Amid uncertainty for pharma as President Donald Trump embarks on his quest of putting “America First,” Johnson & Johnson CEO Alex Gorsky played down the potential fallout for his company during a CNBC interview Monday.
Gorsky, visiting China for a business summit, told CNBC’s Eunice Yoon he’s “encouraged” about the ongoing discussions in Washington, D.C., particularly tax changes that would allow companies to bring home foreign cash more cheaply. But, in a contradiction to Trump's more protectionist stance, Gorsky said that globalization is “critical” for J&J.
To be competitive in healthcare, a corporation has to have a worldwide reach, Gorsky contended. And asked about tough trade rhetoric between the U.S. and China, Gorsky said he takes a “hopeful” approach that the countries will build on the “strong foundation” built up in previous administrations.
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China is a critical market for J&J—an "exciting opportunity," Gorsky said—as it is for many Big Pharmas these days. Though growth in the country has slowed, it's still among the faster-moving pharma markets in the world. J&J has more than 10,000 employees in the country and plans to invest $500 million in R&D operations there.
The helmsman also weighed in on manufacturing—which Trump has urged pharma to "bring back" to the U.S.—plus the company’s recent $30 billion deal to buy Actelion and the Republican healthcare bill making rounds in Washington.
Gorsky said he’s waiting to see specific proposals that might affect drug manufacturing. He remains “optimistic” that U.S. leaders can balance the requirements of global trade, which typically means locating manufacturing facilities near countries where they're sold, and demands for a strong manufacturing sector in the States.
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On healthcare, he said the government is “going to have to make changes” and should look to adopt an “outcomes-based approach” while working to create stronger partnerships between varying segments of the industry.
J&J itself has dabbled in pay-for-performance arrangements on its own drugs; for instance, as new hepatitis C drugs from Gilead Sciences took the market by storm, J&J inked a money-back deal with U.K. cost watchdogs for its own older med Olysio. In the U.S., it has signed on to a Medicare project looking to test value-based payments for prescription meds.
As for its two-pronged deal with Actelion, Gorksy explained to Yoon that the arrangement is designed to combine the biotech’s promising science with J&J’s global reach, creating a “significant opportunity.”
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J&J, which employed 126,400 people around the globe as of Jan. 1, isn’t likely to be significantly affected by proposals that could shake up the government’s H-1B visa work program, the CEO added.
Gorsky was part of the first group of business leaders to meet with Trump after the president’s inauguration. Before taking office, Trump said the drug industry is “getting away with murder,” later dialing that rhetoric back during a conversation with other prominent biopharma representatives.
Still, Trump continues to push for lower prices, recently saying he wants to grow “competition” in the industry. His pick to lead the FDA, Scott Gottlieb, is expected to push for faster FDA approvals, and that may have earned him favor with the president, one analyst wrote before Trump’s selection went official.
Among other proposals to lower drug prices, the president is also favors Medicare price negotiations, a spokesperson recently said.