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US healthcare Reforms To Increase Consolidation In Medical Device Industry: Johnson & Johnson

Johnson & Johnson spokesman said that the US healthcare reform legislation has the potential to increase the consolidation in the medical device industry, the Wall Street Journal reported. The company plans to make acquisitions in this and other areas of healthcare.

The proposed legislation would impose a 2.5% excise tax on the wholesale prices of medical devices sold in the US beginning in January 2013. And a bill progressing through the Senate is proposing that device companies to pay $4 billion taxes.

“If a device tax puts more pressure on smaller med-tech companies, I think that may be an opportunity to see more consolidation in the med-tech space in particular,” Johnson & Johnson Chief Financial Officer Dominic Caruso said.

Caruso said J&J plans to continue making acquisitions in the device arena, as well as collaborations and purchases in the pharmaceutical and consumer-health products categories.

He signaled that Johnson & Johnson was unlikely to pursue large-scale combinations in the pharmaceutical sector, as Pfizer Inc. (PFE) and Merck & Co. (MRK) have done this year. “I would say the track record so far has not been good in terms of bringing together large pharma companies and either getting much more productive [drug research] or being able to withstand pricing pressure,” Caruso said.