Devices & Diagnostics, Pharma

J&J’s Alex Gorsky on healthcare, globalization and changes to come

Life sciences executives and managers got an exclusive peek into the thinking of Johnson & […]

Life sciences executives and managers got an exclusive peek into the thinking of Johnson & Johnson’s (NYSE:JNJ) next CEO last week, but those who heard Alex Gorsky speak had idea at the time.

Gorsky was introduced to the nearly 1,000 attendees of the CED Life Science Conference in Raleigh, North Carolina as vice chairman of the company’s executive committee. On Tuesday, he was named the next CEO for Brunswick, New Jersey-based J&J, succeeding William Weldon. Weldon will remain chairman. Gorsky takes on his new post in April.

As vice chairman of J&J’s executive committee, Gorsky oversees several parts of the diversified healthcare company’s business units, including medical devices and diagnostics, supply chain, government affairs and J&J’s venture capital subsidiary. A J&J insider, Gorsky has been at the company since 1988, save for a four-year stint at Novartis (NYSE:NVS).

Gorsky’s Feb. 16 address to the CED conference was likely his last public appearance before he was named Weldon’s successor. In that speech, Gorsky tapped his career in healthcare to note the industry changes he sees. He said that with a diversified line of products ranging from antipsychotic drug Risperdal to Johnson & Johnson’s baby shampoo, the company has good insight into how healthcare and consumer dollars are spent. And that spending is on the decline.

Gorsky noted a confluence of factors are leading consumers to curtail healthcare spending. Unemployment is one. Higher health insurance co-pays are another. And in this uncertain economy, there’s also what Gorsky calls the “I don’t want to leave my chair syndrome.” People who could opt for elective surgery decide not to take the time off for fear of finding someone else in their job when they return.

Healthcare models are also changing. Surgeons used to be kings and queens as the major surgeries that they performed were profitable for hospitals. But over the last 10 years, reimbursement has been cut and malpractice insurance costs have climbed. More doctors are choosing to close their practices and work for the hospitals, a move that shifts the power of decision making to the hospitals.

Healthcare companies are casting their eyes toward emerging markets for additional opportunities. But Gorsky said that the growth rates in emerging markets have slowed. Still, the opportunities in healthcare will be global and its growth will come from sheer demographics of global population growth. As income grows, in emerging markets and other geographies, so too does the demand for healthcare. Globalization will present different healthcare challenges for the companies aiming to serve these markets.

Gorsky does have some global perspective to bring to his new post. In 2003, Gorsky was promoted to company group chairman of J&J’s pharmaceuticals business in Europe, the Middle East and Africa. In 2009, he was appointed worldwide chairman of the Surgical Care Group and to the Johnson & Johnson Executive Committee.  Later that year, he was appointed worldwide chairman of the Medical Devices & Diagnostics Group. He was appointed vice chairman of J&J’s Executive Committee in January 2011.

Gorsky holds a bachelor’s degree from the U.S. Military Academy at West Point and he spent six years in the U.S. Army, finishing his military career with the rank of captain.  In 1996, he earned an MBA from the Wharton School of the University of Pennsylvania.

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