Johnson & Johnson Misses Medtech Crown to Medtronic but Cardiovascular Business Surges Beyond Expectations

Jan 24, 2024 14:01 CST Updated 14:01

Johnson & Johnson

Medical Device R&D and Manufacturer

Johnson & JohnsonYesterday (January 23) announced the financial report for the fourth quarter of 2023, in whichJohnson & Johnson Medical Technologies ChinaRevenue of $30.4 billion，up +10.8% year-on-year; Compared with Medtronic's fiscal year 2023 revenue of $31.227 billion, it lags behind827 millionDollar.

Thus far,Medtronic Again Tops the 2023 Global Medical Device Revenue Ranking!

Looking back at the first half of 2023 and the first three quarters, Johnson & Johnson Medical once surpassed Medtronic to temporarily take the top spot in the global medical device industry, butDue to Medtronic'sThe Fourth QuarterDespite leading in revenue, Johnson & Johnson Medical missed the top spot for the annual championship.

However, Johnson & Johnson Medical is expected to secure the second position among global medical device companies in 2023, with a strong growth momentum. In contrast, Medtronic's overall revenue declined by 1.4% year-over-year due to the impact of the pandemic in the first half of the fiscal year.

Looking back at the past five years, Johnson & Johnson Medical has maintained steady growth, gradually approaching the top position, as if aiming to regain the glory of being the global leader eight years ago.

From recent moves, a very obvious change is — Johnson & Johnson Medical is increasing its cardiovascular business layout.

The reason is not hard to guess:

First,CardiovascularIs in the field of medical devicesThe Second Largest Sub-Sector, with a sufficiently large market space;
Second, Johnson & JohnsonIn the cardiovascular field, there has beenBrilliant, once launched the world's first drug-eluting stent,But in the current business segments, orthopedics, surgery, and ophthalmology have already taken global leading positions.The cardiovascular field "lags behind" alone.

In fact, in the cardiovascular field,Johnson & Johnson Medical has quietlySurpassing Edwards Life Sciences,EnterGlobal Cardiovascular TOP4; In the future, withJohnson & Johnson MedicalPlan to make more investments, it willDirectly challenging the top three cardiovascular companies: Medtronic, Abbott, and Boston Scientific.

01

A Single Acquisition Reshapes the Landscape:

Surpass Edwards, Reclaim Top 4 in Cardiovascular

Johnson & Johnson Medical Can ApproachGlobal Device TOP 1, which is inseparable from an acquisition deal made a year ago.

November 2022, Johnson & JohnsonAnnounce with$16.6 billionAcquisition of the Leader in Artificial Heart FieldAbiomed, with the latter's exclusive product——Currently in the worldThe only FDA-approved interventional cardiac pump, Impella,In 2023, contributed revenue of $1.306 billion.

It is this incremental revenue,Only then did Johnson & Johnson Medical have the strength to compete with Medtronic in overall revenue.

Looking at the cardiovascular business alone,Other companies have not yet released their Q4 financial reports, but based on the Q1-Q3 data, Johnson & Johnson Medical reshaped the industry landscape in 2023, surpassingEdwards Lifesciences，The possibility of breaking into the TOP 4 is also very high.

In terms of revenue:The First Three Quarters of 2023，Johnson & Johnson Medical Revenue$4.415 billion, surpassing the global cardiovascular rankingEdward Life FourScience ($3.793 billion)), ranking among the top 4 in cardiovascular。

*In the fourth quarter, Johnson & Johnson's cardiovascular business maintained a growth of 24.7%, with annual revenue reaching 5.994 billion US dollars.

In terms of growth rate:Johnson & Johnson Medical's momentum is also better than Edwards':

Johnson & Johnson Medical Cardiovascular BusinessQ1-Q3 2023A year-on-year increase of 50%, with a single-quarter growth rate exceeding 19.3% in Q3;
Edwards Lifesciences Cardiovascular BusinessYear-on-year growth of 11.4% for Q1-Q3 2023, with a single-quarter growth rate of 13.3% in Q3.

