J&J shifts China ops under mounting scrutiny

As Chinese regulators crack down on device and drug companies, Johnson & Johnson ($JNJ) is centralizing its leadership in the country, a move to increase oversight and profitability.

J&J has about 9,000 employees in China, spread across its device, drug and consumer businesses, all of which report to their individual corporate heads back in the U.S. Now, the healthcare giant has appointed former consumer chairman Jesse Wu to oversee all of its Chinese operations, answering directly to CEO Alex Gorsky, Reuters reports.

J&J said its latest move isn't motivated by the spiraling investigations into competitors like GlaxoSmithKline ($GSK) and Eli Lilly ($LLY), and a spokesman told Reuters that while the restructuring "definitely adds additional, and centralized, oversight for our whole enterprise in China ... the emphasis is on growing our business."

Still, with Chinese regulators expanding their focus to include multinational medical device manufacturers, it's a fine time to be beefing up local oversight anyhow.

Earlier this month, the anti-monopoly bureau of China's Commerce Ministry started questioning medical device firms on their pricing practices, according to Reuters, stirring worries that the med tech industry could be next under the gun. The level of detail requested was more than uncommon, an unnamed device exec told the news service, and considering China's often zealous enforcement, it's no surprise the industry is spooked.

Med tech heavyweight Siemens Healthcare ($SI) has already faced allegations of Chinese corruption this year, fighting a whistleblower suit alleging the company paid kickbacks to doctors in exchange for using its devices. Siemens denies the allegations and is working to dismiss the suit.

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