Johnson & Johnson to Spin Out Orthopedics Business, Focusing on High-Growth Medical Technology Sectors

Johnson & Johnson (J&J) has announced plans to spin out its orthopedics business, creating a standalone company that will operate under the name DePuy Synthes. This strategic move, expected to be completed within the next 18 to 24 months, aims to sharpen J&J's focus on higher-growth and higher-margin medical technology markets.

Rationale Behind the Spinout

CEO Joaquin Duato explained the decision as part of J&J's broader strategy to concentrate on areas of greatest unmet need and higher growth potential. "This decision further sharpens our focus as a healthcare innovation leader and accelerates the shift of our medtech portfolio to areas of greatest unmet need and higher growth, which includes cardiovascular and robotic surgery," Duato stated during an earnings call.

Tim Schmid, J&J's worldwide chairman of medtech, elaborated on the company's strategy: "We've been on a journey over the last several years to really aggressively move our portfolio into higher-growth markets, and adding attractive assets such as Abiomed and [Shockwave Medical] in high-growth markets like cardiovascular are good examples. This decision to separate ortho is the next major step in that direction."

Financial Performance and Market Position

The orthopedics unit, which will become the largest standalone orthopedics company in the medical device space, generated approximately $9.2 billion in sales during fiscal year 2024. For the first nine months of 2025, the business reported revenue of $6.82 billion, representing a slight year-over-year decline of 0.3%. However, the third quarter of 2025 saw a rebound, with sales growing by 3.8% to $2.27 billion compared to the same period last year.

J&J's overall medtech unit reported third-quarter revenue of $8.43 billion, a 6.8% year-over-year increase. The company's cardiovascular portfolio, which includes electrophysiology and recent acquisitions Abiomed and Shockwave Medical, demonstrated strong performance with 12.6% growth, reaching $2.21 billion in sales.

Leadership and Future Outlook

Namal Nawana has been appointed as the worldwide president of DePuy Synthes, effective immediately. Nawana will lead the business through the separation process and beyond, overseeing its transition to an independent entity.

Following the spinout, J&J's medtech unit will consist of its cardiovascular, surgery, and vision businesses. The company expects to provide updates throughout the separation process, with significant developments anticipated around mid-2026.

This move by J&J follows a similar trend in the medical device industry, with Medtronic announcing plans to spin out its diabetes business earlier this year. These strategic realignments reflect the ongoing evolution of the healthcare technology sector as companies seek to optimize their portfolios and focus on high-growth areas.