Johnson & Johnson CEO: No Plans to Leave U.S.
Johnson & Johnson’s strong second-quarter earnings are thanks to the company’s focus on long-term goals, particularly in the pharmaceutical business, said CEO Alex Gorsky.
Gorsky joined FBN’s Maria Bartiromo Thursday to discuss the company’s earnings and future plans. Johnson & Johnson (NYSE:JNJ) sales grew by 9.1% in the second quarter to $19.5 billion, beating expectations of $18.99 billion.
"When you look at our pharmaceutical business, what’s so impressive is that about five years ago, when we went through a very significant period of patent expiry, we really focused on five key therapeutic areas where we felt there was a lot of unmet medical need,” said Gorsky. “Since then we’ve launched 14 new compounds since 2009, six of which have already achieved blockbuster status.”
Gorsky said the company intends to launch ten new pharmaceutical products between 2013 and 2017.
But not every medical segment is doing as well. Johnson & Johnson’s medical-device sales were up only 0.7% in the second quarter to $7.2 billion in sales, and domestic sales of medical devices decreased by 1.4%.
Gorsky said the weaker numbers in medical device sales may be tied to the overall economy.
“For many years, you didn’t see a connection necessarily between broader economic themes and consumption of medical devices and utilization in hospitals … (we) seem to see some elasticity between the overall economy and health-care demand,” said Gorsky. Despite this, Gorsky seemed optimistic about medical device sales in the future, referencing the aging population in the U.S.
No Plans to Move Overseas
Though other American companies have discussed moving headquarters overseas to avoid the high corporate tax rate in the U.S.,Gorsky said Johnson & Johnson plans to stay put.
“As we think about acquiring other companies, new technologies and really managing our business for the long-term and the future, tax is certainly an issue we take a look at, but it’s not the primary driver and we always first focus on strategy,” said Gorsky.
Gorsky said he thinks not just about a one-year plan, but also a five-and-ten-year plan.
“And what we see [is that] tax law can change,” said Gorsky.
And while Johnson & Johnson was a supporter of the Affordable Care Act, Gorsky said the law has meant significant taxes and fees for the company.
“We’re paying additional taxes and fees well over a billion dollars for a company the size of Johnson & Johnson,” said Gorsky.
He added that he thinks the longer-term impact of the Affordable Care Act will just now start to be seen in the United States.