The leader of the world’s top medical device company says it doesn’t involve rebuilding the healthcare system we have in the U.S.
"What I have seen, having just recently been over to Russia and made a number of visits over to China, as well as to Brazil and to some of the other emerging markets is, most importantly that the customer in those markets is the government," Gorsky told analysts last week during the New Brunswick, N.J.-based medical device conglomerate’s latest earnings release conference call.
"What we’ve found is that the government is very interested, as they are building their healthcare systems in the developing markets, in not just replicating what’s been done in the developed markets, but looking for ways to expand access and, frankly, also to expand and accelerate their access to some of the new technologies in a cost effective way," Gorsky said.
Not surprisingly, he said Johnson & Johnson is uniquely positioned to take advantage of the paradigm for several reasons.
First, he said, the "depth and breadth" of JNJ’s vast portfolio of products gives the company an inherent edge – being able to compete simultaneously in several markets. Second come the investments J&J’s been making on the ground in developing markets.
Gorsky pointed to the R&D centers the company has placed in several BRIC countries, including an innovation center built in China last year to design and develop medical devices and diagnostic products specifically for Asian markets. In May, the company made its first acquisition of a Chinese medical device company, buying Guangzhou Bioseal Biotech for an undisclosed amount.
Johnson & Johnson is 1 of many top medical device companies looking to invest heavily in emerging countries.
Boston Scientific (NYSE:BSX) president & incoming CEO Mike Mahoney told an audience at the MassDevice.com Big 100 Roundtable East in Waltham, Mass., earlier this month that China is 1 of BSX’s most important geographies, citing the Asia-Pacific region as one of the fastest-growing markets in the world.
Last year Boston Scientific announced a $150 million, 5-year plan to expand its Chinese commercial operations, including establishing a wholly owned manufacturing site and developing training centers for Chinese healthcare providers.
Medtronic (NYSE:MDT) CEO Omar Ishrak, who celebrated his 1st year on the job last month, put his stamp on the world’s largest pure-play medical device company last year by announcing a big push toward global markets, calling them "potentially less risky than creating new products for the flat U.S. market."
Johnson & Johnson posted profits of $1.41 billion, or 50¢ per share, on sales of $16.48 billion during the 3 months ended June 30. That compares with profits of $2.78 billion, or $1 per share, on sales of $16.60 billion during the same period last year.
The results reinforce Gorsky’s push into the BRIC countries. Sales int he U.S. were off 1.2% compared with Q2 2011 and down 8.3% in Europe, but up 12.0% in non-U.S. Western Hemisphere nations and 5.2% in the Asia-Pacific/Africa region.
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