Alyson Shontell sits down with Johnson & Johnson CEO Joaquin Duato to discuss how AI is being used in cancer cell therapy to attack the cells and turn the cancer into a chronic illness. The company's also using robotics technology to assist surgeons to significantly improve the average outcome of the surgeries.
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00:00 First I should note, Johnson & Johnson has been one of 49 companies to be in the Fortune
00:05 500 list every single year since we've made it since 1955.
00:10 This year they clocked in at number 40.
00:12 As Alan said, the healthcare and pharma markets have been booming.
00:17 And you've been in the job for two years, but you've been at the company for 34, so
00:20 you've seen quite a bit.
00:22 Two years in, what's your primary focus and biggest surprise since becoming CEO?
00:27 Thank you, and I'm proud to be the CEO of Johnson & Johnson.
00:31 In our 138 years of history, we have had only eight CEOs, and I am the first one who is
00:38 not born in the US, so I'm proud to represent that.
00:42 And certainly it's a great legacy that we have had during this period.
00:47 So in becoming CEO of Johnson & Johnson, I have a dual purpose.
00:52 One is to remain a company that is true to our mission of addressing difficult to treat
00:59 diseases, and the other one is to be able to continue to be a company which is principle-based,
01:07 people-based, and maintains the reputation that we have had during such a long period
01:11 of time.
01:12 Now, is it true that you didn't get the job at first?
01:14 I mean, not the CEO job, but you initially, when you were interviewing 34 years ago, they
01:19 said no.
01:20 It's true.
01:21 When I finished graduate school, I interviewed with Johnson & Johnson, and I didn't make
01:26 it to the second interview.
01:28 So then I joined another company, a pharmaceutical company, and eventually found my way back
01:35 to Johnson & Johnson, and I've been here for 34 years.
01:38 And I'm really a product of the development opportunities that Johnson & Johnson provided
01:44 me, working in different geographies, in different sectors, in different functions.
01:48 So I'm here really thanks to the opportunities that Johnson & Johnson provided me.
01:52 Yeah, I mean, the longevity of your career there, I think, is telling, and the attrition
01:57 rate is shockingly low at Johnson & Johnson, right?
02:00 Yeah, it's very low.
02:03 It's lower than the industry and our peer companies, and I think there's a number of
02:08 reasons for having low attrition.
02:11 One is the size of the company that enables people to work in different sectors and have
02:17 careers within Johnson & Johnson.
02:19 Sometimes I say Johnson & Johnson has its internal job market.
02:23 The other one is that people simply like to work for Johnson & Johnson.
02:28 Our engagement levels are high.
02:30 People like to work for a company with a purpose in healthcare, and we are a company that pays
02:36 a lot of attention to our people, their development.
02:40 We just had yesterday, for example, we had a global learning day.
02:45 So we gave all employees a full day to develop a learning mission and to get acquainted with
02:51 the learning resources that they want to use.
02:54 We are a company that pays a lot of attention to inclusion, so everybody feels good when
02:58 they come to work.
03:00 And certainly we like to believe that we are a caring company, that we care not only for
03:04 the patients, but we also care for each other.
03:06 So we try to have a strong health and wellness offering for our employees.
03:10 So overall, people like working in Johnson & Johnson and stay longer in Johnson & Johnson.
03:15 Our average tenure, for example, in the US is more than a decade.
03:19 So people can do careers, and we are happy of that.
03:23 We are glad that people like to stay at Johnson & Johnson longer.
03:27 So when you became CEO, and even in your memo to become CEO, you had said, "I think we should
03:32 spin out the consumer business."
03:35 Johnson & Johnson can compete with L'Oreal there, but should it?
03:39 And so could you speak a little bit about Kenview, which is the company that you spun
03:42 out just earlier this year, it's now publicly traded.
03:47 Why you did that?
03:48 Why is return to focus important for Johnson & Johnson versus diversification of businesses?
03:53 Yeah.
03:54 So Kenview is our consumer company.
03:56 So when you think about the Johnson & Johnson and the brands that you know about Johnson
04:00 & Johnson, Band-Aids, Tylenol, or baby shampoo, now they are all in Kenview.
