DePuy Synthes Files IPO Prospectus as Johnson & Johnson Spins Off $10B Orthopedics Giant

Since the beginning of this year, several globally renowned medical giants have announced plans to spin off their businesses in order to focus on core operations, respond to market changes, and enhance competitiveness.

This week, when Johnson & Johnson announced its third-quarter financial report, it delivered a more significant announcement: the plan to spin off its orthopedics business into an independent company named DePuy Synthes within the next 18 to 24 months.

Since the beginning of this year, several globally renowned medical giants have announced plans to spin off their businesses. The aim is to respond to market changes and enhance competitiveness by focusing on core operations. Against this backdrop, the orthopedics industry is undergoing a major reshuffle, and the next "giant" is expected to emerge, intensifying direct competition with current key market players such as Stryker, Zimmer, and Biomet.

　　Breakup of Giants Boosts Asset Value

The latest spin-off of Johnson & Johnson's orthopedics division generates nearly $10 billion in annual revenue, accounting for about 10% of the company’s total revenue. This marks the company’s second major spin-off since 2023. Johnson & Johnson expects that, after the split, DePuy Synthes will become the world's largest company focused on the orthopedic field, holding a leading market position in key product categories such as hip, knee, and shoulder implants, as well as surgical instruments.

Johnson & Johnson began exploring the orthopedic business restructuring plan two years ago. In October 2023, Johnson & Johnson first proposed the restructuring of the DePuy Synthes orthopedic business, which is expected to be completed by the end of 2025. Through the restructuring, Johnson & Johnson hopes to allow the orthopedic department to move away from "lower-profit markets and product lines" to enhance the profitability of the division.

Regarding the divestiture of its orthopedics business, Johnson & Johnson's senior management stated that the company will focus on high-growth, high-margin areas in the future, such as oncology, immunology, neuroscience, surgery, vision care, and cardiovascular fields. In the past, Johnson & Johnson has made long-term investments in these high-growth areas through a series of acquisitions.

Previously, Medtronic also announced that it would spin off its diabetes business unit and establish an independent company. The company explained that with the development of the business, continued investment and greater focus were needed.

In July this year, BD announced that it would spin off its bioscience and diagnostics units and merge them into Waters, a laboratory equipment manufacturer, in a deal valued at approximately $17.5 billion. Thermo Fisher Scientific also announced plans to divest part of its diagnostics business, including its microbiology unit, in the second half of this year in a sale valued at around $4 billion. The split will allow the company to focus resources on core sectors with higher growth potential.

In the view of industry insiders, "focus" is an eternal theme. "Behind the business splits by these giants lies meticulous strategic consideration," a former Johnson & Johnson China executive told the First Financial Daily. "Strategy requires making choices; you can't hold on to everything without focus—that won't work."

The aforementioned individuals stated that divesting businesses with slowing growth or those non-core can enable companies to focus more on their areas of strength and high-profit markets, thereby enhancing overall operational efficiency and profitability. On the other hand, some potentially high-quality businesses may be undervalued within large medical groups; by spinning off into independent publicly listed companies, their unique investment value would become clearer, potentially leading to higher market valuations.

According to the 2025 Global Top 100 Medical Device Companies (Medtech Big 100) released last month on the medical device industry website Medical Design & Outsourcing, Medtronic and Johnson & Johnson Medical Technologies retained their top two positions, while Medline Industries surpassed Siemens Healthineers to rise to 3rd place. Positions 5 to 8 were held by Stryker, GE Healthcare, Philips, and Abbott respectively. Abbott and Boston Scientific climbed two spots to rank 9th, and BD Medical’s Medical and Interventional segment rose to 10th place.

In terms of annual revenue, both Medtronic and Johnson & Johnson Medical Technologies exceed 30 billion US dollars. In contrast, the annual revenues of the two Chinese medical technology companies that made it to the top 100 list, Mindray and MicroPort, are 5 billion US dollars and 1 billion US dollars, respectively.

