company’s Medical Devices and Diagnostics unit, however, experienced modest growth. Revenues were $23.6 billion for 2009, a gain of 1.9 percent. Domestic sales increased 4.5 percent, while international sales decreased 0.2 percent, including an operational increase of 4 percent and a negative currency impact of 4.2 percent. The company has spent $3.6 billion on research and development during the last two years and closed $2.7 billion worth of acquisitions. The medical device division accounted for 38 percent of J&J’s total sales last year and 43 percent of total operating profit (excluding special items).
Primary contributors to the year’s gains included increased sales of surgical care and aesthetics products by the company’s Ethicon division. Orthopedics also played a strong role in keeping the device unit in the black—DePuy's orthopedic joint reconstruction, spine and sports medicine businesses. In addition, Ethicon Endo-Surgery's minimally invasive products and Ortho-Clinical Diagnostics’ professional products added to sales gains. Growth was partially offset by lower sales in the Cordis franchise, reflecting continued competition in the drug-eluting stent market.
Part of the company’s growth strategy to keep it competitive in a tough market has been through aggressive new product development—organically and, more often, through acquisition.
During the last quarter of the year, J&J announced a $785 million deal to buy Acclarent, Inc., a privately held medical technology company dedicated to designing, developing and commercializing devices that address conditions affecting the ear, nose and throat. The purchase was completed in January. The focus of Menlo Park, Calif.-based Acclarent’s technology is treating sinus conditions with novel, minimally invasive endoscopic devices. The company’s Balloon Sinuplasty technology provides an alternative to traditional medical therapy and conventional surgical approaches for those with sleep apnea and other obstructive sinus conditions.
The company also completed the acquisitions of Finsbury Orthopaedics Limited, a privately held, UK-based manufacturer and global distributor of orthopedic implants, and Gloster Europe, a privately held developer of innovative disinfection processes and technologies to prevent healthcare-acquired infections. Finsbury manufactures one of the only large-diameter, one-piece ceramic-on-ceramic hip bearing.
At the beginning of the year, the company concluded its $1 billion purchase of Mentor Corporation, a supplier of medical products for the global aesthetic market.
In the new product category, the company received U.S. Food and Drug Administration (FDA) clearance for its Carto 3 System 3-D imaging system for use by electrophysiologists in treating irregular heart rhythms. In August, an FDA panel recommended approval of the DePuy’s Pinnacle CoMplete Acetabular Hip System, the first ceramic-on-metal hip bearing to be considered for approval in the United States. The company is still waiting for a final OK from the FDA. The device remains an investigational device in the Unites States. Since 2007, the ceramic-on-metal bearing has been marketed in 40 countries. In addition, in 2009, DePuy launched the Silent Hip, a minimally invasive hip stem available outside the United States only. The Silent stem, which is inserted into the femur, is more bone-preserving than traditional stems, according to J&J.
In the ultra-competitive stent market, J&J’s Cordis division received FDA approval for a smaller version of the Cypher Sirolimus-eluting coronary stent. The new 2.25 mm stent is indicated for treatment of coronary blockages in small vessels, an often difficult-to-treat situation. The previous version has been used to treat more than 4 million patients worldwide, according to J&J estimates. This move provides clinicians with an improved option for smaller vessels, which clinically can be more complex to treat.Small coronary vessels have been associated with an increased risk of re-blockage after stent implantation, which requires another procedure to re-open the vessel. The smaller the artery, the more the regrowth of cells within a stent, and stent recoil narrows the lumen.
Other companies also received FDA approval for similar devices in 2009, notably Boston Scientific’s Taxus Liberté Atom and the Taxus Express Atom. Stents are available in numerous diameters, with sizes up to 4 mm.
New product rollouts clearly are part of the company’s take on the competition. This summer, J&J’s leadership told analysts that the company will roll out 80 new products from its medical devices and diagnostics unit through 2012 and plans to expand in markets including biosurgicals and electrophysiology. The division has received more than a dozen regulatory approvals so far in 2010. Overall, Johnson & Johnson claims to account for roughly 62 percent of the $350 billion worldwide medical device and diagnostics market. J&J expects medical device sales to grow an average of 6 percent each year through 2014.
Despite device sector gains, the company was not able to avoid restructuring in the face of increased economic pressures. In 2009, officials said it hoped to save up to $1.7 billion by 2011 (approximately $900 million in 2010). The primary cost savings would come from layoffs. The firm estimated it would reduce its global workforce by 6-7 percent. Leadership also hopes to simplify business structures and processes for additional savings.