Johnson & Johnson (NYSE:JNJ) already has considerable research facilities in China and it is going to further enhance it with its recent acquisition of Chinese device maker, Guangzhou Bioseal Biotech. Apart from that, JNJ has applied for alternative uses of Xarelto to U.S. FDA and going to face trials relating to hip replacement lawsuits and Risperdal drug lawsuits. We maintain a $72.45 price estimate for JNJ, which is nearly 10% above market price largely based on the its long term outlook.
JNJ acquired Guangzhou Bioseal Biotech to immediately enter the fibrin sealant market in China and later to enhance its global reach in biologic solutions.  Bioseal is a Fibrin sealant used by surgeons in addition to hemostasis to control bleeding in patients undergoing surgery. JNJ is looking to integrate it with its Ethicon division for mutual benefit as it complements with Ethicon’s existing biosurgery portfolio.
Apart from that, U.S. FDA had also approved JNJ’s Laparoscopic surgical set, manufactured by Ethicon Endo-Surgery for assembly or dis-assembly inside the body during abdominal surgery.  This will bolster the Ethicon Endo-Surgery segment revenues by gain in market share due to its exposure in the Chinese market and supplemental revenue streams.
FDA Approvals and Lawsuits
Janssen Research & Development, an arm of JNJ, has submitted to the U.S. Food and Drug Administration (FDA) for approval of Xarelto, which is a treatment for the prevention of thrombosis after hip or knee replacement for treatment of vein thrombosis or pulmonary embolism.  Separately, the FDA has also approved Levaquin for treatment of plague in animals. 
JNJ is also facing trouble due to its hip implant lawsuits and its trials might result in huge liability. Its hip replacement device was a major failure, following which it had to recall all implants and cease operations.  J&J’s potential liability related to its antipsychotic drug Risperdal also has been mounting.Notes:
- Johnson & Johnson (China) Investment Ltd. Acquires Guangzhou Bioseal Biotech Co., Ltd., Press Release, May 2, 2012 [↩]
- FDA Approves Laparoscopic Surgical Set From J&J’s Ethicon Unit, wsj.com, May 1, 2012 [↩]
- Janssen Research & Development Submits XARELTO® (rivaroxaban) to U.S. FDA for the Treatment and Prevention of Recurrent Venous Thromboembolism, Press Release, May 2, 2012 [↩]
- FDA approves antibiotic to treat, prevent plague, usatoday.com, April 28, 2012 [↩]
- J&J Hip Patients Will Take ‘Bellwether’ Lawsuits to Trial, Businessweek.com, May 1, 2012 [↩]