Medtech Leaders: Ashley McEvoy, Johnson & Johnson's head of medical devices, on effective turnarounds, APAC opportunities and innovating for success

Medtech Leaders is FirstWord Medtech's leadership interview series, where top-level executives from industry’s key players share their strategies for taking businesses to the next level of growth and provide insight on the industry trends that are shaping these strategies. The first article of this series throws the spotlight on Ashley McEvoy, who has led and accelerated growth in a number of Johnson & Johnson businesses over the past 12 years – including Consumer, Ethicon and Vision/Diabetes Care – and is currently worldwide chairman of the group's medical devices division.

For a long time, Johnson & Johnson was the undisputed leader of the medical device industry and dominated several markets such as cardiology, surgery and orthopaedics. But in a rapidly evolving landscape like health care, where being too diversified and unwieldy may not be the best strategy, Johnson & Johnson found itself slipping in the various medtech segments it operates in and being overtaken by more nimble competitors.

Subsequently, the group has undergone significant restructuring and has been focusing on more profitable, high-growth product categories and geographic markets like Asia-Pacific with attractive growth opportunities. In its second-quarter earnings call in July, the company reported an operational top-line growth of 1.9 percent for its medical device division; while it acknowledged there was still work to do, the firm said that this result was a step in the right direction to its goal of taking medtech to above market growth rates by 2020.

This is an ambitious plan and one that is the overriding priority for Ashley McEvoy, who was appointed worldwide chairman of Johnson & Johnson's medical devices division in June this year.      

The decision to put McEvoy at the helm of medical devices was very likely based on her long track record for turning around slow-growing businesses. McEvoy has led the Consumer business, followed by the Ethicon surgery unit, then the Vision and Diabetes Care franchise, during the 12-plus years at Johnson & Johnson, and with each business, she succeeded in re-galvanising sales growth and returning them to above-market performance.

At last week's Asia-Pacific Medtech Forum in Singapore, organised by APACMed, FirstWord Medtech's executive editor Tina Tan interviewed McEvoy in a fireside chat and asked the medtech executive what her initial thoughts and considerations were - having passed her first 90 days in her new role - for moving Johnson & Johnson's medical device business forward.

Johnson & Johnson, McEvoy pointed out, has several things that work in its favour and will help it achieve its target. "What's on our side is that the global health tech, medtech market is growing. That's good. We're in an industry that's a growth industry," she responded, adding "we're a $27 billion company, so we're the second largest medtech company and we are growing." With the 16 different platforms offered across its four franchises, Johnson & Johnson holds leadership positions of number one and two in the majority of those platforms. The group also has very strong cashflow, which gives it sustainability in the business, she added.

McEvoy acknowledged that while half of its platforms are outperforming the market, and half are underperforming, the intention is to "flip one platform at a time and make sure that we have the right insights on what customers need." McEvoy said "we have a healthy balance of the core portfolio and where the disruptions need to happen. We are deploying our leaders in those jobs. We're empowering them to make the timely decisions to compete, and really offer superior value. Johnson & Johnson is very committed to that next chapter and that next evolution."

In the following edited transcript of the fireside chat, McEvoy elaborates on the factors that make up an effective turnaround strategy, as well as delves into the importance of the Asia-Pacific region to Johnson & Johnson's medical device business; how collaboration with different stakeholders in the ecosystem and internally within the group is key to enabling Johnson & Johnson to meet its goals; and the role of quality leaders and quality innovations.

 

APAC Medtech Forum 2018: J&J's Ashley McEvoy discusses turnaround strategies, innovation and collaboration 

On the components for planning a successful turnaround strategy

FirstWord Medtech: Ashley, you've got a great track record for turning around businesses. You led Johnson & Johnson's consumer business and then, Ethicon followed by the Vision Care/Diabetes business. With each of them, you've managed to turn them around and really boost growth…So, what's your process for planning and more importantly, executing, a good turnaround strategy?

