J&J’s latest acquisition might appear to threaten its partnership with Alphabet to develop robotic surgical systems. But another player could be affected even more.
If you had any doubts as to whether or not Johnson & Johnson (NYSE:JNJ) is serious about robotic surgery, you now have your answer. The healthcare giant announced on Wednesday that it plans to acquire privately held robotic surgery company Auris Health for $3.4 billion.
There’s one interesting wrinkle to this story, though. Johnson & Johnson already partners with Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Verily on developing robotic surgery technology through a joint venture, Verb Surgical. Does the Auris acquisition amount to J&J spitting in Alphabet’s face?
J&J’s latest deal
Johnson & Johnson’s Ethicon medical-device subsidiary began working with Auris Health back in May 2018. At the time, the two companies said that they planned to develop robotically assisted systems for removing potentially cancerous nodules from the lungs.
Auris had secured FDA approval for its first commercial product just a few months earlier, in March 2018. The company’s Monarch system is used to diagnose and treat small, hard-to-reach nodules in the lungs of patients with lung cancer.
The acquisition by J&J is obviously a big coup for Auris Health, which had raised at least $500 million previously in several rounds of private equity financing deals. Not only does Auris receive $3.4 billion in cash upfront, it’s eligible for another $2.35 billion in potential milestone payments.
However, the deal also boosts J&J’s presence in the fast-growing field of robotic surgery. Buying Auris Health gives Johnson & Johnson a ready-to-sell system for the lung cancer market, an area where J&J already has a big focus with its Lung Cancer Initiative. It also positions the company to expand into other areas of minimally invasive robotic surgery.
By Keith Speights | The Motley Fool
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