Saturday, July 26, 2014
Inquirer Daily News

J&J-Weldon bet on Synthes assumes more elective surgery

J&J bought Synthes hoping people can someday again afford more elective surgery on knees, hips and backs.

J&J-Weldon bet on Synthes assumes more elective surgery

 

In the United States, if you are rushed to the hospital with broken bones, trauma surgery is likely to occur, whether you can pay for it or not.

But if you have no job or no health insurance or both, and you're worried about paying the mortgage or rent, paying any portion of elective surgery on your aching knee, hip or back might not be an option.

Johnson & Johnson and its chief executive officer Bill Weldon are betting that declines in elective surgery will slow and perhaps change direction. Only the ultra rich pay cash for such surgery, but Weldon is hoping the growing number of older people will have enough pain, cash for their portion of an operation and insurance to replace their knee or other joints.

That is much of why J&J and Weldon spent $21.3 billion to buy Synthes, the Swiss-based medical device manufacturer with facilities in Chester County that makes plates, screws, nails and power tools to fix broken bones.

"The big area is elective surgery," Weldon said in Tuesday's meeting with Wall Street analysts to discuss 2011 full-year and fourth-quarter results. "We're still much lower than it was previously, but the slope of the line of the decline is starting to smooth out a little bit. The last time I looked there was one-half of 1 percent drop in elective surgery.

"We think we're getting close to the bottom of the trough. We think it is important and why it is important to gain market share. People that need elective surgery are not having it done because they are unemployed, lost their insurance or anything else. They are putting it off. But you can put off these procedures for only so long and there will be a bolus of people that will come back in the market over time. I don't know if it's going to be 2012 or 2013, but I don't think the market is going to decline as precipitously as it has previously.

"I think the procedures are going to be coming back and we need to invest there. There will be continued pressure on pricing. We saw significant pressure in the spinal area in the last period. I think we'll see the procedures come back. But if you also look into emerging markets, you'll see significant opportunity for growth."

David Sell
About this blog
David Sell blogs about the region's pharmaceutical industry. Follow him on Facebook.

For Inquirer.com. Portions of this blog may also be found in the Inquirer's Sunday Health Section.

Reach David at dsell@phillynews.com.

David Sell
Business Videos:
Also on Philly.com:
Stay Connected