Inside the OEM: Johnson & Johnson MedTech Maintaining Its Edge

Recent acquisitions, particularly in cardiovascular markets, have positioned Johnson & Johnson MedTech as a leader in high-growth areas, driving double-digit growth. The industry giant is positioning itself as a global leader in healthcare by combining innovation, strategic acquisitions, and financial discipline to drive long-term success.

Highlighting acquisitions such as Shockwave and Abiomed at recent investor conferences, J&J executives have indicated that these will solidify its position in high-growth areas like cardiovascular technologies and underscore a focus on expanding capabilities in transformative medtech solutions. Moreover, advancements in the company’s product pipeline have enabled it to meet emerging healthcare needs and maintain a competitive edge in innovation.

Strategic Growth

J&J’s purchase of Abiomed enhances its portfolio in cardiac care, introducing groundbreaking heart pump technologies for patients with advanced heart failure, while Shockwave’s acquisition brings innovative intravascular lithotripsy systems, improving treatment for complex cardiovascular conditions.

“In medtech, you can see the impact of our portfolio shift to high-innovation, high-growth markets, particularly in cardiovascular. With the recent acquisitions of Shockwave and Abiomed, we are now category leaders in four of the largest and highest-growth cardiovascular intervention medtech markets, which in Q3 2024 translated to another quarter of double-digit growth across the cardiovascular portfolio,” said Joaquin Duato, chairman of the board and chief executive officer, during the company’s earning call in October 2024.

Almost $300 million is being added from the Shockwave acquisition, which continues to perform to expectations as does Abiomed. “And we’ve also added to the portfolio with the acquisition of Laminar in the fourth quarter of last year,” said Tim Schmid, executive vice president and worldwide chairman of medtech.

The company more recently announced closure of the acquisition of V-Wave, which Schmid said once again takes the company into even more exciting high-growth, high-margin opportunities within cardiovascular. He added that across the portfolio, J&J is benefiting from tremendous new product launches, both within cardiovascular, the E8 peripheral catheter within Shockwave, continued performance within Abiomed with its broad portfolio of pumps, and within its surgery and orthopedics businesses.

“It was exciting to be back and reengaging with interventional cardiovascular,” Michael Bodner, Johnson & Johnson group president of heart recovery and circulatory restoration, said at the Stifel Healthcare Conference in November 2024. “It’s been a while since we’ve played in the interventional cardiovascular space, as I define it — coronary, peripheral, and heart recovery in terms of heart failure. “From a data readout perspective, on the Abiomed side, we released the data on ECP, our expandable cardiac power device — our next-generation Impella pump. That’s going to be easier to use and expand user pools and help us address more patients with high-risk [percutaneous coronary intervention]. And that study met its primary safety and efficacy end points,” he said.

Bodner noted that J&J held a lot of events to talk about “tips and tricks” and how to best optimize the procedure for Abiomed. “We are introducing technology that is optimizing the procedure, making these devices easier to use, lower profile, longer 12 times, and we’re going to be able to expand the types of patients that we treat.”

“We want to focus on high growth, high unmet need areas where we can lead and that we provide value for all our stakeholders,” he said. “Now if we can lead in a way where we’re number one or number two, that’s part of the calculus. But where we can be the market creator, even better. And if you think about Shockwave, Abiomed, and V-Wave, those are all in market creation parts of the innovation cycle, where you got to introduce scale and establish the standard of care, these new therapies. And the competition is still relatively far away.”

He added that as J&J looks to integrate these companies, the company wants to do so in a way that minimizes disruption to patients, to customers, to physicians, and to key stakeholders.

“We’re pretty agnostic to small, medium, or large [companies for our M&A strategy],” said Bodner. “But to frame it a little bit, I would say Abiomed and Shockwave in the J&J context are medium-sized. V-Wave was smallish. But if you look at our history over the last 20 years, most of our acquisitions — I’d say 90 percent-plus — are more tuck-ins, less than $1 billion in size. Having said that, we’re not agnostic to the larger ones if they make sense. So, is there scientific differentiation? Is there a path where we can lead, ideally even be the market creators and provide shareholder value?”

On the Shockwave side, J&J announced the completion of the Empower study, a study just in females, who are often underrepresented in clinical studies. “They’re harder to treat, vessels are smaller, and a lot of times, there could be more calcium,” said Bodner.

