Joaquin Duato

David Rubenstein (0:02)

By revenue, the biggest health care company in the world is Johnson & Johnson. But Johnson & Johnson no longer sells band-aids. It sold off its consumer product division. Now it focuses on pharmaceuticals and medical devices. The man responsible for that transformation of Johnson & Johnson is Joaquin Duato. I had a chance recently to sit down with him to ask him why he made this transformation.

When I was preparing for this, I did some research and I was disappointed to learn that the band-aids I've been using all these years are no longer owned by Johnson & Johnson.

What happened to the band-aids? I mean, I thought band-aids were Johnson & Johnson.

Joaquin Duato (0:41)

So it's not only you. I think many red IDs of the company are sending me mailed regarding that same feeling. Many of them work in our consumer sector.

And now, even today, when I tell people I'm the CEO of Johnson & Johnson, they tell me the baby shampoo company all the time, all the time.

David Rubenstein (1:01)

You became the CEO, and then within a year or two of that, you spun out your entire consumer division, all the kind of products that I'm the one that I buy, those things at the drugstore, and all those things you got rid of. Why did you do that?

Joaquin Duato (1:13)

We wanted to be more focused on medical innovation. And the consumer business has departed from medical innovation.

We were more on areas more connected with cosmetics, all over the countermedication, and it didn't fit in the overall umbrella on trying to bring medical innovation to treat tough, difficult conditions like oncology, cardiovascular, or dementia.

David Rubenstein (1:38)

You're in pharmaceuticals and you're in medical devices. Let's talk about pharmaceuticals. What is your biggest pharmaceutical product?

Joaquin Duato (1:46)

Our biggest pharmaceutical product is a drug for multiple myeloma called Darcelix.

A multiple myeloma is a blood cancer that has improved significantly in the last decade. The life expectancy of a multiple myeloma patient was about single years. Now, a multiple myeloma patient can expect to live more than 10 years. In some ways, we're turning multiple myeloma into a chronic disease.

David Rubenstein (2:10)

Medical devices is another thing. You're pharmaceutical is one thing, medical devices. What is your most important medical device that you have?

Joaquin Duato (2:18)

Look, let me tell you why we have medical devices and pharmaceuticals. It's because I think it gives us a long term competitive advantage. Because we can span the entire patient journey. Let's take cancer. Let's take lung cancer. We have systems to do bronchoscopy and do diagnosis there, robotic assisted bronchoscopy. We have medicines to treat lung cancer.

We also have the instruments that are used for the surgery in lung cancer. And we are working on a radiotherapy enhancer. And radiotherapy is an important therapeutic modality for local control lung cancer. So we can span the entire patient journey. What I'm more excited about medical devices right now is that we can use technology to make our medical devices smarter. And the most important product that we are about to get approval from the FDA is a robotic surgical system. So most of the surgery, it's going to have a robotic component that's going to help improve the level of surgery and have better outcomes.

David Rubenstein (3:13)

How many different products do you have in the pharmaceutical and how many do you have in the devices?

Joaquin Duato (3:18)

We have dozens of products on both sides.

David Rubenstein (3:20)

So how do you keep up with all of them? And when somebody comes along and says we have a new product, do you actually test the product yourself? Or how do you decide whether you're going to go ahead and use this product or not?

Joaquin Duato (3:30)

We have a large, we have a $15 billion recent development budget and thousands of scientists working at Johnson & Johnson. I don't make those decisions. I trust the scientists working at Johnson & Johnson to help me in identifying and making the decision of what's going to have a bigger impact on patients. And our standard is, what is going to have a bigger impact on patients? What is going to clearly improve the standard of care of that particular disease? That's what we try to do every day.

David Rubenstein (3:56)

Now, you have the highest revenue of any health care company in the world, but there's one health care company that has a higher market capitalization than you, which is Eli Lilly, and that's about roughly a trillion dollars because they have a GLP-1 drug. How come you don't have a GLP-1 drug?