Gorsky says military service had 'profound effect' on his reign as J&J chief

gorsky
J&J CEO Alex Gorsky said his six years in the U.S. Army gave him the tools needed to run the top-performing pharma company. (Johnson & Johnson)

What does it take to steer one of pharma’s biggest whales? As Johnson & Johnson CEO Alex Gorsky told Fortune magazine, six years in the U.S. Army made all the difference.

Gorsky, the $20-million-a-year head of the biggest-selling pharma company in the world, said his education at West Point and six years served in the military informed his rise up J&J's corporate ladder—and shaped his management style as CEO.

“In the military, you’re frequently given really challenging missions. And I think what’s really important is to look at things realistically,” Gorsky told Fortune’s Susie Gharib. “You assess them, but then frankly, it’s up to you to motivate the team, to figure out a solution, to keep going ahead.”

During his time in the military, Gorsky reached the rank of captain, Fortune said, which he said had a “profound effect” on his ability to lead the company, which tops the list of biggest drugmakers in the world.

SPECIAL REPORT: Top 15 pharma companies by 2018 revenue - J&J

Since Gorsky’s promotion to the role in 2012, he has navigated J&J past big patent losses and through some of the industry's biggest launches in recent years, such as the prostate cancer drug Zytiga and immunology blockbuster Stelara. In 2018, J&J reported $40.7 billion in pharma revenue and, including consumer health and medical devices, total revenues of $81.58 billion.

By comparison, the next highest pharma earner in 2018 was Roche, which brought in just shy of $56 billion.

And his stint as J&J helmsman has been highly profitable for Gorsky himself: He brought in more than $20 million in total compensation in 2018 alone. And that was a significant cut from the previous year, when he brought home a whopping $29.8 million in salary, equity awards, cash incentive pay and benefits, including a big increase in his pension value.

RELATED: J&J chief Gorsky took a big pay hit in 2018 but still nabbed $20M

Gorsky has overseen J&J’s expansion in the profitable immunology field, particularly the continuing success of psoriasis and psoriatic arthritis drug Stelara. In 2018, Stelara raked in $5.2 billion in worldwide sales, a 28% increase year over year. And J&J’s newest psoriasis rollout Tremfya pulled in $544 million in 2018, an impressive increase over its $61 million in sales the year before.

Other J&J success stories under Gorsky’s watch include the company’s oncology division, which brought in $10 billion in sales in 2018, and the purchase of Actelion in 2017, bringing in almost $2.5 billion from Actelion’s pulmonary hypertension drugs Opsumit, Tracleer and Uptravi.

But Gorsky has been no stranger to "challenging missions" that have played out in court over his tenure.

RELATED: On the heels of victory in New Jersey, J&J scores another talc win in California

In July 2018, J&J lost a $4.7 billion class-action lawsuit in St. Louis filed by 22 women or their families alleging the company's talc baby powder caused ovarian cancer. In the most recent talc lawsuit against J&J, the company was found not guilty in a California court in April. 

Before that, J&J settled for $33 million in 2017 in a suit accusing the company of slipshod manufacturing that led to the recall of millions of over-the-counter bottles of Children's Tylenol and Motrin. 

J&J also faces numerous court challenges to its opioid marketing, as part of state lawsuits that have already bagged huge settlements from Purdue Pharma, the maker of OxyContin. The state of Oklahoma recently settled with Purdue for $270 million and is expected to take J&J, Teva and Allergan to court in May. 

RELATED: First its CEO tells pharma to watch it on pricing—and then Johnson & Johnson raises them

And Gorsky has received public scrutiny himself after he proposed pharma “self-police” its drug prices shortly before J&J hiked the price tags on a group of its drugs in January 2019.

J&J upped the prices on top-sellers such as Xarelto, Stelara and Zytiga, even though the latter drug recently fell off the patent cliff, according to Reuters. Most of its two dozen hikes fell in the 6% to 7% range, according to the news service.

Less than a week earlier at the J.P. Morgan Health Conference, Gorsky said pharma should rein in exorbitant drug price hikes in hopes of avoiding a federal crackdown on drug pricing.

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