: >> fresh out of west point he of 22 soldiers. ow he leads 134,000 employees at a company worth over $350 billion. johnson & johnsonment he took he helm when it was bit tarnished and made changes to get it back on track while making the biggest acquisition the company history and managing it to obama care. elected ald trump was president he sat beside him on counsel to uring represent a growing medical that is over 17% of the

economy and he is the first to say his industry has to change. sat down with him for an extended conversation. >> chairman and c.e.o. of johnson son. i want to take you back. you run big company. employees. back to 1982 fresh out of west point you were a lieutenant with a platoon. 22 young men that were didn't were putting ou them sometimes in harm's way. leader you a different than 22? >> hopefully i have grown and matured. i would say is starting out in the military i think you have learn like when you are a c.e.o. and a lesson i learned in the military early is earn the right to lead and to be in command. a rank on ay have your sleeve that doesn't bestow credibility of

soldiers. early on being able to listen to noncommissioned officers and be trained by them in many i s is very similar to what had to tdo here. when i was in the army it was duty, honor, country. making sure that we were there really gher calling, trying to do our best to protect our country. nd being able to work for johnson & johnson with our creed where you have an explicit 75-year t the commitment around patients and onsumers and communities and shareholders there was a lot of alignment between the two organizations. through the ranks and did leave for a team to go nnavaris. come back? leave and >> i had a basic discontact with for at on i was working the time and there were things as i look back i probably would

i wentne differently and to work in another very good company. a lot.re i learned one that definitely helped make leader but i always knew that i had a very strong johnson son -- johnson and johnson. i realized there could be a path back i took it. when you walked in as c.e.o. figured it out? >> it started with having been long as i was as i had ideas about what we should be doing and can do better. to be clear the company had an incredible track record of it was making very good progress. isin some ways the challenge how do you take this iconic company with the reputation of predecessors and performance they had and milwaukee -- make

better. it started with what we talked about the creed and taking ideas every leader when you come in you have to listen and make understanding and urn beginning and -- you are engaging. did you get resistance? one challenge for a leader taking over a successful a great ion with reputation why do we need calculation? we are doing fine. easier to take over an institution perceived as ailing because you can make changes more easily. >> of course. an thing we did early is of centralization to one where we needed to some cases and in centralize certain functions and practices. our quality practices. things our information too many group will systems. >> we talk about pump and

values. purpose and values. that is wonderful when they are aligned on one side. when you ical matter are a leader sometimes they don't align that neatly and that get tradeoffs trickier and that gets into the essence of how you make as a leader. remicad good example is everyone an important drug. old in the tooth but there are similarities where pay less and yet johnson and johnson resists that. go through the process deciding when should way back off and let those go forward for the large are good? > i think that we always want to integrate values and principles into decision making. a magic l you it is moment when we are making a decision and somebody makes the this is a credo decision because it hits the pause button makes everyone push become

from the table and give it closer conversation. other interesting and important aspect of the credo it and-and statement. it doesn't say take care of the patients or employees or community and the shareholders, it says and. inherent is a conflict. but it makes you balance those as you go riorities through that decision-making process. it makes you reach out and tack not feeling you are going to make the decision on your own. a much do that, we have higher probability of getting it right. today it is one of the most of johnson roducts and johnson. clinical than 42 trials that were done and used round the world in a number of conditions and we know from clinical trials that over 70% of a good the parts get

result. what is important is that a john nsurance is different than a biosimilar. i will be the first to say generics are good for the industry. you might find that interesting for somebody in pharma to make that tatement but without release valve there's no way we rewardtinue to provide a for long-term innovation in the industry. remicaid it is a biosimilar. we have worked in this category a long time and relatively minor proteins can the achine -- manifest clinically in patients with important differences. in addition to the clinical with e we are competing customers as well so we think it emains a really important treatment option for patients. would they want to be treated if stable therapy and challenged by switching from other therapies and we think it important option for

patients and physicians. >> opioids. there was a time you sold them. no longer. but as a societal issue at this at what point do opioids offerll the benefits they for pain relief say the damage and we will have to find a different way to relieve pain? and is an important issue where we will have to work together to solve. it is important to remember the is a very f pain important component to overall care. that we s critical is put together new rules and guidelines to ensure ultimately patients get the treatment they need and also putting a construct in place to make sure we limit the abuse that is taking place and leading to bad outcomes. president trump has been outrespond on the this saying we something about drug

