Johnson & Johnson (J&J) plans to separate its orthopaedics business into a new company named DePuy Synthes, despite modest 2.4% growth this quarter. The split aims to prioritize high-growth markets, leaving J&J focused on pharmaceuticals and MedTech. The separation process is expected to take 18 to 24 months.

J&J acquired Synthes for $21bn in 2012, combining it with DePuy. The split will enhance topline growth and margins, focusing on cardiovascular surgery, vision, and robotics. Former Sapphiros chair Namal Nawana will lead the new orthopaedics company, aiming to become the largest worldwide.

This move follows J&J’s restructuring in FY 2023, retreating from less profitable markets at a cost of $700-$800m. The company also split off its consumer-health division in 2023. CEO Duato hopes the MedTech business will become the industry’s best-in-class. Q3 results showed sales jumping 6.8% to $24bn.

Shares in J&J opened 1% higher at $192.92 post-announcement, with a market cap of $452bn. Oncology drug Darzalex and prostate cancer drug Erleada brought in $3.6bn and $936m, respectively. Immunology drug Stelara earned $1.5bn, with Tremfya showing potential with 40% sales growth to $1.4bn in Q3.

J&J anticipates peak sales of $10bn for Tremfya, with analysts predicting $9.1bn by 2031. The split marks a strategic move to focus on high-growth markets, leaving J&J with a more streamlined and targeted approach to its core business segments.

Read more at Yahoo Finance: J&J spins off orthopaedics business against positive Q3 backdrop