J&J device revenue jumped 6.4% in 2012 thanks to Synthes buy
Johnson & Johnson ($JNJ) paid a pretty penny for orthopedics giant Synthes, but last year's $21.3 billion acquisition made quite a mark on the company's annual report, as J&J posted 6.4% revenue growth in its devices division and a 34.3% jump in its ortho business.
However, Synthes' contributions also helped dull the effect of weakening results in J&J's other device business, including a 13.2% drop in cardiovascular revenue and a 4.4% slump in diagnostics in 2012.
For the year, J&J pulled in $27.4 billion from its device and diagnostics unit, and the company's total revenue clocked in at $67.2 billion, a 3.4% increase over 2011. The company charted growth in specialty surgery (7.2%) and vision care (2.7%), but its diabetes and surgical units posted declines on the year.
J&J's fourth-quarter results tell mostly the same story: Vascular, diabetes and diagnostics all declined compared to the previous year, but orthopedics grew 64.3%, enough to pace a 13.7% quarterly jump for the the whole segment.
And then there's the cost of recalls. In the fourth quarter alone, J&J took about $800 million in charges largely blamed on litigation and associated costs for its recalled ASR all-metal hip implants, and the company is now being dragged into court over its other hip implant, the Pinnacle.
At the same time, last year marked a milestone for J&J's devices and diagnostics: The business has become the company's largest unit, outpacing pharma by more than $2 billion in revenue. Furthermore, the business' 6.4% growth beat the drug unit's 4% jump and the consumer segment's 2.9% decline. That spike is also largely due to the Synthes buy, as integrating the new business accounted for 3.1% of the company's total sales growth across all units.