Latest / The David Rubenstein Show / Joaquin Duato

Transcript

Joaquin Duato · The David Rubenstein Show

0:02
Speaker 1: By revenue, the biggest healthcare company in the world is
0:05
Speaker 1: Johnson & Johnson. But Johnson & Johnson no longer sells Band-Aids.
0:10
Speaker 1: It sold off its consumer product division. Now it focuses
0:13
Speaker 1: on pharmaceuticals and medical devices. The man responsible for that
0:18
Speaker 1: transformation of Johnson & Johnson is Joaquin de Watteau. I
0:21
Speaker 1: had a chance recently to sit down with him to
0:23
Speaker 1: ask him why he made this transformation.
0:26
Speaker 2: When I was preparing for this, I did some research
0:29
Speaker 2: and I was disappointed to learn that the Band-Aids I've
0:33
Speaker 2: been using all these years are no longer owned by
0:35
Speaker 2: Johnson & Johnson. What happened to the Band-Aids? I mean,
0:38
Speaker 2: I thought Band-Aids were Johnson & Johnson.
0:41
Speaker 3: So it's not only you.
0:42
Speaker 4: I think many red IDs of the company are sending
0:45
Speaker 4: me mail regarding that same feeling. And many of them
0:49
Speaker 4: work in our consumer sector. Even today, when I tell
0:54
Speaker 4: people I'm the CEO of Johnson & Johnson, they tell
0:57
Speaker 4: me the baby shampoo company.
0:59
Speaker 3: All the time, all the time.
1:01
Speaker 2: You became the CEO, and then within a year or
1:03
Speaker 2: two of that, you spun out your entire consumer division,
1:06
Speaker 2: all the kind of products that I'm the one that
1:08
Speaker 2: I buy those things at the drugstore. And all those
1:10
Speaker 2: things you got rid of. Why did you do that?
1:13
Speaker 3: We wanted to be more focused on medical innovation.
1:17
Speaker 4: And the consumer business has departed from medical innovation. We
1:21
Speaker 4: were more on areas more connected with cosmetics or over-the-counter medication,
1:27
Speaker 4: and it didn't fit in the overall umbrella on trying
1:30
Speaker 4: to bring medical innovation to treat tough, difficult conditions like oncology, cardiovascular,
1:37
Speaker 4: or dementia.
1:38
Speaker 2: You're in pharmaceuticals, and you're in medical devices. Let's talk
1:42
Speaker 2: about pharmaceuticals. What is your biggest pharmaceutical product?
1:46
Speaker 4: Our biggest pharmaceutical product is a drug for multiple myeloma
1:49
Speaker 4: called Darzalex. Multiple myeloma is a blood cancer that has
1:54
Speaker 4: improved significantly in.
1:56
Speaker 3: The last decade.
1:57
Speaker 4: The life expectancy of a multiple myeloma patient was about
2:01
Speaker 4: single years. Now a multiple myeloma patient can expect to
2:04
Speaker 4: live more than 10 years. And in some ways, we're
2:07
Speaker 4: turning multiple myeloma into a chronic disease.
2:10
Speaker 2: Medical devices is another thing. Pharmaceutical is one thing, medical devices.
2:14
Speaker 2: What is your most important medical device that you have?
2:18
Speaker 4: Look, let me tell you why we have medical devices
2:20
Speaker 4: and pharmaceuticals. It's because I think it gives us a
2:22
Speaker 4: long-term competitive advantage because we can span the entire patient journey.
2:27
Speaker 3: Let's say cancer. Let's take lung cancer.
2:29
Speaker 4: We have systems to do bronchoscopy and do diagnosis there,
2:33
Speaker 4: robotic-assisted bronchoscopy.
2:35
Speaker 3: We have medicines to treat lung cancer.
2:38
Speaker 4: We also have the instruments that are used for the
2:41
Speaker 4: surgery in lung cancer.
2:43
Speaker 3: And we are working on.
2:44
Speaker 4: A radiotherapy enhancer, and radiotherapy is an important therapeutic modality
2:49
Speaker 4: for local control in lung cancer. So we can expand
2:51
Speaker 4: the entire patient journey. What I'm more excited about medical
2:54
Speaker 4: devices right now is that we can use technology to
2:57
Speaker 4: make our medical devices smarter. And the most important product
3:00
Speaker 4: that we are about to get approval from.
