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  • des94536 des94536 Dec 29, 1997 12:52 PM Flag

    JNJ outlook

    Another part of Cordis bungle, which must have contriobuted to the ridiculous price JNJ paid for it, was twofold:

    (1) Cordis' market share in balloons was growing rapidly and JNJ must not have realized that the growth was based on "trading margin fo rmarket share". However, once Cordis drove the price to about $350, they no longer could afford to offer $75-$100 discounts for more market share. Thus, the gravy train cam to a screeching halt. Unfortunately for JNJ, they had purchased Cordis during this "phenomenal growth period."

    (2) At about the time JNJ purchased Cordis, the analyysts were pressing Cordis regarding their lack of a monorail for the
    U.S.market. Cordis, inturn, pledged that it would have a competitive monorail in the U.S. within 18 months. It appears that there was
    nothing behind that pledge other than "smoke". The ramifications, however, for not having a monorail have not yet beenrealized. If
    the market returns to its 40% or more utilization of monorails for PTCA, Cordis will be left completely out of the dance. This
    will greatly impact the relatively small; i.e., <20% of the PTCA balloon market that Cordis has today. They may still retain
    20% of the OTW segment but that pond is likely ot get a lot smaller. The question then that this prompts is "how much of the
    value of Cordis was predicated on the monorail "smoke"?

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    • How could they have gotten a monorail in the US if GDT was sitting on the patent? Or was the outcome of the patent dispute still in question at that time? I still wonder why Palmaz and Schatz sold to J&J in the first place. They must have gotten some pretty lousy offers from Scimed, lilly and Medtronic.

      Cordis main attractions are it's guides, wires and OTW balloons. Big deal. Looks like franks and beans for the Cordis reps until JNJ management wakes up.

 
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