　　Capital Market Welcomes New Giant

In terms of performance in the U.S. capital market, two leading medical technology giants that announced business spin-offs have both achieved good capital returns this year. Year-to-date, Medtronic's stock price has risen nearly 20%, with a market value of approximately $120 billion, while Johnson & Johnson's stock price has increased by about one-third, with its market value approaching $500 billion. The stock prices of Abbott and Boston Scientific have also risen by more than 10%. However, the stock performances of Stryker and GE Healthcare have been lackluster this year, with GE Healthcare even reporting a loss.

"In order to boost stock prices, companies usually take actions such as replacing the management team or announcing significant business reorganizations to change the perception of the capital market," a healthcare industry investor told the First Financial News. "After Johnson & Johnson announced the spin-off of its orthopedic business, its stock price hit a record high, which shows that the capital market is pleased to see these business adjustments."

Joaquin Duato, Chairman of the Board and Chief Executive Officer of Johnson & Johnson, told investors: "DePuy will become the largest and most comprehensive orthopedic company as an independent entity." Market insiders also anticipate that DePuy Synthes is poised to become the next "giant" in the orthopedic industry.

A former Stryker China executive told the First Financial reporter that although the growth rate of the orthopedic business has slowed down in recent years, it is still growing. He believes that after Johnson & Johnson spins off its orthopedic business, the newly established company has the opportunity to become a stronger market participant, which may change the competitive landscape of the entire orthopedic market.

Needham analyst Mike Matson said in a note to clients that while the breakup of Johnson & Johnson may benefit competitors in the short term, DePuy Synthes will emerge stronger in the long run.

In the current orthopedic market, four leading companies occupy the major share: Stryker, Johnson & Johnson, Zimmer Biomet, and Smith & Nephew. Among them, Johnson & Johnson's largest orthopedic business is trauma care. Shagun Singh, an analyst at RBC Capital Markets, stated that Johnson & Johnson holds more than 50% of the orthopedic trauma market, competing with Stryker. However, he believes that Johnson & Johnson’s orthopedic division underperforms within the company’s overall business.

By comparison, in the field of reconstructive surgeries such as knee, hip, and shoulder joint replacements, Johnson & Johnson lags behind its competitor Stryker. RBC estimates that Johnson & Johnson holds approximately 17% of the global knee surgery market and about a quarter of the global hip surgery market share.

In terms of company revenue, Johnson & Johnson's orthopedics division currently generates nearly 10 billion USD annually, while Stryker's annual revenue exceeds 20 billion USD, and Zimmer Biomet's annual revenue is less than 8 billion USD. Earlier this year, Stryker also announced an asset divestiture plan to sell its U.S. spinal implant business and establish a new company named VB Spine.

More details about Johnson & Johnson's newly established DePuy Synthes company remain to be disclosed, but the company has appointed Namal Nawana as its global president. Nawana previously served as the CEO of Smith & Nephew and led Johnson & Johnson's spine business earlier in his career.

　　The Next Battlefield: SurgeryRobot

Market insiders believe that robots are the next battleground for orthopedic giants.

Edward Jones analyst John Boylan predicted in a report that the split DePuy Synthes will place greater emphasis on innovation, accelerate product launches, and further focus on enabling technologies, including robotics.

Currently, Johnson & Johnson already owns the orthopedic robotic platform VELYS in the global market. Last year, DePuy Synthes also launched the VELYS active robotic assistance system, VELYS SPINE, for planning and performing spinal fusion surgeries, applicable to multiple areas including the cervical spine, thoracolumbar spine, and sacroiliac spine.

The First Financial reporter learned that the robot product has not yet been launched in the Chinese market. In China, Johnson & Johnson Medical Technology Orthopedics collaborates with leading domestic orthopedic surgical robot companies.TINAVIAre jointly developing an integrated surgical solution, incorporating DePuy Synthes' minimally invasive implant system Viper Prime(TM) into the Tianzhihang Tianji surgical robot.

