Johnson & Johnson Acquires Robotics Surgery Firm For US$3.4 Billion

Medical Health Device
A robotic surgery device inside a health facility (Photo: Wikimedia Commons)

Johnson & Johnson has recently announced that it is already in process of acquiring the robotic surgery company, Auris, for US$3.4 billion. The multinational medical devices, pharmaceutical, and consumer packaged goods provider intend to further penetrate the medical robotics market with its recent transaction. The company already has an existing deal with Alphabet's Verily, formerly known as Google Life Science.

In a recently published press release, the company's Group Chair for Consumer Medical Devices, Ashley McEvoy, stated that the acquisition was made to further drive the company's goal of producing "market-leading" medical implants, medical devices, and solutions. Johnson & Johnson is apparently moving towards providing a "comprehensive digital ecosystem" that can help both doctors and patients during every stage of surgery.

Alphabet's Verily is currently working on a number of medical projects, which ranges from health tracking wearables to advanced miniaturized robotics for medical applications. On the other hand, Johnson & Johnson's newly purchased company, Verily, specializes in creating robotic surgery equipment that utilizes the latest advancements in robotics, endoscope design, sensors, and data science. Both companies are likely going to be working together to develop and build new and innovative healthcare devices aimed at hospitals and other healthcare facilities.  

The purchase is also meant to revitalize Johnson & Johnson's slowest performing business unit; its medical devices division. Johnson & Johnson is currently divided into three separate divisions, namely medical devices, consumer products, and pharmaceuticals. According to its announcement at the company's recent earnings call, its medical devices division has fallen 4 percent in the fourth quarter of 2018, with only US$6.67 billion in revenue. During the same event, Johnson & Johnson executives promised investors that it would improve the particular division's performance in the coming years by initiating more acquisitions and reducing losses through divestments.

The company's CEO Alex Gorsky also announced during its fourth-quarter earnings call that it would continue to pursue different robotics platforms to add to its portfolio. The surgical instruments and devices business is a booming sector in the medical field. It is expected to be worth at least US$12 billion by 2025, with some of the biggest providers in the particular field including Medtronic, Intuitive Surgical, and Johnson & Johnson.

The acquisition is expected to be finalized sometime in June this year. Following the company's announcement of its planned acquisition, which was originally reported last month, Johnson & Johnson stock prices rose by as much as 4 percent. All in all, share prices rose by a marginal amount over the last four quarters. 

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