JNJ Tweaks its Chain of Command in China

Johnson & Johnson (JNJ) is restructuring its chain of command in China.

The New Brunswick, N.J.-based healthcare giant now will have the business heads of its three Chinese operations reporting to one chairman beginning in September in an effort to increase sales in that country and centralize corporate oversight. Jesse Wu, who has been worldwide chairman of JNJ’s consumer business, will become chairman of J&J China. Wu will report to J&J Chairman and Chief Executive Alex Gorsky. The three Chinese operations have been reporting to separate business heads in the United States.

Each of the three China units will still be responsible for determining its own business strategies, but each general manager and president in China will report to Wu, according to JNJ.

“The appointment of Mr. Wu really reflects our continued confidence in the China market, the increasingly important role China will play for the future of Johnson & Johnson, and our long-term commitment to the patients and consumers of China,” JNJ spokesman Ernie Knewitz told Medical Product Outsourcing. “In this role he will have primary responsibility to ensure one consistent company interface to key external stakeholders is presented while also helping to identify opportunities from combining capabilities embedded in the other business segments.”

Lynn Pendergrass, a Hewlett-Packard Co senior vice president overseeing the printing and personal systems businesses for the Americas, will join JNJ, taking over Wu’s position as head of the global consumer business. The new structure for China is not unique within JNJ. In fact, it’s how the company organizes its other international operations.

Wu will oversee an operation that includes 9,000 employees in China and $2.5 billion in sales last year. The company created a similar reporting structure in Vietnam last year and has been considering it for in hopes of boosting profitability, according to Knewitz.

The reorganization comes at a time when drug companies are in the crosshairs after the Chinese government began investigating bribery accusations against drug manufacturer GlaxoSmithKline. The new structure in China was not prompted by concerns it would be targeted by Chinese authorities, and Knewitz said he was unaware of any current investigations of JNJ by authorities in China.

In May last year JNJ purchased its Chinese medical device maker, Guangzhou Bioseal Biotech.

“This transaction reinforces our commitment to China and delivering innovative medical device solutions to the Chinese market,” Xie Wen Jian, president of JNJ China medical, said at the time of the transaction. “We are very pleased to add the Bioseal brand to our growing portfolio of hemostasis products in China.” JNJ has been doing business in China for more than a quarter century, and in 2011 launched a medical device and diagnostics innovation center there.

Bioseal manufactures a porcine-derived fibrin sealant, named Bioseal, currently the only porcine plasma-derived fibrin sealant approved for use in China. Fibrin sealants are used by surgeons alongside hemostasis for use in patients undergoing surgery, when control of bleeding by standard surgical techniques is ineffective or impractical.