Johnson & Johnson Considers Major Divestiture to Sharpen Strategic Focus

Johnson & Johnson explores selling its orthopedics unit to focus on high-growth pharmaceuticals, aiming for double-digit growth by 2030.

Shares of healthcare giant Johnson & Johnson reached a record high on Wednesday amid reports the company is exploring a significant portfolio shift. The firm is reportedly weighing the sale of its orthopedics unit, DePuy Synthes, in a deal that could exceed $20 billion.

Accelerating a Strategic Transformation

This potential move represents a continuation of a deliberate strategic overhaul. Johnson & Johnson has been actively streamlining its operations to concentrate on its most promising segments. The spin-off of its consumer health business into the independent company Kenvue in 2023 set the stage for further portfolio refinement.

Should the DePuy Synthes sale proceed, it would mark a decisive step away from a profitable but slower-growth medical devices business. The capital generated from such a transaction is expected to be redirected toward Johnson & Johnson's higher-growth pharmaceutical divisions, particularly its robust oncology and immunology franchises. The company's cancer drug portfolio was the primary growth engine in 2025.

Financial Performance and Forward-Looking Targets

The strategic deliberations are supported by solid financial results. Johnson & Johnson reported 2025 revenue of approximately $94.2 billion, reflecting a 6 percent year-over-year increase. For 2026, management has set a revenue target between $99.5 billion and $100.5 billion, which would equate to a near 7 percent rise. The corporation's long-term ambition is to achieve double-digit growth rates by the end of the decade.

Divesting the orthopedics unit could help facilitate these ambitious goals by creating a leaner portfolio with a sharper focus on high-margin businesses. However, finding a buyer at the desired price point for an asset valued at over $20 billion remains an open question. A transaction of this magnitude would likely attract only a limited pool of potential acquirers, such as private equity consortia or large medical technology competitors.

The market's positive reaction, evidenced by the stock's new all-time high, suggests investor approval of a strategy that would see Johnson & Johnson deepen its commitment to its pharmaceutical innovation pipeline.