prices? is he wrong? ♪ ♪

>> let's talk about healthcare in the united states. g.d.p. and increasing, not going down. think we have a problem and we have to bends that. could beright and what done? >> let's start with how important healthcare is. u.s. economy the and by the way it is very personal as well. at some ouch all of us point with parents, children, loved ones. impact everyone. that makes it very important. in healthcare there are a few dynamics in particular that are challenging. population. in the united states about 15% of the population is 65 or older and that could go as high as 25%

the next 20 to 30 years. it is something we are not only seeing in the united states but seeing around the world. what happens as you age you consume more healthcare. ore than five times the amount before you are 65. on top of that we have an around ng middle class the world in china, other developing markets. they provide for the access hey want greater to healthcare and that puts pressure on the system. high quality p care that makes a difference at and sustainable price. so i think in the united states good news is we are taking action and i think whether it is act we will e care see reform the next 50 years because it is that important and and we need to continue to make changes to the system. the being said i think

first step is we have gotten improved access for people to insurance. frankly, it was unacceptable to without r 45 million access and now that we have about 25 covered through the a.c.a. that is a good step and we had things like additional adults, for young preexisting conditions, some of those were tan care of. of.aken care now companies the hard work. how are we going to make sure we underlaying of the cost drivers. ow do you make it move more toward outcome or episode based improve and how do we other quality measures taking a holistic approach. >> but something has it give. everything.have one thing we did before the act -- it sured a lot accomplished a lot we were told care andwe have health cost less and that do not add

up. ou have to say no to somebody someplace. where should we say no? >> we need to keep people healthier and we have to work on side.mand o many things that effect us cardiovascular, diabetes and cancer are significantly impacted by the way we live our so if we don't smoke, make sure we drink responsibly, watch and stay mobile and that can have a big impact up certain condition. number two we need it make sure eliminated.care is how many diagnostics where there strange data to demonstrate it is needed and it defensive or a billing uncourageous that. encourages.

what about end of life and disease states that are particularly demanding on the how do we form specialized care units around those to do a better job. some things we need to do. >> what about pharmaceuticals. a really big portion but it is driving it. t gross fast are and a lot of other costs. why do drugs cost so much? >> it is complex but overall those products are major that butor to the fact people added 30 to 40 years on ife span and whether cardiovascular disease, longer and ving dying later and finding more cures. majority of those are contributed to pharmaceuticals. cost you look at overall they make up about 14%. consistent the last 20, 10, five years ago. rate of increase

it is pretty consistent. oing forward it is an incredibly exciting time because we are moving from just glia active nd pal care. of curing ise something like h.i.v. and eeping that in mind and unfortunately because of our system today sometimes the out portion of the payment patient more about the but it is important to put it in perspective relative to the that is being provided and overall health care service. president trump has been outspoken on this including the state of union address saying we something about drug prices. is he wrong? the can understand frustration and we need to do something about drug prices but restricts at doesn't new innovation or appropriate patients provided to and that also do not restrict

innovation. ecause if we don't continue to innovate and find the next or kthrough for alzheimer's cures for type two diabetes the and impact on the country and productivity let -- e on false is going to false is dramatic. -- families is dramatic. what can the government do? >> simplify the system. e have a very complex system with multiple layers of distributorsed a other simplifying s and that is very important. based that is in place upon the regulations that exist. number two we need greater transparency. more transparency, in fact at johnson & johnson we issued a transparency report around pricing that talks about the commitment and making sure that that is one of wonderful things in the web where you can see

what are the different prices that are available making sure we are taking that approach as well is very important. your approach to the relation of johnson & johnson and federal government. president trump was elected he brought c.e.o.'s every morning in "the west wing" and you were one of them. a lot of hope on the part of the business community it would be a different closely with ork the business community. did it work? >> it is important for industry to the government and i think that having a relationsh relationship, understanding how they are as a customer and stakeholder is critical. to work opportunity with many presidented in my role in different administrations and only by sharing those an s of developing understanding and appropriate partnerships that i think we can that wesolve big issues