3:03
Speaker 3: The FDA is a robotic surgical system.
3:06
Speaker 4: So most of the surgery is going to have a
3:08
Speaker 4: robotic component that's going to help improve the level of
3:11
Speaker 4: surgery and have better outcomes.
3:13
Speaker 2: How many different products do you have in the pharmaceutical
3:16
Speaker 2: and how many do you have in the devices?
3:18
Speaker 3: We have dozens of products on both sides.
3:20
Speaker 2: So how do you keep up with all of them?
3:22
Speaker 2: And when somebody comes along and says we have a
3:24
Speaker 2: new product, do you actually... test the product yourself? Or
3:27
Speaker 2: how do you decide whether you're going to go ahead
3:28
Speaker 2: and use this product or not?
3:30
Speaker 4: We have a large, we have a $ 15 billion regional
3:33
Speaker 4: development budget and thousands of scientists working at Johnson & Johnson.
3:36
Speaker 4: I don't make those decisions. I trust the scientists working
3:40
Speaker 4: at Johnson & Johnson to help me in identifying and
3:43
Speaker 4: making the decision of what's gonna have a bigger impact
3:45
Speaker 4: on patients. And our standard is, what is going to
3:49
Speaker 4: have a bigger impact on patients? What is going to
3:51
Speaker 4: clearly improve the standard of care of that particular disease?
3:54
Speaker 4: That's what we try to do every day.
3:56
Speaker 2: Now you have the highest revenue of any healthcare company
3:58
Speaker 2: in the world, but there's one healthcare company that has
4:01
Speaker 2: a higher market capitalization than you, which is Eli Lilly,
4:05
Speaker 2: and that's about roughly a trillion dollars because they have
4:07
Speaker 2: a GLP-1 drug. How come you don't have a GLP-1 drug?
4:12
Speaker 3: We were focused on a different area.
4:13
Speaker 4: We were not focused on obesity or on diabetes like
4:16
Speaker 4: Eli Lilly was. And great for them that they were
4:18
Speaker 4: able to identify these transformational medicine GLP-1s. There's going to
4:22
Speaker 4: be more GLP-1s coming through the pipe. Multiple companies have GLP-1s.
4:26
Speaker 4: We have other things to pay attention to, like trying
4:29
Speaker 4: to cure cancer or address dementia, which are real social
4:32
Speaker 4: problems and real issues that we want to pursue.
4:34
Speaker 3: But no, we are not going to be in the
4:37
Speaker 3: GLP-1 area.
4:38
Speaker 2: How many employees does Johnson & Johnson have?
4:41
Speaker 3: We have 140,000 employees globally.
4:42
Speaker 2: How many in the United States?
4:44
Speaker 3: We have about 60,000 in the U.S., 80,000 globally.
4:48
Speaker 2: And what are the revenues of Johnson & Johnson now?
4:51
Speaker 4: Our guidance this year is going to be somewhere north
4:54
Speaker 4: of $ 100 billion.
4:56
Speaker 2: Now, some people say that the United States is very
4:58
Speaker 2: good at health care when you have a problem. We
5:01
Speaker 2: have all kinds of drugs for things when you have
5:03
Speaker 2: a problem. But what about prevention? We're not thought to
5:06
Speaker 2: be as good in preventing health care problems as solving
5:10
Speaker 2: them once you have them. What do you think about
5:11
Speaker 2: that argument or criticism?
5:13
Speaker 4: I think that we could do better as a country
5:15
Speaker 4: in prevention. And I think that everything we can do
5:18
Speaker 4: to improve our diet, our exercise, our lifestyle is going.
5:21
Speaker 3: To be good.
5:21
Speaker 4: And everything we can do to improve the primary care
5:25
Speaker 4: side of healthcare in the U.S.
5:26
Speaker 3: Will help in the prevention side.
5:27
Speaker 4: Primary care is the first defense in healthcare and improving
5:31
Speaker 4: primary care, it's an important element.
5:36
Speaker 3: Now, I tell you, when it comes to specialized care,
5:38
Speaker 3: clearly the U.S. is the lead in the world.
5:41
Speaker 4: Everywhere I go, when somebody has a serious disease, they
5:44
Speaker 4: think about coming to the U.S.
5:45
Speaker 3: Because we have the best medicine in the world.
