Johnson & Johnson (New Brunswick, NJ) faces some setbacks with its $21.3 billion acqusition of Synthes. According toFinanz und Wirtschaft, a Swiss publication, merging operations at both companies has been an expensive, slow task. However, executives at the company remain hopeful that the combined operation will become more streamlined in the future.
According to Michel Orsinger, a manager at J&J orthopedics, the merger is less than halfway complete. He also noted that turnover at the company’s Swiss operations is one-fifth annually. However, he noted that the turnover rate for DePuy Synthes overall was five percent. He also said that part of this employee turnover was due to overlap between Synthes / DePuy.
While Johnson & Johnson’s acquisition is moving along slowly, it has faced some other road bumps too. Last year, Synthes recalled its Hemostatic Bone Putty. Under some conditions, the material could catch fire when exposed to cauterization devices during procedures. While J&J purchased the company in an effort to boost its surgical offers, DePuy/Synthesis has been hemorrhaging customers since the merger. In particular, the company’s trauma division has dropped from 50 percent market share to 40-45 percent market share. Child orthopedics also remains a problematic area for the company.
Regardless of the challenges, the company remains hopeful. In total, the company’s child orthopedics market share remains at 20 percent, following Medtronic with 40 percent. Emerging markets in Asia are also helping to propel growth.
While the merger is taking a long time to complete, Orsinger insists that it is still on schedule.
