Embattled Johnson & Johnson Recalls CEO

Joel Anderson |

Johnson & Johnson Tylenol JNJHealthcare conglomerate Johnson & Johnson (JNJ) has announced William Weldon will be stepping down as CEO and be replaced by Alex Gorsky, a company veteran. Weldon will continue to hold his position as Chairman for the a period of transition, but he's expected to step down in the near future.

Gorsky Wins Internal Race

Gorsky managed to edge out Sheri McCoy, considered by many to be the favorite to replace Weldon as CEO. Gorsky and McCoy both filled the role of Vice Chairman on the board and both have over 20 years of experience at the company. McCoy, a former research scientist who worked her way to the top of the company's pharmaceutical division, could have been passed over because of her background, with the Wall Street Journal reporting that Gorsky's operations background and supply chain expertise could have been major factors.

“Gorsky is a conservative choice and the strongest internal candidate,” said Erik Gordon, a business professor at the University of Michigan. “That’s a big deal at a company that always taps an insider as its next CEO -- even if what they need is someone from outside the team that led the company into so much trouble.”

Troubled Johnson & Johnson Looks to Future

The succession to Weldon's position is hoped to help the 126-year-old New Brunswick, NJ company move forward from a troubling few years. Johnson & Johnson has had to issue over 25 recalls since 2009, most recently for a failed design for the new safety feature on bottles of children's Tylenol, as well as other  embarrassments including metal shavings, mislabeling, and drugs made in a facility that had not been properly cleaned. Taken collectively, the recalls have started to erode consumer loyalty to some of Johnson & Johnson's famous brands like Tylenol, Sudaphed, Benadryl, Bengay, and Mylanta.

Gorsky now takes the helm of a company looking to expand through growth into new segments. The acquisition of Synthes, a maker of plates and screws used in repairing broken bones, for $21.3 billion marks a major move for the company. The company operates in an industry that's growing at a rate of 7 percent a year, and the company hopes that it can help boost revenues. Johnson & Johnson had $65 billion in sales, a 5.6 percent increase, but concerns over the damage to the company's premier brands

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Companies

Symbol Name Price Change % Volume
JNJ Johnson & Johnson 118.13 0.86 0.73 7,941,065
VRSK Verisk Analytics Inc. 81.28 0.23 0.28 947,556

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