▲ Johnson & Johnson Medical Q4 and Full Year 2023Cardiovascular BusinessRevenue

Product Development Progress，Last Year Johnson & Johnson MedicalCardiovascularThe main force of the business,Multiple new cardiac ablation products from subsidiaries have received FDA approval, including:

The World's Most Commonly Used Radiofrequency Ablation CatheterTHERMOCOOL SMARTTOUCH™SF；
Bidirectional Guiding SheathCARTO® VIZIGO® ；
High-Density Mapping CatheterPENTARAY® NAV ECO ；
CatheterWebster® CS ……

The usage process of these productsNo X-ray透视 required, making Johnson & Johnson becomeThe World's FirstAlsoCurrentlyOnlyA company with an approved atrial fibrillation ablation product that does not require fluoroscopic guidance.

Based on the above analysis of revenue, growth rate, and new products, a preliminary judgment can be made.，The 2023 cardiovascular device track's annual situation has been determined, and Johnson & Johnson Medical has successfully pushed more than half of its business into the TOP 4!

02

Pipeline Comparison:

Leading the Two Major Subfields of Cardiovascular

December 2023,Johnson & Johnson Medical at the Investor ConferencePublicReleased a long-term sales outlook, indicating"Continue to expand toInterventional Cardiovascular, as well as high-growth markets such as robotics and digital technology." It can be seen that cardiovascular has become itsOne of the medium- and long-term business strategies。

The recent two mergers and acquisitions are precisely the execution of this strategic direction:

One sideExpand New Business, Acquires Artificial Heart Device ManufacturerAbiomed；
One sideStrengthen Existing Business, and acquired Laminar, a manufacturer of left atrial appendage closure devices.

However,Able to cross overCardiovascular FieldTOP 4 This Threshold,What Exactly Does Johnson & Johnson Medical Rely On?

InReview of the Top 5 Players in Cardiovascular IndustryAfter the layout in the细分领域, we found that:Although Johnson & Johnson Medical covers significantly fewer cardiovascular subfields compared to Medtronic, Abbott, and Boston Scientific, it has established a certain advantage in two out of the three major subcategories: electrophysiology, heart failure, and structural heart disease.

① Electrophysiology Field, Advantages Expand

Besides defibrillator products, Johnson & Johnson has been able to compete with the top three cardiovascular giants in multiple细分 modules:

InCatheter Ablation Field (Mapping and Ablation Equipment), Johnson & Johnson has been since its acquisition in 1996Biosense has been in this field ever since.Absolute Dominator, accounting for about 40% of the global market share in 2015 and continuing to lead;
Considered to be the next generation technologyPulsed Electric Field AblationJohnson & Johnson Medical's new device has just received approval in Japan in January, and is currently applying for CE certification in the EU. Medtronic's similar product was just approved by the FDA in December 2023, Boston Scientific has not received FDA approval, Abbott has not yet entered the market, and Johnson & Johnson Medical also...Have a chance to take a seat；
High ThresholdLeft Atrial Appendage Closure Device, the top three cardiovascular products have already been approved.Johnson & Johnson Medical's newly acquired Laminar product is still under research, but its new product inTechnically or with advantages, a promising future awaits.。

② In the field of heart failure, leading alongside Abbott

Johnson & Johnson Medical has not yet ventured into cardiac pacemaker devices, but inArtificial HeartIn the field, among the top 5 cardiovascular giantsOnly AbbottCompete with it, from the perspective of product revenue of bothEqually Matched：

Abbott's Heartmate III was officially commercialized in the United States in October 2018, and the global revenue of the Heartmate series in 2019 was approximately...$770 million, and subsequently did not disclose its separate revenue data;
Johnson & Johnson's artificial heart business revenue in the first three quarters of 2023$9.66 billion, higher than Abbott's total revenue in 2019.

③ In the field of structural heart disease, Johnson & Johnson Medical has a temporary gap.

Edward Life Sciences is the leader in this field, occupying 70% of the global heart valve market share;
Medtronic, Abbott, and Boston Scientific have also made arrangements;
Johnson & Johnson Medical is currently an untapped market, and whether it will venture into it in the future remains to be seen.

The above-mentioned areas within the cardiovascular fieldHigh BarriersIn the track, Johnson & Johnson Medical accounts for a relatively small proportion,But as long as they get involved, they almost always rank among the industry leaders.A single product done to perfection also has the chance to surpass a jack-of-all-trades.

