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J&J mulls future of diagnostics business


By Jaimy Lee
Posted: January 23, 2013 - 10:00 am ET
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Johnson & Johnson said it is exploring options for its diagnostics business, including a sale or a move to operate the unit as a stand-alone company.

The New Brunswick, N.J.-based healthcare company said in a news release that it is evaluating “strategic options” for the Ortho Clinical Diagnostics business, which includes donor screening and blood-typing products as well as clinical laboratory technologies.

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“Options include a possible divestiture if it is determined that OCD could have greater potential as part of another organization whose focus is more closely aligned with its core strengths, or by operating as a stand-alone company,” Johnson & Johnson said in the statement. “At this time, it is not certain that any transaction will be consummated.”

The healthcare giant’s medical device and diagnostics business has undergone a number of changes in recent years, notably a $20 billion acquisition of orthopedic devicemaker Synthes that closed last year.

The company reported that worldwide sales rose 8% to $17.6 billion in the fourth quarter of 2012, compared to the same period in 2011, with the Synthes business contributing 5.6% of the company’s worldwide sales growth.

“We're building on our market leadership positions, having sustained or grown share in the majority of our key platforms, and hold number one or number two positions in over 80% of them today,” Johnson & Johnson Chairman and CEO Alex Gorsky said in the release. “We're also expanding our MD&D business in emerging markets, and with Synthes, generated strong double-digit growth there last year.”

During a call with investors, Gorsky said the diagnostics business does not hold the No. 1 or No. 2 position in its market. Sales for the unit fell 4.3% in the fourth quarter of last year.

Johnson & Johnson’s worldwide full-year sales rose 3.4% to $67.2 billion in 2012, compared to 2011.

The company also said its fourth-quarter net earnings included $800 million in increased litigation and programs costs related to the DePuy ASR, the metal-on-metal hip implant that was recalled in 2010 and has led to thousands of lawsuits, as well as integration and transaction costs related to the Synthes acquisition.


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