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No ‘Silver Bullet’ for Making Health Care Cheaper: J&J CEO

Monday, 22 Apr 2013 | 5:41 PM ET
Johnson & Johnson CEO Shares 2013 Outlook
Monday, 22 Apr 2013 | 4:16 PM ET
Alex Gorksy, Johnson & Johnson chairman & CEO, offers insight on the firm's quarter and forecast for the year ahead.

It will take a combination of approaches to make health care more affordable, Johnson & Johnson CEO Alex Gorsky told CNBC's "Closing Bell" on Monday.

Paying for health care in a high-quality, economical and sustainable manner is a major societal problem, and there's no "silver bullet" for fixing it, Gorsky said.

A solution revolves around three approaches, he said: access, innovation and unique relationships.

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"We need to make sure people have access," the CEO said. "We can have the best technology in the world, but if people can't get access to it, it really doesn't matter."

Gorsky also said the industry must continue to innovate and that there will need to be "unique kinds of relationships between payers, providers, between government and academia—all working together. Those are probably the best approaches."

The executive also said that the Affordable Care Act is not going to have a major impact on his company's business.

"First of all, the fact that more patients are going to get access [to health care] is a good thing," Gorsky said. While a tax on medical devices will have some effect, "overall we're convinced it's going to continue to be about innovation, about strong customer partnerships," he added.

(Read More: J&J Tops Estimates on Newer Medicine Growth)

Johnson & Johnson's diversified business, which includes pharmaceuticals, medical devices and consumer products, is a source of strength, Gorsky said, adding that "nobody else has the depth, breadth, size or scale."

The company is not considering spinning off any of its businesses to unlock additional shareholder value, and it continues to look for new deals to increase growth, he told CNBC.

(Read More: How Obamacare Could Boost Your Premiums)

"Whether it's new technology that we don't have, whether it's a complement, or a better foothold perhaps in an emerging or fast-growing market—we think those are the kinds of places that give us an opportunity to build growth in the future," Gorsky said.

(Read More: Goodwill Investing: J&J Bet on Biotech Start-Ups)

J&J is investing disproportionately in emerging markets—particularly China—where it sees significantly better growth. "When you have the emerging middle class going from about 100 million to 500 million, you know that's going to result in increased demand for health care," Gorsky said.

So far this year, J&J shares have outperformed the broader market, rising more than 20 percent. That's a bit better than Merck's 17 percent gain but lags Pfizer's 23 percent advance.

With the stock sitting at an all-time high, Gorsky said, "We always want to drive innovation that makes a difference for patients. And we know long-term that's really going to drive shareholder value."

By CNBC's Justin Menza; Follow him on Twitter @JustinMenza

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