5:47
Speaker 2: A number of years ago, the Affordable Care Act was
5:49
Speaker 2: passed by Congress. and it was heavily criticized by some,
5:53
Speaker 2: but supported by others. Do you think the Affordable Care
5:55
Speaker 2: Act has been helpful to our US healthcare system? How
5:59
Speaker 2: does it help you? And how would you change it
6:01
Speaker 2: if you could change it?
6:02
Speaker 4: My principle, our principle as a company is the more
6:05
Speaker 4: people that has health coverage, the better for this country.
6:08
Speaker 4: So anything that improves health coverage and more people covered,
6:12
Speaker 4: the better for this country. It's important for a country
6:15
Speaker 4: as rich as the US that we have health care
6:19
Speaker 4: extended to as.
6:20
Speaker 3: Many people as possible. So in that regard, I think
6:22
Speaker 3: that's good.
6:22
Speaker 4: And that's going to help in the areas of prevention
6:25
Speaker 4: that you were mentioning.
6:26
Speaker 3: That's going to help in life expectancy. That's good for
6:29
Speaker 3: the country.
6:29
Speaker 2: People say that sometimes the drugs in Canada or England
6:33
Speaker 2: are cheaper. than they are in the United States for
6:35
Speaker 2: the same drug. Have you ever heard of that?
6:36
Speaker 3: It's true.
6:37
Speaker 4: We are working in order to have the right recognition there.
6:40
Speaker 4: But keep in mind that we are working with countries
6:43
Speaker 4: that have a national health care system that has a
6:45
Speaker 4: monopoly on that. And we have to obey for some
6:50
Speaker 4: of these regulations unless we don't want these patients to
6:53
Speaker 4: have that medicine.
6:54
Speaker 2: It may not be a surprise to you, but a
6:56
Speaker 2: lot of people in this country don't think that pharmaceutical
6:59
Speaker 2: companies are very good. They charge high prices and things
7:02
Speaker 2: like that. You're aware of this concern?
7:04
Speaker 3: I'm aware, yeah.
7:05
Speaker 2: So what are you trying to do in the pharmaceutical
7:08
Speaker 2: industry to make people like you more?
7:10
Speaker 4: Every time I talk to a patient that is using
7:14
Speaker 4: one of our medicines and has a serious condition, they
7:17
Speaker 4: like Johnson & Johnson. And they like the pharmaceutical industry.
7:20
Speaker 4: And they are grateful. And we do that a lot.
7:22
Speaker 4: I mean, we bring a lot of patients to our offices.
7:25
Speaker 4: We bring patients to our manufacturing sites. So our people
7:28
Speaker 4: working in the company can connect what they do every
7:31
Speaker 4: day with the impact those medicines have on patients or
7:33
Speaker 4: those medical devices. So yes, we have a reputation depending,
7:38
Speaker 4: but where we have a good reputation is in the
7:41
Speaker 4: patients that use our medicines and medical technology.
7:43
Speaker 2: Now, when you had a litigation issue years ago where
7:48
Speaker 2: I think some kind of baby talc was said to
7:51
Speaker 2: be carcinogenic. Maybe it was, I don't know. But then
7:55
Speaker 2: when you spun it off, your consumer division, you still
7:58
Speaker 2: kept the talc litigation. What's the status of that litigation?
8:01
Speaker 4: So let me say first, you know, studies, regulatory agencies
8:06
Speaker 4: have never found a causal relationship between talc and cancer.
8:11
Speaker 4: So we stand behind that, and that's why we defend
8:14
Speaker 4: our position there, and we litigate every single case that
8:18
Speaker 4: comes with talk. There's a combination of third-party litigation funders
8:22
Speaker 4: that invest in litigation, like if you were working in
8:25
Speaker 4: infrastructure or if you were investing in technology, and they
8:29
Speaker 4: fund these litigations, building pseudo-scientific arguments and try to play
8:34
Speaker 4: in companies like us. That's the business model that exists here.
8:38
Speaker 4: So we are litigating every single case. We are winning,
8:42
Speaker 4: and at the same time, we are also trying to
8:44
Speaker 4: introduce modifications in civil justice in order to make the
8:48
Speaker 4: system more fair.
8:50
Speaker 2: You must do consumer surveys. What is the most popular
8:53
Speaker 2: thing that people tell you about what they like about
8:55
Speaker 2: your company, what they don't like?
