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Case: competition awarness JNJ VS BSX

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Henri Van Lantschoot

on 1 May 2014

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Transcript of Case: competition awarness JNJ VS BSX

Global MD&D market
Sara Pogliani
Nicola Schelstraete
Henri Van Lantschoot
Competition Awareness
Business Case
"What the world needs is more genuises with humility, there are so few of us left."
COMMON
DIFFERENCES
Value creation
Innovation
Execution
Global
Emerging markets
Leadership
Q&A !
Iceberg (Titanic)
Framework MD&D market
A Medical Device or Diagnostic is an instrument, apparatus, implant, in vitro reagent, or similar that is used to diagnose, prevent, or treat disease or other conditions, and does not achieve its purposes through chemical action within or on the body like a drug. Whereas medicinal products (also called pharmaceuticals) achieve their principal action....
does not achieve through chemical (re-) action within or on the body
diagnose
,
prevent
,
or treats disease

or other conditions
,
instrument
,
apparatus
,
implant
,
in vitro reagent
,
or
similar
Definition
water
$340 Billion market
medical thermometers
implantable microchips
medical robots
cardiac pacemakers
scalpel
lenses
orthopeadic products
Diabetes diagnostic
1st
34%
$27,4 B
Position
Market focus
Actual reach
Largest medical technology company in the world
14th
20%
$7,3 B
Position
Market focus
Actual reach
We are advancing science for life
print screen top 15
1

Johnson & Johnson
2
General Electric Co.
3
Siemens AG
4
Medtronic Inc.
5
Baxter International Inc.
6
Fresenius Medical Care AG & Co. KGAA 
7
Koninklijke Philips Electronics NV 
8
Covidien plc 
9
Novartis AG
10
Cardinal Health Inc.
11
Stryker Corp.
12
Becton, Dickinson and Co.
13
Abbott Laboratories 
14

Boston Scientific Corp.
15
Essilor International SA 
Top
15 MD&D companies
Global Surgery Group
Global Medical Solutions
Global Orthopeadics Group
Acquisitions all over BSX businesses
ACQUISITIONS
STOCK PRICE
After Guidant acquisition, the share price lost 4/5 of its value
Buy back of shares for 600 MM $(in 2013 half of the FCFO will be used for buy back of shares): UNDEREVALUATION & HOLD THE STOCK PRICE
FINANCIAL HEALTH
FINANCIAL HIGHLIGHTS
STOCK PRICE
2012
Cameron Health 1,2 B $
Bridge Point Medical 110 MM $
Rhythmia Medical 265 MM $
CRM
ELECTROPHYSIOLOGY
Vessix Vascular 425 MM$
PI
TOTAL 2 B $ (385 MM $ cash in 2012)
2010
Asthmatx 444 MM $
ENDOSCOPY
SI Therapies 29 MM $
TOTAL 473 MM $ (199 MM $ cash in 2010)
IC
2011
Sandra Medical 386 MM $
IC
Intelect Medical 60 MM $
NEURO
ReVascular Ther 35 MM $
PI
Atritech 373 MM $
TOTAL 854 MM $ (370 MM $ cash in 2011)
(cc) photo by medhead on Flickr
2006
Guidant 27,2 B $
CRM & IC
IC
PI
WHO
:
BSX paid 80 $ each share (+27% premium price)
Abbott paid 4,1 bill $ for Guidant vascular intervention business
J&J out of the deal
RESULTS
:
Q2 2006: BSX reported a loss of 4,26 B $
BSX Debt + 8,9 B $
Products' recalls: already before the deal Guidant recalled 9 models of pacemakers which counted for 56% of their total pacemakers
IMPAIRMENT OF GOODWILL
4,4 B $ in 2012
PATENT INFRINGEMENTS
Between 2010 and 2011 BSX had to pay 2,4 B $ to J&J for 3 stents patent infringements
In 2013 Orbusneich claimed patent infingement against BSX PROMUS product
IMAGE IMPACT
&
PATENT LITIGATIONS LIABILITES
ACQUISITIONS
2010
Micrus Endovascular 480 MM $
GLOBAL
SURGERY
Acclarent 785 MM $
TOTAL 1,3 B $ cash
SterilMed 350 MM $
GLOBAL SURGERY
2011
TOTAL 350 MM $ cash
Synthes 21,3 B $
GLOBAL
ORTHOPAEDICS
13,8 B $ in J&J shares
&
7,5 B $cash
2012
Focused acquisition strategy
Stable share price excl 2009 (after Lehman Brothers crack)
FINANCIAL HIGHLIGHTS
6 B $ GOODWILL
2012
2012
FUTURE OPPORTUNITIES
LEADERSHIP IN THE CRM AND INTERVENTIONAL CARDIOLOGY BUSINESSES
MORE FOCUSED ACQUISITIONS
IMPORTANCE OF REPUTATION
FOCUS ON GLOBAL SURGERY AND ORTHOPAEDICS
POSSIBLE DIS INVESTITURE FROM DIAGNOSTIC BUSINESS
BSX might be interested in J&J Cardiovascular business
As the MD&D business is very broad, it is important to specialize in define segments
Q&A
JNJ on top of the world !
Strategic assessment
TOTAL SOLUTION
UNMET MEDICAL NEEDS
LOCAL FOCUS
QUALITY
LEADING WITH PURPOSE
GLOBAL OPERATING MODEL
STABALIZE CORE BUSSINESS
HIGH- GROWTH ADJACENCIES
MARGIN IMPROVEMNTS
STRENGTHEN LEADERSHIP
macro-economic conditions
strong global competition
regulatory environment
U.S. excise tax
R&D tax credis
negative impact of recalls
demographic trends
globalisation - emerging markets
scientific progress
strategic acquistions
digital revolution
social media
THREATS
OPPORTUNITIES
new operating model
robust financial position (AAA)
strong historical reputation
decentralized management
heart device leader
Leveraged technologies
new leadership (BRIC)
recalls: quality ~ reputation
high debt burden
low credit rating
negative impact product recalls
diversified product offering
WEAKNESSES
STRENGTHS
WEAKNESSES
STRENGTHS
SWOT
The Products
Infection prevention
Vision care
Diagnostics
Surgical Care
Speciality surgery
Cardiovascular
care
Diabetes care
Orthopeadics
Global Orthopeadics Group
Global Medical Solution Group
Global Surgery group
ElectrophysiologyAesthetics
Energy
Biosurgery
Endoscopy
Endovascular
Ear/Nose/Throat
Wound closure
Women's health
Mechanical
Electrophysology
Cardiovascular market
Urology and women health
Endoscopy
Pheripheral intervention
Full transcript