New J & J CEO Plans to Expand Medical Device Industry

It will be interesting to watch how Alex Gorsky, 51, handles his new job and all that comes with it.

As of April 26, he is in charge of Johnson & Johnson (J&J) as its Chief Executive Officer. He also inherited a massive number of lawsuits from surgical mesh and defective metal hip devices.

What will he do? Continue with growing the company’s business, he says.

Medical devices represented about 40 percent of Johnson & Johnson’s earnings in 2011, reports Bloomberg, and Gorsky wants to expand the medical device business, already the world’s largest, reports Mass Device.

He plans to use $14 billion in cash to expand J &J’s medical-technology profile buying medical devices such as heart valves and expanding sales in emerging markets, according to Bloomberg. Diversification is the key, he said in a telephone interview.

Overseeing Recalled Devices

Gorsky is no stranger to medical devices. He was a vice chair of the company’s Medical Devices & Diagnostics Group, overseeing quality control over the problems that eventually led to medical device recalls. In a previous job with the company, Gorsky was with J & J’s Janssen Pharmaceutical unit when it sold the antipsychotic, Risperdal.

The company is facing $1.1 billion in fines after it was found to have hidden the dangers of the drug. Gorsky was then vice president of sales at Janssen.

His biography says Gorsky was CEO of Novartis Pharmaceuticals Corporation in the fall of 2005 before returning in 2008 as the group chairman of J & J’s Ethicon. By the next year he had ascended to the worldwide chairman of devices and diagnostics, reports the WSJ.

Gorsky began his career in sales.

Inheriting Bad PR and Bad Products

The U.S. Food and Drug Administration still has not released three substandard J & J manufacturing facilities back to company control after hundreds of Tylenol, Motrin, Benadryl and children’s cold remedies were found to be contaminated. Those products pulled will likely not be returned to the market until 2013. The company reportedly gets 23 percent of its revenue from over-the-counter products.

Gorsky inherits the ASR hip replacement recall and 93,000 defective metal hips taken off the market at a pricetag of $521 million. Still ahead - 6,000 lawsuits over defective hip replacements.

J & J subsidiary, Ethicon, maker of transvaginal mesh is facing 550 lawsuits over Ethicon surgical mesh including TVT, Gynemesh, Prolene Polypropylene and Secur. There are 93 cases filed against Ethicon in the Multidistrict litigation consolidated in the Southern District of West Virginia.

Not only did the multiple recalls hurt sales, they impacted customer confidence. A Harris Interactive consumer poll found J & J in seventh place down from the top two spots, reports Bloomberg.

In late 2010, Gorsky and Sherilyn McCoy were given new duties within J & J as part of a succession race, reports the WSJ. She has since left the company to join Avon as its CEO.

Gorsky will be paid $1.2 million annually which pales in comparison to former CEO William Weldon who clocked out of the job at $143.5 million in retirement (Pharmalot read here), even amid the recalls, quality control lapses, bad products, and bad PR.

Sources:

http://www.drugwatch.com/jnj-ceo-under-pressure.php;

https://www.massdevice.com/news/new-jj-ceo-gorsky-wants-grow-device-business-wall-street-beat;

http://www.bloomberg.com/news/2012-04-25/j-j-ceo-gorsky-says-company-will-grow-while-rivals-shrink.html;

http://www.whartonzurich07.com/bio-s-gorsky.html;

http://blogs.wsj.com/health/2012/02/21/jj-ceo-succession-who-is-alex-gorsky/;

http://www.investor.jnj.com/governance/managementdetail.cfm?bioid=23627