Johnson & Johnson announced its intent to separate its Orthopaedics business, hoping to enhance its strategic and operational focus of each company as well as drive value for stakeholders.

This transaction would establish DePuy Synthes as a standalone orthopedics business. According to J&J it would be the largest, most comprehensive orthopedics-focused company, with leading market share positions in major categories.

After the separation is completed, Johnson & Johnson will keep a leadership position in six growth areas across its Innovative Medicine and MedTech segments: oncology, immunology, neuroscience, cardiovascular, surgery, and vision. The company expects the separation to increase its top-line growth and operating margins.

“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 Joaquin Duato, chairman and CEO, Johnson & Johnson. “The planned separation reflects our long-standing commitment to portfolio optimization and value creation. We are confident that our Orthopaedics business will be better positioned to improve top-line growth and operating margins as a standalone business.”

DePuy Synthes

After the transaction, DePuy Synthes is anticipated to benefit from a more focused business model. The company would continue to address an over $50 billion global market opportunity and serve about seven million patients annually.

In fiscal year 2024, the Orthopaedics business generated about $9.2 billion in sales. DePuy Synthes would be expected to have an investment-grade profile and balance sheet allowing it to build on its long history of innovation and maintain and extend its leadership role.

Namal Nawana has been named to serve as worldwide president of DePuy Synthes, effective immediately. Nawana will lead the business through the separation process, reporting to Duato. He’s expected to continue leading DePuy Synthes after the separation is completed.

Nawana was most recently executive chairman and founder of Sapphiros, a privately-held company focused on next-gen consumer diagnostic technologies. He was previously CEO and board member of Smith+Nephew, and prior to that was president, CEO, and board member of Alere until its acquisition by Abbott.

Before Alere, Nawana spent over 15 years at Johnson & Johnson in progressively senior leadership positions, culminating as worldwide president of Johnson & Johnson’s DePuy Synthes Spine business.

“I am honored to take on this role to lead the new DePuy Synthes, a global market leader with a deep heritage of innovation and a strong commercial platform that is well positioned to succeed as a standalone company,” said Nawana. “I look forward to working together with the broader team to meet our mission and keep people around the globe moving.”

Transaction Details

Johnson & Johnson said it will explore multiple options for the planned separation. The company aims to complete the transaction in 18 to 24 months, subject to satisfaction of certain conditions.

The company advised there’s no assurance about the ultimate timing or structure of the proposed separation or that the transaction will be completed. Johnson & Johnson will continue to operate its Orthopaedics business aligning with its currently strategy of continued investments in growth, margin improvement, and innovation.

“This move would further enhance the market-leading position for DePuy Synthes and strengthen our overall MedTech business with a focus on Cardiovascular, Surgery and Vision,” said Tim Schmid, executive VP, worldwide chairman, MedTech. “Through the separation process, we will remain focused on setting our talented teams up for long-term success, while continuing to serve our customers and create healthier futures for patients around the world.”