Johnson & Johnson buys surgical robotics firm Auris for US$3.4 billion

A Johnson & Johnson building is shown in Irvine, California, U.S., January 24, 2017. (Reuters pic)

NEW BRUNSWICK: Johnson & Johnson is buying privately held Auris Health, which makes a robotic scope used in respiratory and lung cancer procedures, for US$3.4 billion in cash to gain access to devices that make difficult surgical procedures simpler.

J&J, which makes everything from Band-Aid to replacement knees, has been selling off some divisions such as diabetes care, as it tries to improve sales at better-performing businesses such as cancer treatments and medical devices.

Sales in J&J’s medical device unit have been recovering since turnaround efforts began in 2016, and the company now expects that unit to achieve above-market growth in 2020.

Auris was founded by surgical robotics pioneer Frederic Moll, who also co-founded Intuitive Surgical, the current leader in robot-assisted minimally invasive surgery. Moll will join J&J after its acquisition closes, the company said, but did not disclose what role he would assume.

“This acquisition will accelerate Johnson & Johnson’s entry into robotics with potential for growth and expansion into other interventional applications,” J&J said in a statement.

Auris’s flagship product is a robot used by surgeons through a controller to direct a scope through a patient’s body with cameras. The device, called Monarch, was approved by U.S. regulators last year for diagnostic and therapeutic bronchoscopic procedures, where an instrument is inserted into the nose or mouth.

Auris’s initial focus is on lung cancer, the leading cause of cancer death worldwide.

J&J said the acquisition would complement its purchase last year of Orthotaxy, a privately held developer of software-enabled robotic technology for surgery.

J&J’s Ethicon unit, which will absorb Auris, has a partnership with Alphabet Inc’s Verily Life Sciences, under which the companies formed a robotics-focused company called Verb Surgical Inc in 2015.

“Investors have been yearning to acquire JNJ’s MedTech and while this entity may not have been top of mind, it complements JNJ’s Ethicon franchise and its respiratory health focus,” BMO Capital Markets analyst Joanne Wuensch said.

J&J’s agreement also includes additional payments to Auris of US$2.35 billion, contingent upon Auris reaching certain milestones, which J&J did not specify.