8:56
Speaker 4: What they like about our company is normally the trust
8:59
Speaker 4: that our medicines and medical technologies have on them. So
9:03
Speaker 4: when they think Johnson & Johnson, they think it's a
9:05
Speaker 4: trust market. What they don't like about our company are the.
9:08
Speaker 3: Prices, as usual.
9:09
Speaker 2: What are you going to do about the prices?
9:11
Speaker 4: Look, there's always going to be a tension between innovation
9:14
Speaker 4: and affordability. Because innovation is expensive, it's high risk, and
9:19
Speaker 4: we want to make that innovation gets to everybody in
9:22
Speaker 4: this country. So we are always trying to price our
9:26
Speaker 4: medicines in a way that is consistent with the benefit
9:28
Speaker 4: they bring. In this country, we can work in different
9:31
Speaker 4: areas in order to improve affordability. One area is trying
9:36
Speaker 4: to take some of the percentage that the middlemen get
9:39
Speaker 4: in pharmaceuticals, try to get back to the patient. We
9:45
Speaker 4: can also, we should be doing that, we can also
9:47
Speaker 4: have other countries that are developed countries paying the fair
9:50
Speaker 4: share for recent development. All these things will help in
9:53
Speaker 4: making medicines for Americans more affordable.
9:55
Speaker 2: Let's talk about your story. You're born in Spain, What city?
9:58
Speaker 4: I was born in Spain, in Valencia. I'm the son
10:00
Speaker 4: of an engineer and a nurse. So I had the
10:04
Speaker 4: medical side in my family and also the entrepreneurial side.
10:08
Speaker 4: And I grew up in a large family. In my family,
10:10
Speaker 4: my dad had nine brothers and sisters.
10:14
Speaker 3: So I have like 40 cousins. And I was in
10:16
Speaker 3: the middle.
10:17
Speaker 4: So I realized at the beginning that I needed to
10:20
Speaker 4: have a strong voice in order to be heard. Otherwise,
10:22
Speaker 4: nobody was paying attention to me in my family.
10:25
Speaker 2: Now, as I understand it, you went to college in
10:27
Speaker 2: Spain initially.
10:28
Speaker 3: Yeah.
10:29
Speaker 2: And then after you graduated from college, you applied for
10:32
Speaker 2: a job at Johnson & Johnson and got turned down.
10:35
Speaker 3: Yeah.
10:37
Speaker 4: I got an interview and I didn't make it to
10:39
Speaker 4: the second interview.
10:40
Speaker 2: So what happened to the person who turned you down?
10:42
Speaker 2: Is he still there?
10:43
Speaker 4: He worked in the consumer business and look what happened
10:47
Speaker 4: with consumer.
10:50
Speaker 3: Okay.
10:51
Speaker 2: All right. So now you worked your way up. Over
10:55
Speaker 2: how many years have you been at Johnson & Johnson?
10:57
Speaker 3: I've been at Johnson & Johnson. It goes fast. 37 years.
11:01
Speaker 2: Did you ever think you could rise up to be
11:03
Speaker 2: the CEO?
11:04
Speaker 3: Never. I never thought I was going to be the CEO.
11:07
Speaker 4: I tell you how I realized I could be the CEO,
11:09
Speaker 4: because I was getting different jobs, and every time I
11:12
Speaker 4: got that job, I thought, you know what, I can
11:13
Speaker 4: do the next one. And then next job, I could
11:16
Speaker 4: do the next one, I could do the next one,
11:18
Speaker 4: until I became Vacher, and I said, I think I
11:20
Speaker 4: can be CEO.
11:21
Speaker 2: When did they tell you, like three years in advance?
11:24
Speaker 4: They told me maybe a year and a half in advance.
11:26
Speaker 4: They told me, you are going to be a candidate
11:28
Speaker 4: to be CEO, and I have to go through a
11:30
Speaker 4: process in order to become the CEO.
11:32
Speaker 2: And did you tell them what was wrong with all
11:34
Speaker 2: the other candidates, or you didn't tell them that?
11:36
Speaker 3: They didn't tell me anything. They just told me, you're
11:38
Speaker 3: going to be the next one.
11:39
Speaker 2: Do you have children who want to be in the
11:40
Speaker 2: healthcare world?
