Alex Gorsky, pictured, will step down as CEO of Johnson & Johnson early next year.
Christopher Goodney/BloombergJohnson & Johnson announced late Thursday that CEO Alex Gorsky will step down early next year, to be replaced by the vice chairman of the company’s executive committee, Joaquin Duato. Gorsky will be named executive chairman of the company, effective Jan. 3.
Shares of Johnson & Johnson (ticker: JNJ) were down 0.5% in premarket trading on Friday.
In a note Friday, CFRA Research analyst Sel Hardy wrote that the timing of the news was not expected, but that Gorsky’s tenure had been nearing a natural end.
“We think this is not an abrupt departure and the transition should be smooth,” Hardy wrote. “Mr. Duato is a well-known executive to investors with a successful track record at JNJ; thus, we do not expect a significant impact on JNJ’s stock price following the announcement.”
Gorsky, who is 61 years old, has led Johnson & Johnson since 2012, and has worked at the company for thirty years. Johnson & Johnson’s share price has climbed over 160% during his tenure, while the S&P 500 has climbed over 210%. The stock has returned nearly 240%, including dividends.
Johnson & Johnson grew to be the largest pharmaceutical company in the world by market value during Gorsky’s tenure, surpassing Pfizer (PFE) in 2013. The company is now worth $466.5 billion.
“It has been an honor and privilege to lead this company as Chairman and CEO for nearly a decade,” Gorsky said in a statement. “The past decade alone has been transformational for Johnson & Johnson as we dramatically increased investment in R&D, drove some of the most important global advances in healthcare, made significant strategic shifts across the business and delivered record performance.”
Duato, who is 59 years old, has also worked at Johnson & Johnson for three decades and in his current role provides strategic direction for the company’s pharmaceutical and consumer health businesses, and oversees a number of other teams, including its global supply chain.
In his statement, Gorsky said that Duato had run the company’s response to the Covid-19 pandemic, and was in charge of efforts to keep the business and supply chain running despite the virus.
Duato is a dual citizen of the U.S. and Spain. “I am honored to serve as Johnson & Johnson’s next CEO,” he said in a statement. “As the world continues to face significant health challenges, including the ongoing pandemic, I am inspired by Johnson & Johnson’s opportunity to play a key role in meaningfully improving the global trajectory of human health.”
As big pharma firms like Pfizer, Merck (MRK), and GlaxoSmithKline (GSK) strip auxiliary businesses to focus on developing new drugs, Johnson & Johnson stands out for its commitment to and older conglomerate model. The company sells Band-Aids, wound closure tools used in surgeries, Motrin, Tylenol, Benadryl, Aveeno skin creams, prescription pharmaceuticals, and a long list of other products.
Johnson & Johnson faces a large number of consumer lawsuits, including over its talcum powder and its alleged role in the opioid crisis. In June, the company agreed to pay $263 million to New York state to settle opioid litigation brought by the state.
The company’s Covid-19 vaccine, which it sells on a not-for-profit basis, has faced some headwinds over safety and manufacturing issues, but remains the only single-shot Covid-19 vaccine authorized in the U.S.
Shares of Johnson & Johnson are up 13.5% so far this year. The stock trades at 17.5 times earnings expected over the next 12 months, above its 5-year average of 16.4 times earnings. Of the 18 analysts tracked by FactSet who cover the stock, 13 rate it a Buy or Overweight, while five rate it a Hold. None have a negative rating.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
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