Johnson & Johnson’s choice of Gorsky as new CEO reflects importance of Synthes deal, observers say

Johnson &Johnson’s decision to name Alex Gorsky as its next chief executive officer reflects the importance of the recent acquisition of the orthopedics maker Synthes and future deals like it that will be necessary to grow the healthcare giant, two company observers said yesterday.The 51-year-old Gorsky, who oversees Johnson &Johnson’s medical device business, was named as CEO William Weldon’s successor on Tuesday. The transition is expected to occur officially on April 26 when the company holds its annual shareholder’s meeting. Weldon, 63, will remain as chairman.
“The business model that Johnson &Johnson has followed for many years is a business development model,’’ said Bill Cordivari, a former J&J executive who is now a senior consultant with Michael E. Marion and Associates, an executive search firm in Murray Hill. “They find assets (like Synthes) and bring them in.’’
“J&J needs to see more of those deals to drive its growth,’’ Cordivari said.
Johnson &Johnson, a $66 billion company that makes everything from baby shampoo to arthritis medicines, signaled Gorsky as a possible successor to Weldon in late 2010 when he and Sheri McCoy, who runs the pharmaceutical business, were both named as vice chairman on the company’s executive committee.The company’s long-standing custom is to set up a horse race — and to choose its chief executives from among veterans who have come up through the ranks.Cordivari, whose 10-year-long career overlapped with both McCoy and Gorsky’s arrival, said the finish of the race had to be “paper thin’’ as the board tried to discern a difference between the two.
“They were both hard-working and hard-driving,’’ Cordivari said. “Both had great people skills.’’
McCoy, who began her career at Johnson &Johnson as a researcher, will remain as an executive committee vice chairman and continue leading the pharmaceutical and consumer product businesses, the company said in a statement announcing Weldon’s successor.Neither Gorsky nor McCoy was available for an interview yesterday, a company spokeswoman said.“These are two very gifted individuals, operationally,’’ Barclays Capital analyst Charles “Tony’’ Butler said of Gorsky and McCoy. “They are both well-qualified.’’Butler also speculated that the board’s decision reflected the significance of the $21.3 billion Synthes deal.
The Swiss company, which makes screws, plates and other products to treat skeletal injuries, is designed to strengthen Johnson &Johnson’s orthopedics business. “It’s incredibly important,’’ Butler said. Medical devices and diagnostics has become the largest part of Johnson &Johnson’s business based on revenue, which may have been another factor in the board’s selection of Gorsky, Butler said.Gorsky began as a sales rep for Johnson &Johnson’s Janssen Pharmaceutica division in 1988. In 2004, he left the company to run the U.S. pharmaceutical business for the Swiss drugmaker Novartis. He returned to Johnson &Johnson in 2008.When he takes the corner office in April, his base salary will jump to $1.2 million, according to documents filed with federal securities regulators.
Source:Susan Todd/The Star-Ledger