By Soyoung Kim and Greg Roumeliotis and Jessica Toonkel
NEW YORK, Sept 6 Johnson & Johnson has
launched a sale process for its Ortho Clinical Diagnostics unit,
which makes blood screening equipment and laboratory blood tests
and could fetch around $5 billion, three people familiar with
the matter said on Friday.
J&J has asked JPMorgan Chase & Co to run the sale
and is preparing to send detailed financial information in
coming weeks to potential buyers, including some of the world's
largest private equity firms and a number of healthcare
companies, the people said.
Early estimates suggest the unit's earnings before interest,
tax, depreciation and amortization are between $400 million and
$500 million, suggesting a possible valuation of roughly $5
billion, the people said.
The unit, whose tests are considered older and less
profitable than modern molecular diagnostics that examine gene
mutations for signs of disease, has annual sales of about $2
The people asked not to be identified discussing details of
the process. J&J declined to comment, while a JPMorgan
spokeswoman had no immediate comment.
Healthcare conglomerate J&J said in January it would explore
strategic alternatives for the unit and cautioned that the
process could take anywhere from about 12 to 24 months.
Industrial and healthcare conglomerates General Electric
and Danaher Corp. are likely to take a serious
look at bidding for the J&J business, said one of the sources
and another who had heard about the sales process.
GE declined to comment. A call to Danaher was not
J&J's decision to divest the division comes as drugmakers
are shedding businesses and cutting costs due to overseas price
controls and pressure on payments from insurers and the
government. Pfizer Inc, for instance, just spun off its
animal health products business, and Abbott Laboratories
split off its branded drugs unit early this year.
Ortho Clinical Diagnostics, whose revenue growth has been
relatively flat, is No. 5 in the clinical diagnostics market, as
measured in sales. Typically, J&J's businesses rank first or
second in their respective markets.
Clinical diagnostics are less attractive than molecular
diagnostics, which could see strong revenue growth in coming
years as examination of genes helps doctors steer patients to
But some analysts, including Les Funtleyder of Poliwogg,
have said private equity buyers might be interested in the
stable cash flow the J&J unit could provide.