04:07 Why did we decide to separate Kenview and create a global consumer champion with Kenview?
04:14 Because we thought that focusing on the consumer market and focusing on healthcare was going
04:20 to deliver better results for consumers and for patients.
04:24 For us, it was very complex to be able to compete with L'Oreal, as you mentioned, in
04:29 skincare and at the same time competing biologics with biopharmaceutical companies and in surgical
04:35 robotics with medical technology companies.
04:38 So we thought there was a benefit for Johnson & Johnson to be exclusively focused on healthcare,
04:45 on research and development, on innovation, and that was going to create a better platform
04:51 for us to be true to our mission, not only in the next two or three years or post IPO,
04:57 but during a long period of time.
05:00 And what's your advice been to the new CEO and how did you make sure that they were set
05:03 up with a good culture and you maintained yours?
05:06 I am very proud of the management team of Kenview.
05:10 The entire management team of Kenview, including the new CEO, come from Johnson & Johnson.
05:14 They are also the product, like me, of the development opportunities of Johnson & Johnson.
05:19 And I told him, you know, be patient and put perspective in things, learn how to listen
05:26 more.
05:27 And I gave him confidence that they were going to do great.
05:30 So I put my emphasis in providing confidence to the management team and to give him some
05:34 advice about be patient and put in perspective.
05:38 In the job of CEO, you have to be patient, you have to put perspective on things.
05:42 And I'm helped myself by being a Mediterranean and I take things with certain perspective
05:49 and I wanted to transmit that wisdom to him.
05:52 Well, this conversation is short, so I want to make sure we hit on a number of things
05:58 we could talk about that have been off for a long time.
06:01 One thing I do want to make sure I hit on is R&D is a huge part of Johnson & Johnson.
06:07 What are you seeing in the space?
06:08 You've said that this is the golden era for your business, that there will be more change
06:14 and more positive movements towards curing disease over the next few years than you've
06:18 seen in the last number of decades.
06:21 So what are you seeing that's exciting?
06:23 What are the innovations and what are you doing with things like robotics, AI?
06:27 How is that all changing the industry?
06:28 Yeah, so R&D is the heart of an innovation-based company.
06:34 Last year we invested $14.6 billion in R&D at Johnson & Johnson.
06:38 We are one of the largest, if not the largest investor in R&D in life sciences.
06:45 What we see now, it's a combination of more knowledge on the biology and genetics of disease
06:53 with an acceleration of that due to technology.
06:58 Things like artificial intelligence, machine learning, and now generative AI, it's helping
07:03 us accelerate drug discovery and it's helping us also making medical technologies smarter.
07:11 So that combination is what I believe is going to help us addressing some diseases that are
07:17 considered incurable or diseases that create a lot of suffering around the world.
07:24 Two examples.
07:25 One is in the area of cancer.
07:28 We are being very successful utilizing different treatment modalities in cancer.
07:33 For example, now we are using in cancer cell therapy in hematological tumors, utilizing
07:38 your immune system cells to attack the cancer cells and we obtain incredible responses.
07:44 In a way that you could think that some cancers, hematological cancers, are going to become
07:49 chronic diseases.
07:51 In the surgical side, surgeons are now able to utilize robotic-assisted techniques, better
07:58 visualization, better sensors.
08:01 Those instruments are connected, they can provide them insights, and they can significantly
08:05 improve the average outcome of surgery.
08:08 So those are things that are going to help accelerating discovery and progress in healthcare
08:14 in a way that we have not seen in the last century.
08:18 One thing, we had a lunch previously and you had mentioned, imagine knee surgery, but being
08:22 done by maybe a robot versus a surgeon.
08:25 I mean, think about the precision needed.
08:27 I might prefer a robot for something like that than someone with a potentially shaky
08:31 hand.
08:32 Absolutely.
08:33 All our instruments now have some component of intelligence or connectivity.
08:41 So our instruments now have sensors that can measure pressure, temperature, have visualization
08:47 capabilities which at the end of the day is software, is digital, that give an idea of
08:53 the surgeon of where are they in, are they going to interfere with a critical structure,
08:58 and all that can be visualized and we can even provide guidance to the surgeon real
09:03 time of where they have to go.
