Johnson & Johnson
(NYSE: JNJ)
considers itself “uniquely positioned to lead the next wave of healthcare innovation.”
Ahead of a meeting with the investment community today, the company outlined its views on where it stands in the medtech and pharmaceutical markets.
New Brunswick, New Jersey-based Johnson & Johnson set long-term financial targets, including at least 3% sales growth in 2025. It expects a 5%-7% compound annual growth rate (CAGR) from 2025 to 2030.
Within the Johnson & Johnson MedTech business, the company anticipates growth through a differentiated pipeline and geographic expansion. It intends to expand in the interventional cardiovascular, robotics and digital spaces.
The company’s recent moves back up that plan. J&J last week acquired left atrial appendage device maker Laminar, adding to its earlier cardiovascular play in the form of the $16.6 billion acquisition of Abiomed. Last month, the company set out a timeline for its long-awaited Ottava surgical robot, which includes FDA IDE submission next year.
J&J expects to grow operational sales by 5%-7% through 2027. Notably, it anticipates a third of its sales to come from new products in 2027.
The company set 2024 sales growth forecasts for between 5%-6%. It expects adjusted earnings per share to range between $10.55 and $10.75. That factors in a 15¢ dilutive impact from the Laminar buy.
“Science and technology will advance human health more in the next decade than it has in the last century, leading to more effective and personalized treatment, earlier intervention, and smarter, less invasive healthcare,” said Joaquin Duato, chair and CEO. “We are excited to share today how the breadth of our scientific capabilities, diverse portfolio and robust pipelines uniquely position Johnson & Johnson to be a leader in this next wave of innovation while delivering strong financial performance.”
Duato doubled down on that at the event.
“We have entered into a new era,” he said. “I’ve been at Johnson & Johnson for more than 30 years, and I’ve never been more excited about the future of our business.”
New J&J MedTech head speaks about driving progress
In October, Ashley McEvoy announced her surprising resignation from the role of EVP and head of J&J’s medical devices group. The company tapped Tim Schmid, a veteran of more than 30 years at the medtech giant, to replace McEvoy.
Schmid spoke at the investor event, explaining his commitment to driving growth at J&J MedTech.
“As I step into this new role, I’m committed to building even further on the progress we’ve already made,” Schmid said. “While I recognize that we have more work to do, I’m focused on further advancing our impact and our competitiveness. Our goal is clear. It is to be No. 1 or No. 2 in every market that we compete.”
Schmid highlighted a greater global demand for medical intervention, with COVID-19 putting public health in the spotlight. He also pointed to the “rapidly aging global population” driving disease burden and contributing to an all-time high in healthcare spending.
At the same time, though, the world expects smarter, less invasive and more personalized medical technology.
“Johnson & Johnson MedTech is uniquely positioned to meet this demand, which will grow our business while also bringing life-changing and life-saving technologies to patients all around the world,” Schmid said.
Schmid’s value drivers
Schmid laid out what he considers the “three key value drivers” to improve financial performance and create more value for J&J MedTech, he said.
First, the company wants to advance its differentiated pipeline. Second, it wants to shift its portfolio into high-growth markets to expand reach and scale globally. Finally, J&J MedTech aims to build operational resilience across its portfolio, he said.
For the pipeline, Schmid said the company knows that “incremental innovation alone is insufficient” to achieve its goals. The in-development Ottava surgical robotics system — and a potential update for a spine robot in the first quarter of next year — are some of the standout markers of progress in J&J’s pipeline.
“We have a balanced approach to innovation, in that we’re focused on differentiated product upgrades, while also placing big bets on building a pipeline of truly differentiated innovation to address significant unmet needs,” he said.
Global expansion, the next value driver, is important as 50% of J&J’s revenue comes from outside the U.S. Schmid said that, while the U.S. remains a priority, continued global expansion will facilitate growth in the future.
He specifically singled out massive markets in China and Japan — something Boston Scientific recently said it targets, too. Schmid highlighted differentiators like trusted clinician relationships, trained clinical sales expertise, regulatory capabilities and “world-class professional education.”
“These capabilities enable us to penetrate more markets around the world faster with our highly differentiated, premium products,” Schmid said. “Johnson & Johnson’s global infrastructure is opening doors for rapid expansion.”
On operational resilience, Schmid said the company has to navigate a macro environment while advancing competitiveness. Supply chain and digitization are key parts of this, he noted.
“We are big and complex,” Schmid said. “And we will work even harder to meaningfully simplify ways of working to accelerate our speed of decision-making to reduce costs and remove operational barriers that may have the potential to slow our people down.”
Abiomed deal is performing above expectations
Duato opened the investor event by mentioning that the successful integration of Abiomed into the company’s portfolio is “already tracking ahead” of the company’s deal model.
Schmid said the company remains “very excited” about its entry into heart recovery with Abiomed.
“Cardiovascular disease is a leading cause of death worldwide, and all forms of the disease lead to heart failure,” Schmid said. “Abiomed has made heart recovery possible, and J&J is now the undisputed world leader in heart recovery.”
With Abiomed on board, J&J now looks to make the flagship Impella heart pumps smaller, smarter and more connected.
J&J Global Head of Heart Recovery Michael Bodner explained the company’s goal to make Impella available to more patients around the world. He pointed to four growth drivers: indication expansion, geographic expansion, physician training and new product introductions.
Bodner said the company is “investing significantly” in trials to drive Impella adoption. He added that, along with Schmid’s global expansion plans, the company wants to bring Impella to more places outside the U.S. Currently, 80% of procedures take place in the U.S.
Despite Impella’s leading position in the heart recovery market, J&J continues developing new products on that front. Bodner said they’re lower-profile, easier to use, smarter and more connected. Studies are underway for these systems, including a longer-duration pump that he thinks could potentially disrupt the LVAD market.
“As we tap into the vast resources of Johnson & Johnson, we’ll continue to expand in the U.S. and internationally, raising the standard of care and heart recovery for patients all around the world,” Bodner said.
Ottava update
J&J’s long-awaited timeline for Ottava was welcome news after around three years of near-radio silence. Many were excited to receive an update on the robot, which is J&J’s bid to penetrate the soft-tissue surgical robotics market long dominated by Intuitive Surgical.
The company said it plans to submit Ottava for FDA investigational device exemption (IDE) in the second half of 2024 to initiate clinical trials.
Hani Abouhalka, J&J MedTech company group chair for Robotics & Digital, said at today’s event that the company remains confident in that timeline. He also said the company is engaging in periodic discussions with the FDA to ensure alignment and inform plans.
“We are well underway to be ready for the clinical study,” Abouhalka said.
Abouhalka added that the company plans to continue innovating in robotics “for what’s next in surgery.” He said J&J has differentiated products and solutions connected through a digital ecosystem for surgery.
That digital ecosystem supports the acceleration of robotics and addresses unmet needs for surgeons, he said.
“This market is ready for competition and choice,” Abouhalka said. “Based on our timeline and our confidence to deliver, we expect Ottava to contribute meaningful revenue towards the end of the decade.”
This story may be updated with additional information from J&J’s investor event.
