USA— Johnson & Johnson (J&J) has struck a deal to buy heart pump maker Abiomed Inc for US$16.6 billion in cash, as it looks to boost growth in its medical devices unit after next year’s planned spinoff of the consumer health business to be called Kenvue.
The deal is expected to close early next year and will bolster J&J’s MedTech division. That’s one of two remaining segments, along with pharmaceuticals, that the company is focused on after announcing that it would split off its consumer health division that sells Band Aids and beauty products.
Abiomed makes a heart pump used on patients with severe coronary artery disease. Johnson & Johnson expects to finance the acquisition with cash on hand and short-term financing.
J&J is focused on its pharmaceuticals and medical devices operations with the consumer health spinoff expected by November 2023.
The deal for Danvers, Massachusetts-based Abiomed will complement J&J’s existing heart business and comes with “significant” expansion opportunities, said CEO Joaquin Duato.
It also adds to J&J’s portfolio a company with explosive growth. Abiomed sales jumped 22% to exceed US$1 billion in its most recent fiscal year. That is well over twice the annual sales it booked just five years ago.
J&J’s BioSense business focuses on treating arrhythmia or an irregular heartbeat. Abiomed will add, among other products, its Impella heart pumps, which are inserted through arteries into the hearts of high-risk patients.
Impella heart pumps temporarily help the heart maintain blood flow while a surgeon places stents in the patient.
Abiomed’s Impella heart pumps, the smallest in the world, have been used in the United States since 2008. The devices brought in worldwide revenue of US$985 million in fiscal year 2022.
After the deal closes, Abiomed will operate as a standalone business within Johnson & Johnson MedTech, becoming one of 12 medtech priority platforms as defined by annual sales of at least US$1 billion each, the company noted.
Johnson & Johnson said the acquisition diversifies and expands its portfolio while also benefitting patients. The companies touted their combined footprint, capabilities, and expertise on the commercial and clinical sides.
J&J said it will pay US$380 in cash for each Abiomed share. It also will throw in another US$35 per share in cash if some commercial and clinical milestones are met in a few years.
J&J will pay for the deal with a combination of cash and short-term financing. The company expects the acquisition to be neutral or to slightly dilute adjusted earnings in the first year after its completion. It then expects that the deal will help its bottom line starting in 2024.
The deal comes a few weeks after J&J said it topped third-quarter expectations, thanks to growth from its largest segment, pharmaceuticals. Sales climbed 2% in the company’s medical device segment, to US$6.78 billion.
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