03

Latest M&A:

Poised to Break into the Top 3 in Cardiovascular

In Johnson & Johnson Medical's strategy, the key to achieving a breakthrough in performance growth and challenging Boston Scientific, the third-ranked company in the cardiovascular sector, will depend on itsIn NovemberAcquired Left Atrial Appendage Closure DeviceLaminar LAA.

Because of the Left Atrial Appendage Closure DeviceNot only does it have huge market potential, but also there are currently fewer players, still a blue ocean market.

According to data presented by Boston Scientific at the 2022 Transcatheter Cardiovascular Therapeutics (TCT) conference, there are currently approximately 38 million people worldwide with atrial fibrillation. This number is expected to reach 60.8 million by 2050, indicating a significant increase in market demand for left atrial appendage devices.According to KBV Research's forecast in 2022, the global market size of left atrial appendage closure devices is expected to reach$4 billion, during the forecast periodThe compound annual growth rate is 19.3%.

Currently, the top three cardiovascular companies, Medtronic, Abbott, and Boston Scientific, all have left atrial appendage devices approved:

AndItMarket Performance, alsoProved the value of this niche track:

Boston ScientificRevenue from the WATCHMAN left atrial appendage device has been reported separately starting in 2022.Revenue of $1.019 billion in 2022, the revenue in the first three quarters of 2023 has approached the total of 2022, reaching$9.31 billion, and alreadyContinuous year-on-year growth of over 20% for three quarters；
AbbottThe revenue of the left atrial appendage device was not separately counted, but it was also highlighted in the financial report: Abbott's structural heart business grew by 13% in 2022, mainly driven by the left atrial appendage device Amplatzer Amulet; in Q3 of 2023, the medical device business grew by 16.6%, also contributed by the Amplatzer Amulet product.

Although Johnson & Johnson Medical is a latecomer, under the strong market demand,It is not impossible for latecomers to surpass the early ones.

Johnson & Johnson Medical's acquisition of LaminarLAA has unique advantages compared to Boston Scientific's Watchman series and Abbott's Amplatzer Amulet:

The principle is more ingenious:By "rotating"Eliminate the Left Atrial Appendage, Rather Than Occlude It`, which is expected to avoid the drawbacks of traditional left atrial appendage occluders, such as leakage and the need to take anticoagulants;`
Small size, low risk:The device is significantly more compact in size (as shown in the figure below), which means minimizing the risk of residual leakage around the instrument and device-related thrombosis.

▲ From left to right are the left atrial appendage occluders from Boston Scientific, Medtronic, and Johnson & Johnson.

Johnson & Johnson Medical stated that the Laminar deviceHas received FDA approval to conduct pivotal studies in the U.S. and will begin in early 2024.According to the productPreviouslyTrials on animals and human subjects have shown excellent results. Industry experts say that if other safety risks can be ruled out, the future of this product is promising.

Even in high-barrier fields such as pacemakers, defibrillators, automated external defibrillators, and heart valves, where Johnson & Johnson Medical has not yet entered, it has already become one of the top four in cardiovascular with its advantages in electrophysiology. In the future, Johnson & Johnson Medical will bring more pressure to Medtronic, Abbott, and Boston Scientific.

And topping the list in cardiovascular isMedtronic, it will inevitably not show weakness. It stated in July 2023,The future business focus will be on five rapidly growing fields, one of which isCardiac Electrophysiology — This is precisely Johnson & Johnson Medical's "forte.”Business.

The competition in the future is bound to be more intense.

With the intensification of the global aging population, atrial fibrillation is affecting an increasing number of people, with both prevalence and incidence on the rise. This has led to a continuous increase in the number of stroke patients, indicating a sustained rise in demand for artificial hearts and left atrial appendage closure devices — a growth opportunity for Johnson & Johnson Medical.

In 2023, Johnson & Johnson Medical's return to the top four in cardiovascular is certain;In the future, we look forward to seeing when its left atrial appendage device will be approved, whether it will continue to expand into other niche areas, and whether it can break into the top three in the cardiovascular field.

And in Johnson & Johnson's Q4 earnings call, Chief Financial Officer Joseph Wolk was asked about the company"Interest" in M&A"When we say: 'We are in a strong position to continue engaging in various types of transactions.'"

The competition for the top spot in the medical device field will also become more exciting.

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