Johnson & Johnson (J&J) announced today its plan to spin off its orthopaedics business, which will operate as an independent company under the name DePuy Synthes. This move echoes a similar strategy by Zimmer Biomet in 2022, when it separated its spine and dental units to form ZimVie. Both cases highlight a growing trend in the MedTech sector: streamlining conglomerates to boost agility and sharpen strategic focus.
A Strategic Move by Johnson & Johnson
The U.S.-based multinational plans to complete the separation of its orthopaedics division within 18 to 24 months, aiming to strengthen its focus on higher-growth, higher-margin businesses such as innovative medicine (oncology, immunology, neuroscience) and advanced medical technology (cardiovascular, surgery, and vision).
The new DePuy Synthes will become the largest orthopaedics company in the world, with approximately $9.2 billion in annual sales and operations in more than 60 countries. According to J&J, the separation will allow each entity to focus on its core strengths:
- J&J will drive its high-margin portfolio.
- DePuy Synthes will be able to innovate and grow with greater independence in a market valued at over $50 billion.
Executive Namal Nawana—former CEO of Smith & Nephew and Alere—has been appointed worldwide president of DePuy Synthes to lead the spin-off process.
The Zimmer Biomet Precedent and the Birth of ZimVie
In March 2022, Zimmer Biomet completed the spin-off of ZimVie, transferring its spine and dental divisions to the new company.
Shareholders received ZimVie shares (one share for every ten Zimmer Biomet shares), and the new company debuted as a publicly traded entity with operational and financial independence.
Later, ZimVie pursued an additional strategy: in December 2023, it announced the sale of its spine business to H.I.G. Capital for $375 million. This transaction allowed ZimVie to focus exclusively on the dental sector and strengthen its balance sheet by reducing debt.
Today, ZimVie operates as a pure-play dental company, with a more specialized and agile approach compared to the competition.
Similarities Between the Two Processes…
Johnson & Johnson and Zimmer Biomet share a very similar rationale behind their spin-offs. In both cases, the main goal was to focus the portfolio and simplify operations, separating divisions that, although profitable, did not fully align with each company’s new strategic priorities.
Both companies sought greater specialization and operational autonomy, enabling the new entities—DePuy Synthes and ZimVie—to make faster, market-adapted decisions.
The ultimate objective in both cases is to unlock the growth potential of each unit while improving the profitability of the parent business. In short, J&J and Zimmer Biomet recognized that excessive diversification can limit innovation and responsiveness, and they opted for clearer, more focused structures.
Key Differences?
The main differences between the two cases lie in scale and financial motivation. DePuy Synthes will start as one of the largest orthopaedic companies in the world, whereas ZimVie began at a more moderate scale.
In J&J’s case, the separation is primarily driven by strategic optimization, not an immediate need for liquidity. By contrast, ZimVie needed to reorganize its debt and strengthen its balance sheet, which later led to the sale of its spine business.
Additionally, the structural impact on J&J will be greater, as the orthopaedics division represents a central part of its portfolio, while for Zimmer Biomet, the spin-off affected more limited units.
Lessons for Investors and the Industry
- Specialization drives value. In increasingly complex medical markets, focusing on a niche allows for greater efficiency and faster innovation.
- Spin-offs are just the first step. ZimVie demonstrated that a separation can be the start of a deeper transformation.
- Initial scale matters. DePuy Synthes has resources and a global presence that will help it navigate market challenges more effectively.
- Execution defines success. Announcing a spin-off is easy; implementing it smoothly without operational friction is the real challenge
Conclusion
Both Johnson & Johnson and Zimmer Biomet aim to create more agile, profitable, and focused companies.
The ZimVie case shows that independence can provide focus, but it also brings financial and execution challenges.
If J&J successfully completes the spin-off, DePuy Synthes could emerge as the new global orthopaedics leader, while the parent company strengthens its position as a medical innovation powerhouse.