11:42
Speaker 4: I have a daughter who is in medical school, and
11:45
Speaker 4: I have a son who is a mechanical engineer. But yeah,
11:49
Speaker 4: I have a tradition in my family, as I told you,
11:50
Speaker 4: my My mom was a nurse. My grandmother was a pharmacist.
11:54
Speaker 4: My grandfather, a pediatrician. And I spent a lot of
11:57
Speaker 4: my childhood in Valencia, my hometown, in my grandmother's pharmacy.
12:01
Speaker 4: She had a retail pharmacy. And when my mom was
12:03
Speaker 4: doing errands in town, she would let me in the
12:07
Speaker 4: pharmacy waiting with my grandmother because she was manning the
12:09
Speaker 4: pharmacy herself. And she was talking to patients coming to
12:12
Speaker 4: refill prescriptions all the time. And I would always complain, grandma,
12:15
Speaker 4: why do you talk to people so much? where you
12:17
Speaker 4: spend so much time with the people. And she told me,
12:20
Speaker 4: I remember that, Joaquin, the important thing is not the medicine,
12:23
Speaker 4: it's the person. So I always retain that to myself.
12:27
Speaker 4: It's not the medicine, it's the person.
12:32
Speaker 2: So if you're the healthcare CEO of the biggest healthcare
12:34
Speaker 2: company in the world, you should be really fit. And
12:37
Speaker 2: you seem like you're fit, but what do you do
12:39
Speaker 2: to save? I mean, do you exercise every day? Do
12:41
Speaker 2: you have an instructor to teach you how to make
12:43
Speaker 2: sure you look fit and are fit?
12:45
Speaker 4: So I exercise a couple of days a week, and
12:48
Speaker 4: then I play tennis over the weekend. They say tennis
12:50
Speaker 4: is the best sport in order to be fit.
12:53
Speaker 3: Because you have to exercise your mind and your body.
12:56
Speaker 4: And there are many studies that show that tennis is
12:58
Speaker 4: the one that creates more longevity.
12:59
Speaker 2: So that's why I'm testing it. So do you play
13:01
Speaker 2: with Rafael Nadal? I wish.
13:03
Speaker 3: I wish.
13:04
Speaker 4: I play with a coach. And I plan that. I
13:07
Speaker 4: play twice a week. And I really love it.
13:09
Speaker 2: How much of your time do you spend on the road?
13:12
Speaker 3: I would say 75%. 75%? Yeah.
13:13
Speaker 2: So who's watching the store back in?
13:17
Speaker 4: Look, I mean, I have a lot of people back
13:21
Speaker 4: in the store, so that is watching for me.
13:23
Speaker 3: And it's important for me to be connected.
13:25
Speaker 4: I have to be connected to the physicians that use
13:28
Speaker 4: our medicines and medical technologies. I have to be connected
13:32
Speaker 4: with our employees here in the.
13:33
Speaker 3: US and elsewhere. I have to have a pulse of
13:36
Speaker 3: the company. I cannot have a pulse of the company
13:38
Speaker 3: if I am at New Brunswick.
13:40
Speaker 2: What is the hardest part about being CEO of Johnson & Johnson?
13:44
Speaker 2: What's the biggest challenge you face?
13:47
Speaker 4: The biggest challenge is to be able to continue to
13:49
Speaker 4: improve this company every day. I mean, these companies as
13:52
Speaker 4: big as Johnson & Johnson, we need to have attention
13:54
Speaker 4: to improvement, to reinvent ourselves. So the biggest challenge for
13:59
Speaker 4: a CEO is to break the inertia and to make
14:02
Speaker 4: the company every day more competitive.
14:05
Speaker 3: And that's what I'm trying every day.
14:07
Speaker 2: If you were to educate somebody to this audience and
14:10
Speaker 2: you say, here's something you should know about healthcare that
14:12
Speaker 2: you really don't know or you should know more about,
14:14
Speaker 2: what would that be?
14:15
Speaker 4: Yeah, so I would say first, in becoming CEO of
14:17
Speaker 4: Johnson & Johnson, I think this is a sign of
14:19
Speaker 4: the opportunities that exist in this country. I think the U.S.
14:22
Speaker 4: is a great country. It's a land of opportunity and Look,
14:26
Speaker 4: I was born in Spain, but I am more an
14:28
Speaker 4: American from a professional perspective. I love the sense of
14:31
Speaker 4: opportunity of this country. I love the opportunity to progress
14:34
Speaker 4: and make your dreams come true, like me becoming CEO
14:37
Speaker 4: of Johnson & Johnson.