Shockwave’s acquisition brings innovative intravascular lithotripsy systems, improving treatment for complex cardiovascular conditions. “We’re very excited about Shockwave. The magic of Shockwave is really taking lithotripsy technology that was used for shattering kidney stones and applying it to a simple balloon catheter. As we all age, we get hardening of the arteries, right? This is calcium deposits start to form, particularly after the age of 60. That calcium can form either in the surface of the artery or deeper in the layers of the artery. The traditional way that we’ve been treating those lesions has either been with a high-pressure balloon (40 atmosphere pressure). Using lithotripsy applied to a standard balloon makes the procedure simple,” said Bodner.

“Those lithotripsy emitters create a sonic pressure wave that goes through soft tissue without damaging it. And it shatters the calcium, making that vessel compliant so a physician can then open up the vessel and deploy a stent without having a waste and a potential for stent thrombosis later. The team at Shockwave is taking that technology and making it easier to use.

Abiomed Integration

J&J has kept Abiomed as stand-alone entity, but Bodner noted that doesn’t mean J&J has left it alone. “We’re being very thoughtful with our engagements. And really, this is about amplifying all the good work that they already do. In the beginning, it was all around getting our arms around their key talent. And they have an unbelievable talent population, talented population across that entire organization. The know-how is outstanding. The engineering group, the original inventors of the Impella heart pumps, are still with us.”

Bodner added that the capability around artificial hearts, left ventricular assist devices, tethering systems, percutaneous mechanical circulatory support devices, “is still in our building. We make our own pumps. We make our own motors. We’re now making the most — smallest, most efficient motor in the world out of that organization.

What this means, he said, is that step one is getting arms around talent and then investing in the areas that matter most — patient care teams not just at the index procedure but following that patient through to the ICU and making sure that patient is getting the best treatment possible. Step two is about next stages of innovation: investing in the R&D programs to make these devices lower profile, easier to use, longer dwell times, and even more hemocompatible. Step three focuses on manufacturing capacity: expanding J&J’s ability to produce these pumps to treat more patients around the world. Step four involves tapping into J&J’s market access teams around the world, particularly in the UK, France, China, and Japan, to open up health economics and reimbursement for making Impella available to more patients around the world.

Welcome Back to Cardiology

“We are being welcomed back, and it’s great to see old friends and colleagues from back prior to the divestiture of Cordis,” said Bodner. “We’re reentering the space because it’s extremely attractive, both clinically and commercially. Clinically, it’s one of the biggest unmet needs in the medtech space. It’s a leading cause of death and rehospitalization. Commercially, it’s the most attractive. Depending on how you like to size things, it’s $65 billion in aggregate, growing 8 percent, with some of the nicest gross margin profiles in medtech, generally above 80 percent.”

Bodner said that J&J wants to participate differently than the company’s competitive set. “My visual is a backpack filled with rockets, not a big hockey bag of slow-growth commodities. And there’s room in that backpack for a few more rockets for sure, but we want to play in a different way.”

Also in medtech, J&J completed enrollment of the Omny-IRE clinical trial to evaluate safety and effectiveness in mapping and treating symptomatic paroxysmal atrial fibrillation during standard ablation procedures. In cardiovascular, FDA approved the VARIPULSE™ Platform for the treatment of drug refractory paroxysmal atrial fibrillation (AFib). The platform is designed to enable AFib treatment with a single device that combines pulse field ablation therapy and advanced mapping with the CARTO ™ 3 System, a 3D electroanatomical cardiac mapping system.

Sales Growth

To grow sales, the medtech division continues to focus on building comprehensive solutions for surgeons and healthcare professionals, integrating advanced technology to improve precision and patient outcomes.

Worldwide sales of $7.9 billion increased 6.4 percent with growth in the United States of 7.8 percent and 5 percent outside of the United States. Overall, J&J’s medtech growth was driven by commercial execution and strength of new product introductions, partially offset by continued headwinds in Asia-Pacific, specifically in China.

Joseph Wolk, chief financial officer and executive vice president, noted that with the addition of Shockwave, the medtech business delivered operational growth of 6.4 percent in the quarter. “We continue to fortify our future, advancing the OTTAVA robotic surgery system to IDE, expanding VELYS use, and launching new intraocular lenses,” he said. “Due to dynamics in the Asia-Pacific region, specifically in China, we are taking a responsibly conservative approach by assuming no material improvement in that part of the business for the remainder of [2024]. And as such, we expect medtech adjusted operational sales growth for the full-year 2024 to be closer to 5 percent versus the 6 percent we referenced last quarter.”

