Recently, Johnson & Johnson revealed its plans to acquire Auris Health Inc., a surgical robotics company, for $3.4B in cash.
By doing so, Johnson & Johnson will access the firm’s surgical robotic scope that is not only utilized in respiratory procedures but also lung cancer detection.
“In this new era of health care, we’re aiming to simplify surgery, drive efficiency, reduce complications and improve outcomes for patients, ultimately making surgery safer,” claimed Ashley McEvoy, the company group chair of consumer medical devices, in a press release.
“Collectively, these technologies, together with our market-leading medical implants and solutions, create the foundation of a comprehensive digital ecosystem to help support the surgeon and patient before, during and after surgery.”
Auris’s flagship product entails a robot that is operated by surgeons through a controller to direct a scope fitted with cameras through a patient’s body.
Dubbed Monarch, the device was approved by the United States regulators in 2018 for therapeutic and diagnostic bronchoscopic procedures, whereby an instrument is inserted into the mouth or nose.
Initially, Auris concentrated on lung cancer, which is the main cause of cancer-related deaths across the globe.
J&J claimed that the deal would complement its last year’s acquisition of Orthotaxy, which is a privately-owned developer software-powered robotic technology designed for surgery.
The company’s Ethicon division, which is anticipated to absorb Auris, boasts a partnership with Alphabet-owned Verily Life Sciences, under which both companies established a surgery-based entity dubbed Verb Surgical Inc. back in 2015.
“Investors have been yearning for an acquisition for JNJ’s MedTech and while this entity may not have been top of mind, it complements JNJ’s Ethicon franchise and its respiratory health focus,” BMO Capital Markets analyst Joanne Wuensch said.
Johnson & Johnson is divided into three core business units, including consumer products, medical devices, and pharmaceuticals.
Its medical device enterprise has been sluggish, with sales dropping by 4% to $6.67B in the last quarter of 2018.
Nevertheless, the health-care business looks forward to bolstering its performance, especially through divestitures and acquisitions.
J&J has sold several of its divisions including diabetes care in its efforts to concentrate on and boost sales at better-performing enterprises such as cancer treatments.
Recently, the company revealed that it is developing a “connected digital ecosystem” that utilizes robotic technology and data in guiding surgeons through procedures and boost patient treatment.
The surgical items market is unanticipated to hit over $12 billion by 2025, with the largest players in the field including Intuitive Surgical, Medtronic, and J&J.
Alex Gorsky, the chief executive officer of Johnson & Johnson, noted in last month’s fourth-quarter earnings call that investors would witness “continued news about our robotics platform throughout 2020 and beyond.”
“What we want to make sure is that we get out in a timely manner,” he said, “but that we’re also out in a manner that ensures we’re competitive and ensures, ultimately, that we’re making an even bigger difference in this area as we go forward.”
The deal will be finalized by the close of 2019’s second quarter.