14:38
Speaker 3: So as a U.S.
14:40
Speaker 4: Citizen that was not born in the U.S., I have
14:42
Speaker 4: to say this is a wonderful country. And sometimes you
14:45
Speaker 4: have to be from outside to appreciate what a great
14:47
Speaker 4: country this is. So I'm very grateful for this country
14:50
Speaker 4: and the opportunities they gave me. So as far as
14:53
Speaker 4: what I would say in healthcare, I would say trust
14:55
Speaker 4: your doctor. I think doctors and nurses and healthcare workers
14:59
Speaker 4: are really the frontline of our health, and I think
15:02
Speaker 4: that trusting your doctor, your nurse, is a very important
15:05
Speaker 4: thing for us. That's why, as Johnson & Johnson, our
15:08
Speaker 4: focus in terms of our philanthropic activities is in frontline
15:11
Speaker 4: healthcare workers, is in nurses. We think that's the frontline
15:15
Speaker 4: of healthcare, and my advice is trust them.
15:18
Speaker 2: Now, in the United States, there are only two companies
15:22
Speaker 2: that have a triple A credit rating. Does anybody else
15:25
Speaker 2: know what, one is Johnson & Johnson, anybody else know
15:27
Speaker 2: what the other one is? That is the only other
15:29
Speaker 2: company in the United States, publicly traded company, that has
15:31
Speaker 2: a triple A credit rating. Anybody? What? Microsoft is the company.
15:38
Speaker 3: Microsoft, yeah, Microsoft and Johnson & Johnson. We're proud. to
15:41
Speaker 3: have a AAA credit rating.
15:43
Speaker 4: I think it's a better credit rating than the US government.
15:50
Speaker 4: It's a sign of our financial discipline and our trajectory
15:54
Speaker 4: over a long period of time. And many investors ask me,
15:58
Speaker 4: why having a AAA credit rating? You could be more leveraged.
16:02
Speaker 4: I say, look, it's a sign of our financial discipline.
16:04
Speaker 4: We are not married to the AAA credit rating. If
16:08
Speaker 4: a good opportunity would come along, we would be happy
16:09
Speaker 4: not to have a... a triple-A credit rating, but it's
16:12
Speaker 4: a sign of our financial discipline, and our investors like it.
16:15
Speaker 2: For 15 years in a row, you've had an annual
16:19
Speaker 2: dividend that has increased, is that right?
16:21
Speaker 3: More than 50 years.
16:23
Speaker 2: More than 50 years.
16:23
Speaker 3: More than 50 years we have increased our dividend, yeah, yeah.
16:26
Speaker 2: So that's pretty good. Do you try very hard to
16:28
Speaker 2: make sure you do that every year?
16:29
Speaker 4: That's sacrosanct. You know, when investors ask me, what about
16:32
Speaker 4: the dividend? I say, that's always going to be there,
16:34
Speaker 4: that you can bet that you will have a dividend
16:37
Speaker 4: growth if you are investing in Johnson & Johnson.
16:40
Speaker 2: The most commonly asked question of CEOs today is how
16:42
Speaker 2: is your company being affected by AI and what are
16:45
Speaker 2: you doing to take advantage of AI? So how are
16:48
Speaker 2: you being affected by AI and how are you taking
16:50
Speaker 2: advantage of AI?
16:51
Speaker 4: On the positive, you know, AI for us is a
16:53
Speaker 4: force multiplier because AI, it's going to help life science
16:56
Speaker 4: companies like Johnson & Johnson to be able to develop
16:59
Speaker 4: better medicines and medical technology. So we have to embrace AI.
17:03
Speaker 4: AI is going to accelerate discovery of new medicines. AI
17:06
Speaker 4: is going to make medical devices smarter, be able to
17:09
Speaker 4: navigate the body better. So I think AI is something
17:12
Speaker 4: that a company like Johnson & Johnson has to embrace. Now,
17:15
Speaker 4: we have to help all our employees to amplify what
17:19
Speaker 4: they do with AI. And we are training all our
17:21
Speaker 4: employees in AI because we want to bring everybody in
17:24
Speaker 4: the journey. AI is not going to take your job,
17:27
Speaker 4: but somebody with AI skills may take your job.
