Johnson & Johnson Drops New Sedation System: Sedasys

By Matthew Kochen,
Money & Investing Writer

As part of Johnson & Johnson’s (NYSE: JNJ) restructuring of their medical-device business, the company is halting sales and production of their Sedasys Sedation System.

Approved by the U.S. Food and Drug Administration on May 3, 2013, the Sedasys Sedation System is, “a computer-assisted personalized sedation device that delivers the drug propofol for minimal-to-moderate sedation. The device provides comprehensive patient monitoring and limits the depth of sedation by adjusting drug delivery accordingly.”

By constantly monitoring the patient, this device and modify or stop infusion to correct for under and over sedation.

While requiring disposable parts for each patients, the Sedasys Sedation System is continuously reusable.

It is specifically used to deliver propofol to patients (must be 18 years or older) for sedation while undergoing colonoscopy and esophagogastroduodenoscopy procedures. The Sedasys Sedation system was the first computer-assisted personalized sedation (CAP) system.

The benefit of this system is it enables physicians to administer minimal to moderate sedation without a anesthesia professional present. Ethicon, the surgical equipment and devices subsidiary of Johnson & Johnson and creator of Sedasys Sedation System projected 15 million Americans could benefit from it.

This segment of Johnson & Johnson has struggled in recent years.

They produced $28,490 million in medical device sales in 2013.

Sales decreased 3.4 percent in 2014 to $27,522 million and another decrease of 8.7 percent in 2015 to $25,137 million. The only part of the medical device segment that grew in from 2014 to 2015 was advanced medical equipment at a paltry 1.2 percent.

The diagnostics section, under which Sedasys Sedation System would be accounted, declined by far the most all items. From 2013-2014, sales fell 49 percent and from 2014-2015 fell 91.1 percent to a total of $86 million in total sales.

Because of this continued atrocious performance, Johnson & Johnson is cutting costs to compensate.

Although Ethicon declined the release sales figure of the Sedasys Sedation System, it is a same assumption that it was one of the poorest performers as evidenced by their decision to discontinue the line.

Since the product was introduced, expectations have not turned into reality. What was once considered exciting and innovative failed to translate into revenue. An anonymous company insider cited by Becker’s Healthcare, a business and legal informational news source on the healthcare industry, stated that sales did not take off as Johnson & Johnson expected.

From the start, the Sedasys Sedation System faced major pushback from anesthesiologists who claimed that an automated system would threaten patient safety.

It should also be noted that successful adoption of Sedasys Sedation Systems would lead to significant replacement of anesthesiologists, reducing jobs and income.

The official statement from Ethicon on Sedasys was, “We have determined it is not a growth business for us.” This speaks not only of Sedasys, but nearly the entire segment of.

As a result of the failure of Sedasys to take off and the larger issues of selling medical devices, Johnson & Johnson announced a restructuring plan back in January in an effort to reduce costs.

In this restructuring, about an estimated 3,000 jobs (about 5 percent of the whole workforce) are to be eliminated from the medical devices segment, saving as much as $800 million to $1 billion a year.

In January, Johnson & Johnson’s fell until it hit a low of $95.75.

Since that low and the implementation of the restructuring, the price has been steadily increasing.

At time the time of publication, JNJ stock was trading $107.50.

A version of this article appeared in the Tuesday, March 22nd print edition.

Contact Matthew at
matthew.kocken@student.shu.edu

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