Johnson & Johnson (JNJ) – Get Report shares edged lower Friday after the healthcare giant said longtime CEO Alex Gorsky would step down later this year, and tabbed industry veteran Joaquin Duato as his replacement.
Gorksy, who has lead the group since 2012, will transition to the role of executive chairman on January 3, citing “family health reasons” for his surprise decision. Duato, 59, will take over the group on that date, as well, capping a three-decade career with the group that has included stints leading the consumer products division and overseeing its technology and supply-chain operations.
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“The decision to step aside was one of the most difficult of my career,” Gorsky said in a statement. “This is the right time for the Company as our organization is delivering strong performance across all three segments and is positioned for continued success, in addition to this being the right time for me personally as I focus more on my family due to family health reasons.”
Johnson & Johnson shares were marked 0.35% lower in pre-market trading Friday to indicate an opening bell price of $177.95 each.
Shares in the group have risen more than 170% in Gorsky's tenure as CEO, just ahead of the 167% gain for the Dow Jones Industrial Average over the same time period.
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He also lead the group's coronavirus response effort, which culminated in the spring approval of its single-shot vaccine by the Food & Drug Administration.
However, his time at Johnson & Johnson also coincided with a $4.7 billion ruling — ultimately trimmed to $2.1 billion — linked to a court finding in Missouri that 22 women developed ovarian cancer from the use of Johnson & Johnson products — including is iconic Baby Powder — that included asbestos
Johnson & Johnson faced at least 25,000 separate suits linked to its iconic baby powder products, with the company setting aside $3.9 billion in litigation expenses last year, even after the U.S. Food & Drug Administration said a study found “no asbestos fibers or structures in any of the samples of cosmetic-grade raw material talc or cosmetic products containing talc.”
“We think Duato is the right person to take on the CEO role at Johnson & Johnson,” said Cantor Fitzgerald analyst Louise Chen. “In addition to driving accelerated growth and profitability in its Pharmaceutical and Consumer Health businesses, Duato helped guide Johnson & Johnson's enterprise strategic planning process, encompassing all three of the company’s business segments, and was responsible for spearheading a significant technology transformation across the enterprise over the past year.”
“Notably, he also oversaw the company’s rapid response to the COVID-19 pandemic,” Chen added.
Last month, Johnson & Johnson topped Street forecasts with a stronger-than-expected second quarter earnings report that included $164 billion in vaccine sales and solid rebounds in pharmaceutical and consumer health.