17:30
Speaker 2: Are you spending a lot of money now on AI?
17:32
Speaker 4: We are investing in AI, too, in programs that are
17:34
Speaker 4: going to improve the operations of the company in areas
17:38
Speaker 4: like drug discovery, where I think AI is going to
17:41
Speaker 4: have a big impact, in areas like making our medical
17:45
Speaker 4: devices smarter, our robotic systems.
17:47
Speaker 3: So we are investing in AI.
17:49
Speaker 2: Like in my age, I'm focused on drugs that are
17:53
Speaker 2: Alzheimer's related. Is that something you're focused on?
17:55
Speaker 3: Yeah.
17:56
Speaker 2: Because that's going to be a big....
17:59
Speaker 4: I think the biggest challenge for the healthcare industry and
18:02
Speaker 4: for the pharmaceutical and medical device industry is to address
18:05
Speaker 4: the issue of neurodegeneration and dementia.
18:09
Speaker 3: I mean, it's a real.
18:10
Speaker 4: Social problem that your chances of having some type of
18:14
Speaker 4: cognitive impairment.
18:15
Speaker 3: Increase as you age.
18:17
Speaker 4: And as we are increasing our age, the likelihood of
18:20
Speaker 4: having more people with dementia is higher. So I think
18:22
Speaker 4: this is the most important problem, in my view, that
18:26
Speaker 4: the industry can address. And we are working on that,
18:29
Speaker 4: as Johnson & Johnson, in trying to identify that.
18:31
Speaker 3: We're trying, we fail, and we come back again.
18:34
Speaker 2: What about cancer?
18:36
Speaker 4: Cancer, we aim to be the number one company in cancer.
18:40
Speaker 4: Our goal is to be number one by 2030. Perhaps
18:43
Speaker 4: it's the best sign of where the company is heading.
18:46
Speaker 4: What is the new Johnson & Johnson about is trying
18:49
Speaker 4: to eliminate cancer. The basic areas that we're working, I
18:52
Speaker 4: mentioned multiple myeloma, we're also working in lung cancer, bladder cancer,
18:57
Speaker 4: prostate cancer, colorectal cancer, head and neck cancer. So we
19:01
Speaker 4: have multiple medicines to address a number of cancers that
19:05
Speaker 4: have common oncogenic drivers. Cancer is an area in which
19:09
Speaker 4: progress is occurring at an accelerated pace. On one hand,
19:13
Speaker 4: we understand better the biology of the disease, and on
19:15
Speaker 4: the other hand, we have better technologies to kill cancer cells.
19:20
Speaker 2: So when you want to get a new product, let's
19:22
Speaker 2: say in Alzheimer's or cancer, you can develop it yourself
19:26
Speaker 2: in terms of your own lab, and that might take
19:29
Speaker 2: 15 years or so, or you can go buy it
19:31
Speaker 2: from somebody else. What percentage of your products that you
19:35
Speaker 2: now sell in pharmaceutical and in medical devices did you
19:40
Speaker 2: actually develop yourself, and what percentage did you actually buy
19:43
Speaker 2: from somebody else?
19:44
Speaker 4: So we always aim to have a happy mix of 50-50,
19:48
Speaker 4: internal and external, Uh, It's not realistic for a company
19:52
Speaker 4: to think that all the best things are going to
19:55
Speaker 4: occur in your labs. You have to be aware that
19:58
Speaker 4: some of the best science is not going to be
20:00
Speaker 4: occurring in the walls of Johnson & Johnson. So we
20:02
Speaker 4: have a very sophisticated system of scientific scouts identifying external innovation.
20:08
Speaker 4: Most of the times, we identify things that are quite
20:11
Speaker 4: early on that will still take many years to get
20:14
Speaker 4: into the market. For example, we just bought a company
20:17
Speaker 4: that has a system to kill cancer cells. I think
20:20
Speaker 4: the first medicine coming from that company may come mid-30s.
20:24
Speaker 3: So is that internal or external?
20:26
Speaker 4: Because for us to get that medicine into the market,
20:29
Speaker 4: we have to do some adjustments in the chemical structure.
20:32
Speaker 4: We have to be able to develop and do all
20:35
Speaker 4: the clinical development and develop all the manufacturing process and
20:39
Speaker 4: bring it to market. So we have a happy 50-50
20:42
Speaker 4: external and internal innovation for a company that is focused
20:45
Speaker 4: on medical breakthroughs. Having a good system of external innovation
20:49
Speaker 4: is fundamental.
