J&J streamlines with plan to hive off orthopaedics unit

Johnson & Johnson has said it wants to spin off its orthopaedics division as part of an effort to redirect its business towards higher-growth areas.

The announcement – made as the company raised its sales growth guidance for 2026 to 5% – is the second major divestment for J&J in recent years, coming after the separation of its consumer health business into the $15 billion standalone company Kenvue in 2023.

The orthopaedic business, which makes products like replacement joints, trauma products, and surgical instruments, will operate under the DePuy Synthes banner and be led by Namal Nawana, an industry veteran whose CV includes a role as former chief executive of medtech company Smith & Nephew.

It has been starting to lose market share to other companies and has already been undergoing a restructuring process since 2023. There was a small decline in sales to $6.8 billion in the first nine months of this year as J&J's overall revenues grew 5% to around $70 billion.

"This transaction enables Johnson & Johnson to further strengthen its focus and investment toward higher-growth areas where we can meaningfully extend and improve patient lives," said group CEO Joaquin Duato.

"We expect DePuy Synthes to benefit from a more focused business model with greater flexibility to extend its market leadership, invest in its commercial capabilities and capitalise on profitable growth opportunities," he added.

The separation is expected to be completed in the next 18 to 24 months and will leave J&J with pharma and medtech businesses at its core, recently grown with acquisitions such as Abiomed, Shockwave, and Intra-Cellular.

The company said that there are no immediate plans for any further streamlining of the current business units.

MFN talks ongoing

On J&J's third-quarter results call, Duato also said there was nothing to share yet on negotiations with the Trump administration over most-favoured nation (MFN) pricing in the US, but added: "I am optimistic that we are going to land in a place which is going to create common ground between the administration and ourselves."

Pfizer and AstraZeneca have already announced MFN agreements – although the details of those remain scant – in order to sidestep the 100% tariffs recently imposed by Trump on pharma imports into the US. A commitment to major investments in new facilities lies at the heart of those deals, and Duato pointed to J&J's own commitment to invest $55 billion in the US over the next four years.

"We've been talking with this administration with an open dialogue since day one, even before day one," he added. "We are always looking…at Johnson & Johnson for common ground to build in the administration priorities that are similar to ours."

Those priorities include "making sure that American patients have access to innovation in an affordable and timely way, priorities like making sure that foreign entities do not free ride on American innovation, making sure that we are able to maintain the overall leadership that this country has in life sciences, and finally, making sure that we continue to invest in manufacturing in this country to build good middle-class jobs."