For medtech, J&J expects to deliver on its long-term objective identified at last year’s enterprise business review of growing operational sales in the upper end of the 2022–2027 weighted average market growth rate of 5–7 percent.

“We also expect continued adoption of newer products across all medtech businesses, such as VARIPULSE in electrophysiology, VELYS-enabling technology across orthopedics, Odyssey and PureSee in surgical vision, and contributions from our Abiomed and Shockwave integrations,” Wolk said.

What’s Special About Electrophysiology?

“It is a really exciting time to be in electrophysiology,” Schmid noted. “And we couldn’t be prouder of the significant leadership position we’ve held in this category for more than 20 years. To put our performance in context, our EP business is a $5 billion business, which grew 11 percent in the third quarter [2024] and 17 percent year to date.”

J&J is actively progressing our launch of VARIPULSE in EMEA and in Japans. “We’ve had over 800 successful cases. We shared the data from our admIRE study at the recent HRS meeting, showing 85 percent primary effectiveness in that portfolio and that product. And we believe we’ve got a product that really will hunt,” he said.

As it relates to the United States, he said that J&J is seeing continued competition, especially in the ablation space, given that the company doesn’t currently have a PFA product. “We’re benefiting from the volume increase from PFA even though we don’t have that catheter,” he said. “Beyond our first launch with VARIPULSE, you will see a full portfolio of focal — large-focal, single-shot, and dual-energy catheters. So we’re confident in our leadership position in EP and our sources of differentiation for the future.”

Fighting Headwind in Asia

“We’ve had a myriad of issues hitting us in the Asia-Pacific region of late,” said Schmid. “Firstly, in February [2024] in Korea, the government initiated — or at least, a strike was initiated — among the healthcare professional community. Unfortunately, we don’t see any end in sight to that. And so that’s certainly has been a headwind.

“We’re seeing macroeconomic pressures in Japan, and then more importantly, the ongoing impact to volume-based procurement, which has also been exacerbated by the anti-corruption campaign. While we believe this is absolutely the right thing to do and we support it for the long term, it is impacting procedures and the engagement by healthcare professionals with companies like ours, especially on premium products.”

While J&J has a leadership position in China, Schmid said that the company is seeing a disproportionate impact from value-based purchasing (VBP). “We have five major categories impacted through tenders in 2023, in electrophysiology, trauma, spine, endocutters, and energy, and more recently, the IOLs and sports in our orthopedics business.

“We do believe that this will be a headwind into 2025. That said, we are absolutely confident that China will continue to be an important part of our portfolio even with the impact of VBP. We believe we can deliver tremendous growth and returns for our shareholders, and I think this really talks to the strength of our global portfolio across medtech.

Schmid said that J&J can offset headwinds in one geography with better performance in places like Europe and the United States. He said that Asia-Pacific will continue to be a growth opportunity because 60 percent of the world’s patients live in that part of the world. “We’re proud of the fact that we’ve been in many of these markets for many, many years and expect to continue to do so.

Outlook for Ortho

“Specifically to orthopedics, we believe this is going to be another solid year, 3.2 percent growth for the year,” said Schmid. “We did have a slightly softer third quarter, which was a result of the restructure within orthopedics. And as we look to the full year, we expect a return to significantly better performance, especially in orthopedics, which typically has a stronger fourth quarter,” he said. “We are seeing tremendous performance specifically within the hips and knees categories, growing 6 and 7 percent.” He said that is a result of the company’s success of its enabling technologies in VELYS in knees. J&J has added the indication of the UNI-Knee, as well as KINCISE and hip navigation systems within hips.

Regarding orthopedics performance, Schmid said J&J is significantly addressing portfolio gaps within its trauma portfolio with the launch of TriLEAP, Virtu-Guide, and VOLT.

“Our spine portfolio has been challenged, and we’re addressing that with the launch of TELIGEN, our new trial to thoracolumbar system, and the new spine robot, which we just received approval for. We all need to watch carefully the impact of the recently announced IV saline shortages, which, if they do persist, could potentially impact surgical procedures across our portfolio,” he said.

Conclusion

Johnson & Johnson continues to advance its leadership in medtech and innovative medicine by focusing on high-growth, high-innovation markets. Recent strategic acquisitions have strengthened its cardiovascular portfolio, contributing to significant sales growth. With a strong pipeline and clear financial priorities, the company is well positioned for sustained growth in 2025 and beyond.

This article was written by Sherrie Trigg, Editor and Director of Medical Content. She can be reached at sherrie. This email address is being protected from spambots. You need JavaScript enabled to view it..

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