have been talking about during the but is today. -- during the interview today. with this administration there's outreach early on and there have been issues we had to manage along the way but i think it will be incumbent on all business leaders to try to way to n a positive bring about positive change. >> what happens with the council? air when it sort of dissolved and we had ken frazier and one or two others pull out then i think the white house issued an announcement has again away and we heard from you and two or three others that it unravelled. >> there was a lot going on in a hort period of time and it starts with the fact there was a wanevents that transpired that were there were and several councils that were taking place. there was manufacturing and

strategy. >> this was in the wake of charlottesville. >> it was. so, with those events there was a sense that the best thing both of to dissolve them and move forward independently. >> does that mean you continue o talk with the president with senior people? it is important for the government and large business to have some communication path. >> we continue to have conversations. f.d.a., erent what other regulatory agencies. of course. like johnson & johnson we are the largest health care company representing it any different interests is vital we stayin' gauged in an -- stay engaged. trade wars good for johnson johnson? > we want a trade environment that is collaborative. we have to make sure to have place and it s in oes not mean we should not up date given the time with and a

half that and other things. don't throw the back out with the bath water and build on constructs recognizing important are partners for us as part of a global economy. > you have a very big company here. do you ever think about with it should be broken up? p?

>> we talked about president praiseices.rug some policies that have affected johnson & johnson tax cut. how good were they for johnson & johnson? >> we think revision of the tags for us to ritical remain competitive. you think where it was 35% you are seeing now at 21%. artificial creating artifact of how to deploy capital that led to inversions behavior that i don't think was strategically or financially smart. to address it, to get on it and level the playing field and we could be agnostic about where we deploy will make use investment and more competitive. >> as c.e.o. johnson & johnson deploy ou decide how to that increased cash? we are redeploying it in

research and development and the ost important thing something to innovate and have the next treatment that will help through and we do that r& r&d. invested $10.5 billion in $35 million in m. and a. better flexibility, better ability to move that capital around now i think is only good for johnson & johnson but good for the united states. > is that including possible acquisitions. we have a chinese one involving biotech. looking for other deals to expand your scope? 50% of the time we stexternally.tion there is a lot of great ideas, hang veryd technology fast and there is no you can do of that in-house.

by building connections and having the expertise and with academic institutions and other communities, start-ups and source it and access great regulatory elopment capabilities of is condition ike johnson & johnson you take a product and contact lens that be a few million dollars and create billion dollars platforms billions of patients. greatnson & johnson has a balance sheet. when do you need to deflow and constructively? >> to think we have 355 consecutive years of dividend 34 years of increases and triple a credit a very think is important story and something hat we think is evidence of a

discipline and thoughtful way we run the business. as we look forward fundamentally we don't think the strategy will chi change. we are disciplined about the way and we use analysis and look at other tradeoffs that we might have at a particular time. think that will stay who tent but we noening -- we no longer have the con traeupblts. to go to you have shareholders? >> the way we run our business we think that first of all we in our business for the long term and that means research and development i healthy rate and competitive.we are number two it is the dividends that the shareholders depend on. that chmark that and know pensi pensioners and other funds look indicative fully as of their confidence in the business over the long trl. at how to we look

deploy it through business development and mergers and acquisitions. that in a disciplined way and last but not least we gone through all of those we look at things like buy-backs. the beauty of johnson & johnson is book do those simultaneously. you have a very big company here. do you ever think about whether it should be broken up? we challenge ourselves every day. we challenge the business model fundamental strategy. we believe being a large diverse best interestshe of our shareholders and stakeholders. > is it too early to have some sense of what you would like to leave behind when i'm sure many on?rs from now you move >> it is way too early. i think that the worse thing you say what your legacy will be. your important to roll up sleeves and make a difference. n the long runny know my score

-- i know my scorecard is how i -- living up to the credo.of ♪ two, down, back up!

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>> you are watching "best of bloomberg daybreak: middle east." here are the major stories from this week. is a showdown looming with saudi the opec meeting nears and iraq is the latest to call production policy. helping hand three nations $2.5 billion to jordan to deal with an economic crisis largest ked some of protests since the arab spring. president to peace trump and kim meet in