November 29, 2022
Johnson and Johnson

Johnson & Johnson is investing more than $16 billion in treating heart disease, continuing a shift away from its consumer health roots that began last year.

The healthcare behemoth announced Tuesday that it will acquire Abiomed, a cardiovascular technology company that manufactures a heart pump used on patients with severe coronary artery disease.

The transaction, which is expected to close early next year, will strengthen J&J’s MedTech, or medical device division. After announcing the separation of its consumer health division, which sells Band-Aids and beauty products, the company is focusing on one of two remaining segments, along with pharmaceuticals.

The acquisition of Danvers, Massachusetts-based Abiomed will complement J&J’s existing heart business and provide “significant” expansion opportunities, according to CEO Joaquin Duato during a conference call with analysts on Tuesday morning.

It also adds a company with explosive growth to J&J’s portfolio. In the most recent fiscal year, Abiomed’s sales increased by 22% to exceed $1 billion. That is more than double the annual sales it had just five years ago.

J&J’s BioSense division specializes in the treatment of arrhythmia, or irregular heartbeat. Abiomed will add its Impella heart pumps, which are inserted through arteries into the hearts of high-risk patients, among other products. They help the heart maintain blood flow temporarily while a surgeon places stents in the patient.

Once the transaction is completed, Abiomed will operate as a separate business within J&J’s medical device segment.

J&J has announced that it will pay $380 in cash for each Abiomed share. It will also pay an additional $35 per share in cash if certain commercial and clinical milestones are met within the next few years.

J&J will pay for the transaction with cash and short-term financing. The acquisition is expected to be neutral or slightly dilutive to adjusted earnings in the first year following its completion. It then anticipates that the transaction will benefit its bottom line beginning in 2024.

The transaction comes just a few weeks after J&J announced that it outperformed third-quarter expectations, thanks to growth in its largest segment, pharmaceuticals. Medical device sales increased 2% year on year to $6.78 billion.

Johnson & Johnson, based in New Brunswick, New Jersey, saw its stock drop nearly a dollar to $173.11 in early trading Tuesday. The Dow Jones Industrial Average, which includes J&J, rose slightly.

Abiomed Inc.’s stock increased by more than 50% to $380.

Leave a Reply

Your email address will not be published. Required fields are marked *