A person familiar with the collaboration told the First Financial News: "Johnson & Johnson's deployment in the robotics strategy is slightly behind, lagging competitors like Stryker and Medtronic, and there is no sign of catching up in the near future."

According to IQVIA MedTech, the global orthopedic robotics market size exceeded USD 1.9 billion in 2024 and is expected to surpass USD 3.5 billion by 2030, with a compound annual growth rate of over 10%.

Stryker acquired Mako Surgical, the top-ranked orthopedic surgical robotics company at the time, for $1.7 billion in 2013. In recent years, it has launched a series of robotic products and achieved commercial success. According to Stryker's Q2 2025 financial report, sales in the Medical Surgical and Neurotechnology division reached $3.8 billion, a year-over-year increase of 17.3%, primarily driven by the continued growth in adoption of the Mako robotic system.

Smith & Nephew also entered the surgical robot track through acquisitions, purchasing orthopedic robotics company BlueBelt in 2016, and launching the orthopedic surgical robot system Cori in 2019. The product was launched in the United States the following year.

Medical technology giant Medtronic acquired Mazor Robotics for $1.64 billion in 2018, gaining the Mazor X surgical platform. In recent years, the Mazor orthopedic surgery robot has also become a popular product in the high-end orthopedics field.

"A notable development trend in the orthopedic industry is intelligent solutions, and surgical robot products will become a core competitiveness for enterprises," a senior R&D expert in surgical robotics told the First Financial Daily.

　　Chinese Enterprises Are Also on the Rise

Medical device expert and professor at the School of Health Science and Engineering, University of Shanghai for Science and Technology, Song Chengli, also told the First Financial Daily: "Technology is reshaping traditional diagnosis and treatment methods, and medical companies are increasing their investment in innovative technologies. In the field of intelligent medical devices, Chinese companies are expanding their leading advantages in niche areas like surgical robots."

The First Financial reporter learned that in terms of commercialization, the sales performance of multinational corporations' surgical robot products in China has not been ideal. In contrast, domestically produced orthopedic surgical robots are rapidly emerging. Relevant industry data shows that in 2024, nearly a hundred orthopedic surgical robots were sold domestically, with over 70% being Chinese-produced equipment.

At present, the leading manufacturers of domestically produced orthopedic surgical robots in China are represented by companies such as TiRobot and MicroPort. In terms of the number of surgeries performed, taking TiRobot as an example, the TiRobot orthopedic surgical robot completed over 39,000 surgeries throughout 2024, representing a year-on-year increase of 62.5% compared to over 24,000 surgeries in 2023.

According to forecast data from the research institution Frost & Sullivan, the Chinese surgical robot market will continue to experience rapid growth, with an expected scale of $3.84 billion by 2026 and a growth rate as high as 44.3%.

Against this backdrop, multinational corporations are also strengthening their cooperation with local innovative surgical robot companies. Earlier this year, Medtronic showcased the first spinal surgery robot Made in China, the Mazor XC, as well as locally developed and manufactured products such as the Medtronic Kanghui EngineNav orthopedic surgery navigation system.

"From a certain perspective, China's huge market presents fierce competition on one hand, but on the other hand, it also offers new opportunities for multinational companies to build an innovative ecosystem in China through cooperation, flexibly integrate cutting-edge technologies, and achieve win-win outcomes," Song Chengli told the First Financial News.

A senior executive of a Chinese robot manufacturer told the First Financial reporter that they have benefited from the cooperation with large companies. The technology jointly developed by both parties has become an important selling point of the product and has broken the pattern where technology was previously dominated by multinational corporations.

However, relevant industry insiders also reminded that in China, the "involution" pattern in the surgical robot industry has become very significant. He revealed to the First Financial reporter that there are at least 50 manufacturers competing in the orthopedic robot market in China, with about 70 product registration certificates already issued. Just last year, more than 40 products were approved. "There is a clear oversupply in the market," the person said. "In the future, we will see a large number of companies being eliminated, and the competition will be extremely fierce."

Editor: Guo Jian