Ashley McEvoy: I think one of the things that we're all very fortunate to have is, quite frankly, the purpose – that's really number one. What do we do every day? I always find it very important to remind everybody – whether it be our employee base, or our customers, or our stakeholders – about what business we are in. And healthcare matters. For example, we talk about the value of sight, and half the world's population is in need of sight, yet only 10 percent are getting treated. And 80 percent of vision loss can actually be treated or prevented, if treated early. So, just reminding all of our colleagues the value that we have to patients.

Number two is people. Johnson & Johnson has a very strong history of having very talented Asian leaders run big chunks of our global businesses. I have to give an acknowledgment to Vladimir [Makatsaria, group chairman for Johnson & Johnson medical devices, APAC], who opened [the APAC Medtech Forum] yesterday. Vladimir spent six years here running Asia, but he will be taking over from Michael Del Prado who is from the Philippines, running our global Ethicon business, a globally $10 million business. Our head of R&D for all medical devices is from China, Peter Chen. We have Ai Hua Ong, a local Singaporean running all of Asia. We have Winston who's a local Singaporean running all of legal for medical devices, Bentley, from Australia running all of global HR for supply chain. So, people matter ... It's no surprise Asia's where a significant amount of growth comes from, so we need to make sure that folks that have that experience are leading big chunks of our business.

Number three is having that good balance of honouring the past, and the heritage from where we come from, and then, really preparing for the future. And you'll see, in my experiences, companies get a little off-balance when we're shooting too far for the North Stars, and we're not paying attention to the today. And we need to really shore up our core business, and our core value propositions as we evolve for all the market shifts happening and prepare for those [changes]. Not all of our customer base are ready for that rampant change, and we have to live in the world of today and have a foot in the world of the future.

 

On collaborating for growth in APAC and working as a collective eco-system

FWM:  Collaboration is a critical part of Johnson & Johnson's global strategy - collaboration with external partners and internal, cross-sector partnerships between [ Johnson & Johnson's] pharma and med devices. In a notoriously fragmented region like Asia-Pacific, how could the different stakeholders work as a collective ecosystem to drive innovation to make healthcare more affordable and accessible?

McEvoy: Asia is a little bit of a microcosm of the world, because there's all this beautiful, local ingenuity that resides in-country, and then there's the collective power of Team Asia. And we at Johnson & Johnson try to do a similar approach. We like to say that we're a 135-year-old healthcare start up. How do we use our size for good, but how do we also maintain that nimbleness and agility that takes advantage of local insight?

When we say innovation is a company sport, what do we mean by that? Half of our innovation comes organically within our labs, from our colleagues. But also, half comes from outside of the walls of Johnson & Johnson. We openly invite in the world's best new ventures, new start ups and labs. That combination has been really a good track record.

We have embedded local capability here. We have R&D centers in China. We have six manufacturing sites. We want to feed Asia from a local point of view, but we also want to take advantage of some remarkable capability that the enterprise has built globally. We really feel like that could be a competitive advantage for healthcare.

 

On leadership in a disruptive era for healthcare and healthcare companies

FWM: It's a very disruptive era that we're entering in, with such a quick, fast-evolving healthcare landscape…There're so many new business models that companies have to consider with the emergence of digitisation of healthcare, continuous pricing challenges, regulatory disruptions and things like that. Are there any new skillsets that you see leaders need to develop?

McEvoy: Johnson & Johnson is somewhat unique because we're not just a medtech company. We obviously have a very large pharmaceutical business, we've had a consumer business, and we have a large medical technology business. What I would offer is, we believe we can solve some of the biggest healthcare challenges in the world by being diversified. I'll give a great example of that, because it's about solving problems agnostic of what that technology solve is.

One example comes from what we're working on in lung cancer. Lung cancer is a silent killer. There are so many watchful-waiting people. You could go get a dissection. You could be treated with a pharmacological agent, but when we start to put together our medtech experts and our pharmaceutical experts, and some good folks on digital and robotics, and endoluminal experts, they're starting to uncover really, quite frankly, breakthrough ways to access the lung, access the very, very distal parts of all parts of the lung, access the lesions, diagnose the lesions, treat the lesions with drugs and potentially even ablate the lesions. And we use those words around really migrating from treatment into really more of disease interception.