20:50
Speaker 2: Now, some people say that in China, they take American
20:54
Speaker 2: healthcare products that are patented and then they kind of
20:58
Speaker 2: copy them, counterfeit them, and sell them. Is there any
21:01
Speaker 2: evidence of that?
21:02
Speaker 4: China is making a lot of strides in healthcare and
21:06
Speaker 4: everything is incremental. At the beginning, you start copying, but
21:09
Speaker 4: gradually you start improving and you start discovering new things
21:12
Speaker 4: yourself too. So I think clearly we have competition from
21:15
Speaker 4: China when it comes to innovation. I don't think China
21:19
Speaker 4: is at the level of breakthrough innovation that the U.S.
21:21
Speaker 3: Is.
21:22
Speaker 4: China didn't discovered the GLP-1s or didn't discover the CAR
21:26
Speaker 4: T cell therapy or the immunotherapy in cancer, but they
21:29
Speaker 4: are good in being fast followers and that only has
21:32
Speaker 4: to stimulate the US that has the best ecosystem in
21:36
Speaker 4: order to be able to invest more in healthcare. We
21:38
Speaker 4: have to invest more in research, we have to continue
21:40
Speaker 4: to protect the intellectual property, we have to attract the
21:43
Speaker 4: best talent, we have to have a good market, and
21:45
Speaker 4: if we do that, we're gonna continue being the number
21:48
Speaker 4: one country in life science innovation, which is good economically,
21:51
Speaker 4: and it's also good for the patients here.
21:53
Speaker 2: If I wanted to buy a stock in a healthcare company,
21:56
Speaker 2: would Johnson & Johnson be a good stock to buy?
21:59
Speaker 3: David, you're a smart man. It would be the best
22:01
Speaker 3: stock to buy, Johnson & Johnson. No question. I'm going
22:04
Speaker 3: to give you some reasons why. We are just at
22:07
Speaker 3: the beginning.
22:08
Speaker 4: This is just the initial innings of a cycle of
22:10
Speaker 4: growth for Johnson & Johnson. We were saying that we
22:14
Speaker 4: have line of sight to double-digit growth by the end
22:16
Speaker 4: of the decade, and that's remarkable. for a company which
22:19
Speaker 4: is more than $ 100 billion. And you know why? We
22:22
Speaker 4: are not a one-trick pony company. We have a whole
22:25
Speaker 4: stable of medicines and medical devices. We have 28 platforms
22:29
Speaker 4: of more than a billion dollars. So we don't depend
22:32
Speaker 4: on a single platform. And that creates much more optionality
22:35
Speaker 4: to be able to bring breakthroughs and at the same
22:38
Speaker 4: time to create more revenue.
22:39
Speaker 2: Since you've been in the healthcare world, what do you
22:41
Speaker 2: think is the single greatest healthcare invention or creation? It's
22:45
Speaker 2: this discovery of certain kind of drugs. What do you
22:48
Speaker 2: think has changed the world of healthcare more than anything
22:51
Speaker 2: else in the years that you've been in the healthcare world?
22:53
Speaker 3: I mean, I have seen a lot of progress.
22:55
Speaker 4: I mean, I've seen how life expectancy increase in the
22:58
Speaker 4: 20th century more than 30 years. I have seen how
23:01
Speaker 4: HIV got to be a curable disease. I have seen
23:05
Speaker 4: how we develop vaccines that have been extremely positive preventive tools.
23:10
Speaker 4: I have seen how we have improved cardiovascular mortality and
23:14
Speaker 4: morbidity through multiple prevention in hypertension, in statins. So I
23:19
Speaker 4: have seen many, many positive things. Perhaps the most positive
23:22
Speaker 4: things that I'm seeing now is how we are improving
23:25
Speaker 4: our treatment of cancer.
23:27
Speaker 3: The cancer death rates are coming down.
23:29
Speaker 4: We are much better as a country than any other
23:32
Speaker 4: country in the world, and we have the ambition to
23:34
Speaker 4: eliminate cancer.
23:36
Speaker 2: Thanks for listening. To hear more of my interviews, you
23:39
Speaker 2: can subscribe and download my podcast on Spotify, Apple, or
23:43
Speaker 2: wherever you listen.