A Look At Johnson & Johnson’s Medical Devices Segment

by Trefis Team
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Johnson & Johnson
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Johnson & Johnson’s (NYSE:JNJ) Medical Devices segment accounts for 35% of the company’s value, according to our estimates. Most of the company’s value can be attributed to its Pharmaceuticals business. In this note, we focus on the company’s Medical Devices segment and its future implications for JNJ. Take a look at our interactive dashboard of JNJ’s business, which shows how its Medical Devices segment will perform in the coming years, compared to the company’s other segments. Below we explain in more detail.

How Does Medical Devices Compare To JNJ’s Other Segments?

Medical Devices Revenue Composition

We currently estimate the segment’s revenues to grow in low single-digits from $25 billion in 2016 to $29 billion by the end of our forecast period in 2024. This is slightly higher than the overall growth forecast for the company during the same period.

Key Factors To Future Growth

  • Changing dynamics in the women’s health market – with the rise of sub-specialties, particularly in gynecology –  should result in a larger addressable market for the company.
  • Minimally invasive surgery (MIS) procedures reduce hospital-acquired infections. As a result, we expect higher demand for MIS surgical procedures.
  • An overall increase in global healthcare demand due to an aging population, increasing healthcare spending and income in emerging markets, availability of treatment, and overall population growth.
  • However, pricing pressure has grown in recent years due to a number of players competing in the market. This is likely to continue and keep the segment’s growth in check.
  • Also, there are high regulatory standards with which to comply for the medical devices segment. Earlier this week, the US FDA issued a class I recall on JNJ’s heart device, due to a faulty valve.

We have a $125 price estimate for Johnson & Johnson, which is around 10% below the current market price.

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