I can tell you our pharma folks would never be able to do that by themselves. Our medtech folks would never be able to do that ...so really having the skillset to access capability not necessarily where it's right in front of you and really accessing the world's capability is really important.

FWM: When you are implementing a strategy for change and you're talking to your team, how do you communicate effectively with them to allow them to embrace change and be on board with you to move forward and grow business?

McEvoy: I come back to [this question of] what unifies all of us? We all have a common cause here around serving patients. Healthcare is a growth industry. It's an area with a huge amount of humility. Nothing is worse when you feel your most vulnerable, when you're lying in a hospital, you're preparing for a procedure and you don't have control. For me, what motivates me every day is to try to bring the best that we can. We have 70 000 people who work in medical devices at Johnson & Johnson. We share that unifying cause.

Many of us in this room and many of us in this region, when we talk about medtech, we share that cause. So that is kind of reminding ourselves what business we're in. And then we always talk about human spoken here. I'm not a doctor. I'm not a scientist. I'm not a professor. I fell into this business. I love the business side of healthcare, but I love the science and the technology and having a learning aptitude, and an open mind, and quite frankly a little bit of courage to say, 'I don't understand. I don't know. Will you teach me?' The world will come and help. And the world will come help solve some big, bold, audacious needs in healthcare.

 

On what innovations are disrupting healthcare; regulatory and reimbursement hurdles

FWM: Talking about innovations, are there any areas that really excite you?

McEvoy: I think we're going to have a lot more smart implants. Some of us spent some time with our trauma team and we're going to see a world where implants are smart and they can actually let you know when you're on your phone, if your phone is in fact healed. I get very excited about that. I was in a case two weeks ago in Jefferson Hospital. Talking about sight, an 18-month-old had bilateral retinoblastoma. Three years ago, that little boy, not only would he not see, but he would not have a chance to live life. Now, through three different treatments over four weeks, through a highly minimally invasive procedure of a catheter going through the groin, up to the ophthalmic artery ... local dose of chemotherapy, not only is this little boy going to live, but he's restored vision and 70 percent of sight.

I just think that there's huge honour in what we do, and as we know, we are just getting started. I heard [Stryker CEO Kevin Lobo] speak yesterday a little bit about the ecosystem, and how important it is that we have a healthy ecosystem to support patient care and innovation, and I would really reinforce that, because no one company is going to figure this out by ourselves. We need really good mapping companies, and visualisation companies and data management of accessing real live-time data for predictive outcomes to get better patient selection and better patient response. It's going to take a lot of these collective capabilities that we can have big, bold impacts on these major healthcare needs.

FWM: There're also the regulatory and reimbursement considerations when taking innovations to market. Those are persistent challenges, introducing innovations to regulators then trying to get healthcare payers to adopt it.  What are your views, in terms of what could help companies overcome these hurdles more easily?

McEvoy: I had the good fortune to spend some time with my team in Washington last week and Jeff Shuren was there, and he's a big advocate. I know he was just in China two weeks ago around collaborating on the global stage of regulatory harmonisation. I know he's very passionate about that. We're at different parts of the S-curve where we are. I think medtech is going to have to move much more into evidence generation, and that's not a bad thing, that's a good thing. And at the same time, we do have a slightly different model than the classical pharmaceutical and how we generate evidence and how we disseminate evidence.

I know that a lot of the regulatory environment is open to new models and we just have to really stay engaged in the conversation ... I was listening to some of the local CEOs of healthcare systems in Asia, and I think that industry is eager to help solve some of the pain points in the delivery of care, to deliver more value-based healthcare. Whether that be having a very efficient supply chain or, as an example, whether we have our team in hip fractures who's worked with certain hospital systems go in and really execute a standardization of how hip fractures are treated – first triaged in the ER, and then in the orthopaedic area to really ensure harmonisation to get a better outcome at a more affordable cost. It is going to require that collaboration and we use the word risk-sharing, and that's where the global regulatory environments comes in because some of the local laws are impediments for us to be able to more of those risk-sharing events.

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