J&J returns to growth in Q1 as elective care rebounds in US, Asia-Pacific

Dive Brief: Johnson & Johnson’s medical device business returned to growth in the first quarter […]

Dive Brief:

  • Johnson & Johnson’s medical device business returned to growth in the first quarter after elective care losses due to the coronavirus pandemic contributed to four straight quarters of declines in 2020.
  • The medtech giant’s device business brought in approximately $6.6 billion of sales, growth of 8% compared to the same period last year. Chris DelOrefice, vice president of investor relations, said procedures rebounded in multiple geographies from the COVID-19 hit, such as the U.S. and Asia-Pacific regions.
  • Orthopaedic procedures, one of the hardest-hit elective segments throughout 2020, bounced back for J&J, growing year over year by 1.2%. However, the recovery was mixed among procedure types — hip sales improved by 3.2% compared to the prior year’s quarter, while knees and spine, sports & other declined by 9.9% and 2.2%, respectively.

Dive Insight:

J&J’s medical device business struggled for much of last year as the pandemic took a toll on elective care. After seeing a roughly $2.2 billion sales decline in the second quarter, J&J’s worst quarter of 2020, the company performed better in the second half but, ultimately, never returned to pre-pandemic levels.

Total medical device sales for the company were about $23 billion last year, declining by 11.4% compared to 2019.

CEO Alex Gorsky said during the earnings call that first-quarter results grew above last year’s results despite COVID-19 declines carrying into January, February and the first weeks of March. The CEO said that procedure returns, vaccine rollouts and patient willingness to return to healthcare facilities all contributed to growth.

The recovery, however, is varied across geographies. For example, the Asia-Pacific and U.S. markets are recovering stronger than the Europe and Latin America markets, where countries are still being hit hard by the pandemic, according to DelOrefice.

Gorsky said procedure levels for most of the major healthcare systems in the U.S. were in the range of 90-105% of 2019 levels in the final weeks of March, and while Italy, for example, is still struggling, procedure volumes in U.K. markets have returned to about 90-100% of 2019 levels.

While the pandemic is still hitting some markets harder than others, recoveries can be sudden.

“We have continued to see month-to-month and even week-to-week progression across those major markets,” Gorsky said.

A return to elective care will be crucial for the medical device industry after companies took large losses from procedure declines last year. Analysts and industry project a second-half recovery; however, there is still uncertainty about whether procedure volumes can return to pre-pandemic levels by the end of the year or grow beyond pre-pandemic levels.

Both Gorsky and CFO Joseph Wolk pointed to favorable year-over-year comparisons for the second quarter and remainder of the year. However, analysts still view comparisons to 2019 as more accurate indicators of success.

After seeing 2020’s procedure losses continue into January and February, J&J expects volumes to improve throughout the rest of 2021.

“It’s clear to us that we’re seeing improving trends,” Gorsky said. “Given year-on-year comps plus what we’re seeing underlying both in the United States and Europe — in terms of procedure scheduling, confidence in returning to the hospitals and overall surgical volumes — we would expect those to improve through the second and third quarters of this year.”

J&J’s 8% year-over-year sales growth in the first quarter was largely fueled by the interventional segment, where sales grew by 26.4% compared to the prior year. J.P. Morgan analysts wrote while J&J’s results beat expectations by about $250 million, consensus estimates were relatively “stale.”

While the orthopaedic business grew compared to last year, J.P. Morgan analysts were still underwhelmed by the results as sales came in roughly at expectations. According to the analysts’ report, the total business came in about $5 million above expectations, dragged down by a $24 million miss for knees and a $22 million miss for spine, sports & other.

Original Article: (https://www.medtechdive.com/news/jj-returns-to-growth-in-q1-as-elective-care-rebounds-in-us-asia-pacific/598692/)