Orthopaedics: The Business Being Let GoNarrow moat

Johnson & Johnson (JNJ) — moat facet

J&J is separating its slowest-growing device business, which grew 1.1% in 2025, to lift the growth rate of what remains.

J&J has decided its orthopaedics business is worth more outside the company. On 14 October 2025 it announced its intent to separate the business, which would operate as DePuy Synthes, targeting completion within 18 to 24 months1. The company expects the separation to increase its top-line growth and operating margins2.

Orthopaedics sales ($M)8,94220239,15820249,25820252,305Q2 20252,418Q2 2026J&J Form 10-K FY2025; Q2 2026 financial schedules
Barely growing in 2025, better in the latest quarter.

The reason is in the growth rates. Orthopaedics sold $8,942 million in 2023, $9,158 million in 2024 and $9,258 million in 2025, up 1.1% last year3, the slowest of J&J's four device franchises. The filing says all platforms were negatively impacted by revenue disruption from the orthopaedics restructuring, volume-based procurement in China and selling days4. Spine, sports and other fell 2.5% on competitive and price pressures5.

The business is not weak in its own market. J&J describes the standalone DePuy Synthes as the largest, most comprehensive orthopaedics-focused company in the world, addressing a $50 billion+ global market opportunity and serving approximately seven million patients annually6. Knees grew on the Attune portfolio and pull-through related to the Velys robotic system7.

The second quarter of 2026 was better: orthopaedics grew 4.9% to $2,418 million, with trauma up 7.6%8. Letting go of a business that is improving is the usual pattern of a separation.

The restructuring before the separation tells its own story. J&J began a restructuring of the orthopaedics franchise in 2023 to exit certain markets, product lines and distribution network arrangements, at a total cost of approximately $1 billion by the fourth quarter of 20269. The filing says revenue disruption from that restructuring affected all platforms in 202510. J&J is shrinking the business to make it healthier before letting it go.

Within the franchise, the pieces differ. In the second quarter of 2026 trauma grew 7.6%, knees 5.5%, hips 4.9% and spine, sports and other 1.8%11. The weakest part, spine, is where the filing described competitive and price pressures in 202512.

For J&J's moat, orthopaedics is being removed rather than defended. What matters is how J&J's MedTech margin looks without it; the company has said the separation should raise margins, and the first set of pro forma figures will show by how much.

Moat trajectory: Narrowing

Being separated; growth of 1.1% in 2025 before a better second quarter of 2026.

The number that tests this moat
Reported
Orthopaedics sales, 2025
$9,258M, +1.1%

The slowest franchise, due to be separated; J&J expects the rest of MedTech to grow faster and earn more without it.

Source: Johnson & Johnson Form 10-K, FY2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
Separation Costs Before Separation Benefits
J&J has spent about $1.4 billion reorganising and separating a business it is giving away.
References
  1. ReportedOn 14 October 2025 it announced its intent to separate the business, which would operate as DePuy Synthes, targeting completion within 18 to 24 months.
    Johnson & Johnson announcement of its intent to separate the Orthopaedics business (DePuy Synthes), Form 8-K exhibit 99.3. — October 2025 · publ. 14 October 2025 · source ↗
  2. ReportedThe company expects the separation to increase its top-line growth and operating margins.
    Johnson & Johnson announcement of its intent to separate the Orthopaedics business (DePuy Synthes), Form 8-K exhibit 99.3. — October 2025 · publ. 14 October 2025 · source ↗
  3. ReportedOrthopaedics sold $8,942 million in 2023, $9,158 million in 2024 and $9,258 million in 2025, up 1.1% last year, the slowest of J&J's four device franchises.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: MedTech segment and franchise sales analysis. — FY2025 · publ. 11 February 2026 · source ↗
  4. ReportedThe filing says all platforms were negatively impacted by revenue disruption from the orthopaedics restructuring, volume-based procurement in China and selling days.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: MedTech segment and franchise sales analysis. — FY2025 · publ. 11 February 2026 · source ↗
  5. ReportedSpine, sports and other fell 2.5% on competitive and price pressures.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  6. ReportedJ&J describes the standalone DePuy Synthes as the largest, most comprehensive orthopaedics-focused company in the world, addressing a $50 billion+ global market opportunity and serving approximately seven million patients annually.
    Johnson & Johnson announcement of its intent to separate the Orthopaedics business (DePuy Synthes), Form 8-K exhibit 99.3. — October 2025 · publ. 14 October 2025 · source ↗
  7. ReportedKnees grew on the Attune portfolio and pull-through related to the Velys robotic system.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  8. ReportedThe second quarter of 2026 was better: orthopaedics grew 4.9% to $2,418 million, with trauma up 7.6%.
    Johnson & Johnson second-quarter 2026 supplementary sales data, statement of earnings and non-GAAP reconciliation, Form 8-K exhibit 99.2 - MedTech segment and franchise sales by region. — Q2 2026 · publ. 15 July 2026 · source ↗
  9. ReportedJ&J began a restructuring of the orthopaedics franchise in 2023 to exit certain markets, product lines and distribution network arrangements, at a total cost of approximately $1 billion by the fourth quarter of 2026.
    Johnson & Johnson second-quarter 2026 supplementary sales data, statement of earnings and non-GAAP reconciliation, Form 8-K exhibit 99.2 - statement of earnings and non-GAAP reconciliation. — Q2 2026 · publ. 15 July 2026 · source ↗
  10. ReportedThe filing says revenue disruption from that restructuring affected all platforms in 2025.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
  11. ReportedIn the second quarter of 2026 trauma grew 7.6%, knees 5.5%, hips 4.9% and spine, sports and other 1.8%.
    Johnson & Johnson second-quarter 2026 supplementary sales data, statement of earnings and non-GAAP reconciliation, Form 8-K exhibit 99.2 - MedTech segment and franchise sales by region. — Q2 2026 · publ. 15 July 2026 · source ↗
  12. ReportedThe weakest part, spine, is where the filing described competitive and price pressures in 2025.
    Johnson & Johnson Form 10-K for fiscal 2025 (year ended 28 December 2025) - Item 7 MD&A: consolidated sales, volume and price, geography, the three wholesalers, rebate accruals, costs, R&D and liquidity. — FY2025 · publ. 11 February 2026 · source ↗
Sources
Generated September 24, 2026