Johnson & Johnson (J&J) has joined the throng of pharma companies narrowing their operational focus by agreeing to sell its medical device unit Cordis to Cardinal Health.
Drug distributor Cardinal Health is paying $1.94bn for Cordis, which makes a broad range of devices used in cardiovascular and endovascular applications including catheters and stents, and reported sales of around $780m last year.
The transaction is expected to close before the end of the year and will mark the end of J&J’s exit from the $5bn global cardiovascular stent business.
J&J is credited with creating the cardiovascular stent market in the 1990s but has seen its leading position steadily eroded in recent years by competition from the likes of Boston Scientific, Abbott Laboratories and Medtronic.
Stents are used to prop open obstructed arteries that have been opened using angioplasty procedures, and over the years the devices have steadily become more sophisticated for example with the addition of drug coatings that prevent the stents from becoming blocked by tissue growth.
J&J exited the latter product category – known as drug-eluting stents – in 2011, pulling its Cypher product from the market, stopping development of a new-generation device and closing two factories with the loss of around 1,000 jobs.
“This initiative is part of our ongoing disciplined portfolio management approach to focus on our most promising opportunities to help patients and drive growth,” said Gary Pruden, who heads J&J’s global surgery group.
J&J’s chief financial officer Dominic Caruso said recently that the company wanted to get out of “commodity markets” in the medical device space and focus on innovative categories such as biosensors and orthopaedics.
The Cordis disposal comes at a time when big pharma companies are increasingly hiving off non-core divisions in order to become more specialised and nimble. For example Baxter is in the process of separating its biopharma and medical technology businesses, while Abbott Labs spun off its research-based pharmaceuticals business as AbbVie last year, and Pfizer, Novartis and GlaxoSmithKline (GSK) have all sold off units.
For Cardinal Health, the move continues the expansion of its offering from general hospital supplies such as surgical gowns and gloves and wound management products into cardiovascular devices and other areas.