Peter Lynch's assertion to "buy what you know" has led many investors to the familiar products of Johnson & Johnson (NYSE: JNJ). My own house has seen its fair share of baby powder and Band-Aids over the years. But now, a wholly different consumer market promises to reignite J&J's potential for powerful profits.

Move over, Band-Aids...
J&J has long been known as an over-the-counter go-to staple, competing with the likes of Procter & Gamble (NYSE: PG) or Kimberly-Clark (NYSE: KMB). While consumer brands are a significant slice of the profit pie for Johnson & Johnson, many investors may not realize that another sector entirely has begun to drive the company's future growth.

Let's compare the profit generated by J&J's divisions:

Segment

2008

2009

2010

Consumer

15.3%

14.9%

13.2%

Pharmaceutical

43.5%

38.7%

40%

Medical Devices

41.3%

46.4%

46.7%

Source: Johnson & Johnson annual reports, 2009 & 2010.

Surprisingly, consumer goods comprised only 13% of the operating profit for 2010, while more than 85% came from the pharmaceutical and medical-device divisions. The average consumer rarely realizes this, especially when product recalls for over-the-counter drugs garner most of the media attention. Consumer product sales decreased 1.6% in 2009 and 7.7% in 2010. While Johnson & Johnson has publicly retained a dominant consumer-company image, its developments in medical and health care will actually drive the bulk of its future earnings growth.

Show me the money
For the last few years, J&J's business segment sales have indicated a distinct shift. A recent push to be the market leader in medical manufacturing has accelerated J&J's sales growth in the medical device sector, leading it to outperform the company's other divisions. Since 2007, J&J's pharmaceutical sales have declined about 10%. While consumer-goods sales were flat over that period, the medical device segment is the shining star, with sales up 13% in total since 2007.

Many consumers may not realize that J&J is now the largest medical devices and diagnostic company worldwide -- and still actively growing on this front. With a focus on developing treatments for issues ranging from diabetes, vision care, and now orthopedics, J&J competes against medical stalwarts St. Jude Medical (NYSE: STJ), Medtronic (NYSE: MDT), and Boston Scientific (NYSE: BSX).

$37 billion and counting
On April 27, J&J announced the purchase of Swiss medical device maker Synthes, a world leader in orthopedic manufacturing. Since rumors previously suggested that J&J was interested in U.K. medical device maker Smith & Nephew (NYSE: SNN), the company's actual move surprised some analysts. Regardless, it points to J&J's interest in building the medical services division further toward an international market share and an even greater global medical presence.

J&J CEO Bill Weldman considers the purchase "Johnson & Johnson's growth driver" in the world's "growing $37 billion market" of orthopedic medicine. Since Johnson & Johnson already holds the DePuy franchise for orthopedic and sports medicine, Morgan Stanley analysts predict that this move will make it the No. 1 orthopedic manufacturer worldwide when the deal closes in 2012.

As irony would have it
Orthopedics is certainly a growing market, especially as America ages. By 2030, one in five Americans will be over 65, and more than 200,000 will be centurians. Only three years ago, American Medical News estimated that these aging patients would need more than 600,000 hip and 1.4 million knee replacements by 2015. If the 70 is the new 40, then Johnson & Johnson is right at the edge of an exponential market explosion.

That's precisely why I will be adding Johnson & Johnson to my own portfolio this year. I'm bound to rely on this company in the near future -- and not just for the dividend yield.

Johnson & Johnson is a Motley Fool Inside Value recommendation. Smith & Nephew is a Motley Fool Global Gains pick. Johnson & Johnson, Kimberly Clark, and Procter & Gamble are Motley Fool Income Investor choices. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. The Fool owns shares of Johnson & Johnson and Medtronic. Alpha Newsletter Account, LLC owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Andrea Kalvesmaki currently does not own shares of any company mentioned in this article but she is planning on acquiring shares of Johnson & Johnson as soon as the discretionary window is closed. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.