Medical Device Link.

Originally Published MX May/June 2002

BUSINESS NEWS

Generally speaking, publicly held companies don't like it much when changes in leadership make headlines. But when the largest medical product manufacturer in the United States changes hands, it's news.

Ralph S. Larsen

William C. Weldon

That's what happened in April at the annual shareholders meeting of Johnson & Johnson (New Brunswick, NJ), when chairman and CEO Ralph S. Larsen stepped down in preparation for his retirement in July 2002. Also stepping aside was Robert N. Wilson, senior vice chairman of the board and vice chairman of the executive committee, who is expected to retire in April 2003.

The new leaders of the healthcare giant are William C. Weldon, who replaced Larsen as chairman and CEO, and James T. Lenehan, who was named president in addition to his previous position as vice chairman of the board.

Weldon previously headed J&J's pharmaceuticals group and consumer pharmaceuticals and nutritionals group. Lenehan had responsibility for the medical devices and diagnostics group, and the consumer and personal care group. Both previously served as vice chairmen of the board.

Announcement of the succession was made in late January, in anticipation of the April meeting. Commenting on the changeover, Larsen said, "this management succession reflects a long-standing practice at Johnson & Johnson of developing outstanding leaders from within our broadly based, global healthcare business."

Robert N. Wilson

James T. Lenehan

Larsen and Wilson became J&J's senior executives in 1989. According to the company, over their 13 years in office, sales increased from approximately $9 billion to $33 billion, and net income rose from $1 billion to $5.7 billion at the end of 2001. Return to shareholders over the period increased at a compounded rate of more than 22% annually, with the market value of the company increasing from approximately $14 billion to more than $182 billion at the end of 2001.

Larsen's tenure ended on a high note, as the company reported record growth during the first quarter of 2002. Company earnings in the quarter totaled $1.8 billion on sales of $8.7 billion, increases of 18.2% and 11.3%, respectively, over the first quarter of 2001. Excluding the impact of negative currency, worldwide sales increased 13.4%. Domestic sales were up 17.1%, while international sales increased 8.0% on an operational basis.

First-quarter sales for the company's medical devices and diagnostics segment were $3 billion, an increase of 11.1% in local currency compared with the same period last year. Primary contributors included strong sales growth from Cordis's circulatory-disease management products, DePuy's orthopedic joint reconstruction and spinal products, LifeScan's blood glucose monitoring products, Ethicon Endo-Surgery's minimally invasive surgical products, and Vistakon's disposable contact lenses.

Also effective at the annual meeting was the promotion of Michael J. Dormer to become J&J's worldwide chairman for medical devices.

Copyright ©2002 MX