Johnson & Johnson to Spin Off Orthopedics Business, Sharpening Focus on High-Growth Medtech Sectors

Johnson & Johnson (J&J) announced plans to spin out its orthopedics business into a standalone company, a move aimed at refocusing its medtech portfolio on higher-growth areas such as cardiovascular and robotic surgery. The spinoff, to be named DePuy Synthes, is expected to complete within 18 to 24 months and will create the largest orthopedics company in the medical device space.

Strategic Shift Towards Higher-Growth Markets

J&J CEO Joaquin Duato emphasized that this decision aligns with the company's strategy to sharpen its focus as a healthcare innovation leader. "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 the company's third-quarter earnings call.

The orthopedics unit, which generated approximately $9.2 billion in sales in fiscal year 2024, has shown relatively slower growth compared to other segments. Through the first nine months of 2025, the orthopedic business reported $6.82 billion in revenue, a slight year-over-year decline of 0.3%. However, the unit rebounded in the third quarter, growing sales by 3.8% to $2.27 billion.

Tim Schmid, J&J's worldwide chairman of medtech, explained the rationale behind the spinoff: "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. Ortho is a great business but, frankly, one that participates in lower-growth markets. This is all about shrinking to grow faster for medtech."

DePuy Synthes: A New Orthopedics Powerhouse

The spinoff company, DePuy Synthes, is poised to become a major player in the $50 billion orthopedics market. J&J has appointed Namal Nawana as the worldwide president of DePuy Synthes, effective immediately. Nawana, who previously served as CEO of Smith & Nephew and led J&J's spine business earlier in his career, will lead the business during and after the separation process.

Duato expressed confidence in the new entity's potential: "We expect DePuy Synthes to benefit from a more focused business model, with greater flexibility to extend its market leadership, invest in its commercial capabilities and capitalize on profitable growth opportunities."

The orthopedics business has a strong market position in several areas. J&J maintains a dominant share of over 50% in the orthopedic trauma market, competing primarily with Stryker. In reconstruction procedures such as knee, hip, and shoulder replacements, J&J holds approximately 17% of the global knee market and about 25% of the global hip market.

Analysts anticipate that the spinoff will allow DePuy Synthes to become a stronger competitor in the long term. The standalone company is expected to focus on innovation, bringing products to market more quickly, and further developing its orthopedics robotic platform, Velys.