Johnson & Johnson to spin off orthopaedics arm

(Sharecast News) - Johnson & Johnson is to spin off its orthopaedics unit, the US healthcare giant confirmed on Tuesday, as it posted above-forecast quarterly numbers. J&J said the planned separation represented the "best path forward" for all stakeholders as well as positioning the division - to be called DePuy Synthes - "for long-term success".

It is expected to take between 18 and 24 months to complete.

The unit, which makes knee, hip and other orthopaedic replacements, reported full-year sales of $9.2bn last year. It is set to become the world's largest specialist orthopaedics firm once the separation is complete.

But J&J chief executive Joaquin Duato acknowledged last month that the division was not a fast-growing segment for the company.

The update came as J&J - which is increasingly focused on more high margin divisions, such as oncology - posted third-quarter sales of $24bn, up 6.8% or by 5.4% on a constant currency basis. The increase was ahead of Wall Street forecasts.

Adjusted diluted earnings per share rose 15.7% to $2.80.

Duato said third-quarter trading had been fuelled by "the depth and strength of our portfolio, and significant progress across our pipeline.

"With a sharpened focus on the six priority areas of oncology, immunology, neuroscience, cardiovascular, surgery and vision, [the company] is in a new era of accelerated growth and innovation."

Looking to the full year, reported sales were expected to come in between $93.5bn and $93.9bn, compared to a previous forecast for between $93.2bn and $93.6bn.

As at 1545 BST, shares in J&J, which have put on 30% so far this year, were off 1%.