J&J's Gorsky looks to unload $2B diagnostics unit in biz reshuffle
A big development in the diagnostics industry emerged in Johnson & Johnson's heavy stream of earnings news today. The healthcare giant ($JNJ) is mulling options for its Ortho Clinical Diagnostics business, as CEO Alex Gorsky moves to emphasize the company's best prospects for growth.
Johnson & Johnson, the world's largest healthcare products company, is starting to weigh options such as a sale of the diagnostics unit or a spinoff of the business as a standalone company. As Bloomberg reported, the clinical diagnostics group brought in an estimated $2.16 billion in sales last year or 3.3% of J&J's total revenue.
At this point, J&J isn't sure whether it will pull the trigger on a deal. However, the company seems open to shaking things up in its prized medical devices and diagnostics business. The MD&D segment wrapped up 2012 with $27.4 billion in sales, making it the largest chunk of J&J's healthcare products empire. But device and diagnostics sales fell about $100 million short of targets, according to Leerink Swann analyst Danielle Antalffy, as quoted by Bloomberg.
Gorsky is on the hook to drive growth in the MD&D business after J&J pulled the trigger on a $21 billion buyout of device maker Synthes, the largest acquisition in the history of the company. He could pluck out the Ortho Clinical Diagnostics unit, which has products for screening blood supplies used in transfusions, and invest in faster-growing businesses.
"As we look to the future we're advancing innovative new products in our pipeline, continuing to take a disciplined approach to managing our portfolio and adapting our business to the changing marketplace," Gorsky said in a statement.
J&J seems to be following suit with other large players interested in addition through subtraction. Pfizer ($PFE) is rolling ahead with an IPO for its animal health unit, Zoetis, and Abbott ($ABT) recently completed the spinoff of its pharma business, AbbVie ($ABBV).
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