CORRECTED – UPDATE 2-J&J sees its device market as faster growing

(Corrects first and eighth paragraphs to show Johnson &
Johnson sees itself competing in a faster-growing segment of
the medical device market, not that its own sales would grow
faster than the market)

* Plans 80 regulatory submissions for new devices

* So far in 2010, has received more than 12 approvals
(Adds details, analyst comment, byline)

By Ransdell Pierson

NEW BRUNSWICK, N.J., June 3 (BestGrowthStock) – Johnson & Johnson
(JNJ.N: ) sees itself competing in a faster-growing segment of
the medical device market and plans about 80 “significant”
regulatory submissions for its largest unit in the next two

J&J outlined its growth plans for the medical device
business — its top product category with annual sales of $25
billion — as it tries to overcome a manufacturing crisis at
its consumer unit that makes Tylenol and other products.

Many analysts gathered at company headquarters in New
Brunswick, New Jersey, on Thursday also hoped for an update
about J&J’s series of recalls of Children’s Tylenol and dozens
of other over-the-counter medications.

But it was not clear whether management would discuss
anything tied to the recalls, now under investigation by the
U.S. Food and Drug Administration.

“If it were me, I would segregate that because it would be
a tremendous distraction,” said Matt Duffy, an analyst BDR
Research in Manhattan. Duffy said he was looking for signs
that J&J is keeping its edge in devices and diagnostics against
the likes of Abbott Laboratories Inc (ABT.N: ).

“There are a lot of questions about devices and
diagnostics. The stent business has been unbelievably
competitive with (Abbott’s) Xience taking over the world”,
Duffy said.

J&J said it already has received more than a dozen
regulatory approvals so far in 2010. Additional submissions
will be rolled out across its seven franchises, including its
DePuy orthopedics unit, its Cordis cardiovascular business, and
Ethicon, which makes surgical instruments.

The maker of Band-Aids and Motrin told analysts it expects
sales of the types of medical devices that it sells to grow by
an average of 6 percent per year between 2009 and 2014. That
would outpace growth of the wider medical device industry,
which it forecast at 5 percent annually. J&J did not provide a
forecast for its own medical device sales.

In 2009, total company sales were $61.9 billion.

Shares of J&J rose 0.5 percent on Thursday, outpacing a 0.1
percent rise for the wider Standard & Poor’s 500 Index (.SPX: ).


The company said it still expects to seek approval in the
United States and Japan by 2012 for its experimental
bioabsorbable drug-coated heart stent, called Nevo. It is made
of a polymer that disintegrates soon after being implanted to
help open a diseased artery. The product has already been
submitted for approval in Europe.

The device would likely compete at some point with a
similar bioabsorbable stent being developed by Abbott,
underscoring the competitiveness of the stent market.

J&J also expects the number of users of its Acuvue contact
lenses to grow by more than 30 percent by 2014.

“Consumers are feeling more confident…We are expecting
nice growth over the next five years” in J&J’s contact lens
business, said Michael Sneed, group chairman of Vision Care.

In particular, an anti-allergy lens represents “a great
market expansion opportunity” because many people who suffer
from allergies are unable to tolerate contact lenses, Sneed

J&J’s prescription drugs account for about $22 billion in
sales, while consumer products, including Tylenol, approach $16
billion. Some industry experts say J&J’s consumer unit problems
could spill over into its other, more profitable, businesses if
the FDA begins to scrutinize those divisions as well.

“If regulators start to distrust management, then they
start being strict with everything, and checking and inspecting
everything,” Fred Hassan, former chief executive of
Schering-Plough, told Reuters. Hassan was hired by the company
in 2003 to clean up a quality control disaster.[ID:nN03224575]

J&J’s latest recall on April 30 involved more than 40
over-the-counter products for children and infants made by its
McNeil healthcare unit, including Tylenol, antihistamines
Benadryl and Zyrtec and painkiller Motrin.

Problems ranged from excessive amounts of active
ingredients, inactive ingredients that did not meet testing
requirements, and tiny metallic particles left as a residue
from manufacturing. J&J has shut the Pennsylvania plant that
made the contaminated products.

“How well they can contain the political fall-out is a
tough call. There’s definitely a downside,” BDR’s Duffy said.
“J&J is so well diversified, you’re not going to get too
dependent on any one product. That mitigates the risk,” he

Investing Basics

(Additional reporting by Debra Sherman; Editing by Michele
Gershberg, Lisa Von Ahn, Dave Zimmerman)

CORRECTED – UPDATE 2-J&J sees its device market as faster growing