Johnson & Johnson (J&J) has made the latest slimming down move across its company in recent years, saying it plans to separate its orthopaedics business into a new stand-alone company.
While few details were shared on the spinoff, J&J said the new business will be named DePuy Synthes.
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The decision comes despite modest growth for the business, which already includes DePuy Synthes as one of its components. The unit, which includes artificial hip and knee devices, grew 2.4% this quarter.
J&J acquired Switzerland-based Synthes for $21bn in 2012, combining it with its own DePuy business.
According to J&J鈥檚 Chair and CEO, Joaquin Duato, this will primarily occur in a bid to 鈥減rioritise鈥� its portfolio, while moving its core business strategies into 鈥渉igh-growth markets鈥�.
The split will leave J&J focused on its pharmaceutical and remaining MedTech segments.
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By GlobalDataThe company expects that the separation of its orthopaedics business will enhance topline growth and margins, while facilitating the key focus on cardiovascular surgery, vision and robotics.
J&J anticipates the separation process will likely take 18 to 24 months to complete. Once the split is complete, Namal Nawana, previous chair and founder of Sapphiros, will take the company鈥檚 helm, which will become the 鈥渓argest and most comprehensive鈥� orthopaedics company worldwide, according to J&J.
This split follows the pharma鈥檚 restructuring of its orthopaedics unit in FY 2023, which saw the company retreat from less profitable markets and product lines at a cost of between $700 and $800m. J&J also split off its consumer-health division 鈥� which makes well known products such as Tylenol and Band-Aid 鈥� in 2023.
Andrew Thompson, Director of Therapy Research and 色界吧, Medical Devices at GlobalData, noted that there have been a range of notable spinoffs in recent years, citing BD, Medtronic, Smiths Medical, Siemens Healthineers, Alcon from Novartis and Envista’s split from Danaher.
“All kinds of reasons are often cited as the driving factor for these splits, from the need to focus on high-growth markets to focusing on portfolio optimisation, but J&J’s motives seem to be driven by profitability,” Thompson stated.
“Big divestments are easier to manage than small exits, because the divested united are already 鈥� in effect 鈥� stand alone businesses,” he added.
In the Orthopedics sector, GlobalData tracks $7.4 bn in revenue (about 80% of reported revenues), behind Medtronic at $7.8bn and Stryker at $9.8bn, in 2024, so the new Depuy-Synthes will continue as the largest pure orthopedics company in the world.
“What J&J might also have an eye on is declining Medicare reimbursements for orthopedic surgery, and this might be why the Depuy-Synthes business is seen as less profitable; something that will likely become more challenging is the ACA is reformed or even repealed,” stated Thompson.
Meanwhile, Duato noted that he had high hopes for the company鈥檚 MedTech business, which he hopes will become 鈥渢he best-in-class MedTech group in the industry鈥�.
Positive Q3 backdrop
The orthopaedic split was shared on the same day as the drugmaker announced Q3 results. J&J distanced itself from the big pharma earnings slump earlier this year, with the company鈥檚 sales jumping 6.8% to $24bn in Q3 2025.
This upward trend was primarily driven by sales across its innovative medicine portfolio, which constituted 64% of the reported sales this quarter. This value was up 6.8% from the same time in 2024.
Shares in J&J opened 1% higher at $192.92 at market open on 14 October compared to a pre-announcement market close. The drugmaker has a market cap of $452bn.
This includes oncology stalwarts like blockbuster multiple myeloma drug Darzalex (daratumumab) and prostate cancer med Erleada (apalutamide), which pulled in $3.6bn and $936m, respectively, for the US pharma company.
Meanwhile, immunology asset Stelara (ustenkinumab) was still a high earner for the company, making $1.5bn, despite the drug surpassing its patent cliff at the start of the year.
However, Stelara鈥檚 successor, took centre stage in the company鈥檚 14 October investor call, with the company鈥檚 executive VP of innovative medicines, Jennifer Taubert noting that J&J was 鈥渂ullish鈥� about the IL-23 inhibitor鈥檚 future potential after sales grew by 40% to $1.4bn in Q3.
Taubert added that the drug already held half of the IL-23 market share before the subcutaneous (SC) approval of Tremfya, which 鈥� in her eyes 鈥� signalled 鈥渁 lot of growth opportunity鈥� for the autoimmune therapy moving forward.
While J&J estimates peak sales of $10bn for Tremfya, analysts at GlobalData have a slightly more conservative forecast, predicting that the therapy will make $9.1bn in 2031. GlobalData is the parent company of 色界吧 Technology.
Editor’s note: This piece was amended on 15 October to include statement from Andrew Thompson, Director of Therapy Research and 色界吧, Medical Devices at GlobalData.