09:05 So that's going to be transformational in the way we do surgery and it's going to help
09:10 improving the outcomes of a procedure, which is very common.
09:12 I'm sure in the audience, every one of you have had some type of surgery during your
09:16 life, so that's important if we can improve the outcomes and the quality of surgery.
09:21 When I think about what we can do as a company, we have the range of technologies to be able
09:27 to do what no other company can do.
09:29 We can do cell therapy, but we can do robotic surgery.
09:33 We can do genetic or mRNA therapeutics and we can do also smart implants.
09:40 So there's a lot of things that we can do as a company based on the number of technologies
09:44 and capabilities that we have.
09:47 So as the leader of a company, you have to lead in good times and in bad, and with a
09:51 company as large as Johnson & Johnson, there are hard things and there are lawsuits.
09:55 You've had talcum powder lawsuits, opioid crisis to deal with, COVID, having your vaccine
10:02 essentially be dismantled.
10:06 How do you lead in those hard times?
10:07 How do you encourage your team to not lose morale, to stay focused on the mission when
10:12 there's a lot of hardship around?
10:15 We do it with conviction.
10:18 Conviction on the principles of our credo, by the way, this year is the 80th anniversary
10:22 of the credo was written.
10:26 We do it by having a trajectory of more than 100 years in which we have always tried to
10:32 do the right thing for the patient.
10:34 When we make a mistake, we take responsibility and when the facts, the science and the law
10:41 are on our side, we stand by our products and we have been able to manage this balance
10:48 during many years.
10:50 But the people in the company working at Johnson & Johnson have a genuine passion of doing
10:53 the right thing and we don't do it for the recognition.
10:57 We do it because we have convictions and those convictions normally help an organization
11:02 to manage change.
11:03 I'm convinced that purpose-driven organizations are much better in managing change and our
11:09 organization has a strong tradition of being a purpose-driven one.
11:13 Internally, we say we are the original mission-driven company based on the fact that our credo was
11:19 written 80 years ago.
11:20 80 years ago, talking about putting the patient first, the employees, the communities, and
11:25 then if you do the right thing, it's going to be good for the shareholder, wasn't very
11:29 innovative, very different.
11:31 So I think that that's part of the energy that people at Johnson & Johnson have in order
11:35 to navigate the ups and downs that anything in life is going to present you with.
11:41 Quick question from the audience.
11:42 Yes, right over here.
11:43 Hi.
11:44 Marjorie Krause, APCO Worldwide.
11:45 I wondered with the new legislation, what impact that's going to have on the ability
11:46 to do the research that you're doing?
11:47 And whether you think that the advantage in technology, sorry, if you can hear me, will
12:03 help address the efficiency side, so maybe there will be more resources.
12:10 I just wondered how you looked at that.
12:13 We always want to be a constructive actor when it comes to healthcare.
12:20 The recent legislation that you are referring to, I'm assuming you're referring to an
12:23 Inflation Reduction Act, right?
12:26 And the fact that now Medicare is going to be fixing prices for some products.
12:32 On one hand, we believe that this legislation is misguided in as much that there's been
12:41 a lot of, or a number of challenges constitutionally to the law, and there's a number of companies
12:46 that have presented lawsuits.
12:49 On the other hand, it's going to have a chilling effect on innovation without addressing the
12:53 basic issue that we have when it comes to pharmaceuticals, which is the patient affordability
12:59 and the patient out-of-pocket costs.
13:01 So inevitably, this will have an effect on R&D investments because it would make it more
13:07 unpredictable and it would be particularly acute, not only in the big companies like
13:13 Johnson & Johnson, but in the smaller companies that are funded by investors, because the
13:17 return for those investors is going to be more unpredictable.
13:21 At the same time, it's going to be shaping the way we invest in R&D.
13:24 So on one hand, it doesn't address the issue of patient affordability, which is real, and
13:30 on the other hand, it's going to have a chilling effect on innovation.
13:33 Thank you all so much, and thank you so much for being here with us this morning.
13:36 Thank you.
13:37 [Applause]
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