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Ortho mounts growth spurt ahead of possible IPO

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Martin Madaus, CEO, Ortho Clinical Diagnostics.
Martin Madaus, CEO, Ortho Clinical Diagnostics. - ()

Raritan-based Ortho Clinical Diagnostics is expected to reap a windfall if it goes public, possibly by year’s end, but for now CEO Martin Madaus is focused on managing growth to date.

New York-based private equity firm The Carlyle Group, which acquired Ortho from Johnson & Johnson for $4 billion in 2014, reportedly hired Goldman Sachs, JPMorgan Chase and Barclays in late 2017 to explore an IPO or sale.

One banker, speaking on the condition of anonymity, said an IPO could happen in the fall, and is expected to be worth at least $20 billion.

Madaus wouldn’t comment on the possibility of an IPO nor confirm whether Carlyle had hired the investment banks. He did say Ortho is “really focused on being a private company and driving growth.”

“We have an independent board of directors and so the oversight is pretty tight on a monthly basis,” he said. “That structure has a lot of advantages. Unlike a public company with a lot of public investors, the people at Carlyle really have a good understanding of what’s happening here on a monthly basis.”

Ortho is considered a leading provider of in vitro diagnostic tools, chemical assays and chemistry analyzers. Its annual revenue has grown 14 percent since 2014, to $1.8 billion in 2017, amid 13 consecutive quarters of year-over-year revenue growth.

Since 2014, its workforce has grown 15 percent to 4,400 employees worldwide, including 650 in its Raritan headquarters. The company operates in 120 countries.

One of Ortho’s best-selling products is Ortho Vision, an immunohematology system, for which Ortho received the 2017 Edison innovation Award . The company also found success two years ago when it launched its HIV combo assay, which tests patients for HIV in one test. 

Earlier this year, Ortho won the Edison Award for Innovation for its Vitros Nephrocheck product, the first fully automated risk-assessment tool for predicting acute kidney injury.

“What we’re really excited about right now is the rolling out of our next-generation chemistry analyzers which will come out later this year,” Madaus said. “That’s been a major development effort.”

“The first thing we needed to do in 2014 was create some structures in finance, information technology, taxes and other functions that were completely controlled by Johnson & Johnson previously, so that took some time,” he said. “And given the regulated nature of our business, we then had to reregister our products in countries around the world. That took a good two years to do, and during that time we did have support from Johnson & Johnson with service agreements, so they did a good job supporting us. Last July, we were able to complete registration in all countries worldwide. That was complicated to do, but we’re now a global standalone company.

“After we were acquired, we focused on the strength of the company. We have very good products for the hospital lab segment in in vitro diagnostics. That was always a strength that the company, even when we were owned by Johnson & Johnson. When we were owned by Johnson & Johnson, it wasn’t really clear where the business was going.

“Since being acquired, we reinvested in that product line. … We have a very focused view of our strategy and on our core business – chemistry and dry slides; immunoassays for disease testing; and immunohematology, which we’re one of the world’s leader is. What we said was, let’s focus on hospitals and invest more in the segments in which we can win the most.”

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Vince Calio

Vince Calio

Vince Calio covers health care and manufacturing for NJBIZ. You can contact him at vcalio@njbiz.com.

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