Tom Heyman was interviewed at the start of his unit’s 45th anniversary year as a corporate venturing unit.
I started Johnson & Johnson in 1982 in their Janssen affiliate back in Belgium. I am a lawyer by training and I started in the law department of Janssen Pharmaceutica, primarily supporting licensing deals, distribution deals, joint venture deals and so on.
Then in 1990 I was asked to come to the US as vice-president of corporate development for Ortho, which was one of the other pharmaceutical companies within the Johnson & Johnson family of companies. Then in 1992 I was then asked to lead the business development group of the pharmaceutical group of Johnson & Johnson.
I have done that job for more than 20 years. In 2015 part of my role became head of the Johnson & Johnson Development Corporation, today known as JJDC.
So most of my career here, I have been involved in external innovation, primarily for the pharma group in my business development function, and now for the whole Johnson & Johnson Corporation in my role within JJDC.
In that external innovation role, I was fortunate to be involved in many of the licensing deals and acquisitions that were done by the pharmaceutical group, by Janssen Pharmaceutica as it is now called, since 1992. I have been involved in key acquisitions like Centocor and Alios BioPharma – all these companies and licensing deals that were important in building the portfolio of Janssen Pharmaceutica.
JJDC is one of the oldest and leading corporate venture capital funds. Introduce us to the fund and how it works.
JJDC is the oldest corporate venture group in healthcare. It was created 45 years ago and it is amazing to see what foresight people had – management and leadership – at that moment in time, to start off with this corporate venture group at a time when there were not that many such groups, especially in healthcare.
We are a separate legal entity reporting into Johnson & Johnson Innovation. We are involved in external innovation through equity investment in young companies that have products, technologies or assets that might be important to one of our key sectors in the future.
It is a small team. It is not a venture capital fund in the traditional sense of the word, so we do not have a certain amount of capital assigned to us. We have access to J&J’s balance sheet, so we can make small to really large investments. Our investments range from a few hundred thousand dollars to sometimes more than $100m, depending on circumstances. So it is not a closed-end fund like you would see with a traditional venture capital group.
Our investors are based in the ecosystem where a lot of innovation is ongoing, so they are together with the people in our four innovation centres. We have investors in Boston, California, London and Shanghai. We have one person based in Tel Aviv because Israel is such an important source of innovation, especially in the medical device sector.
In what key technologies and business models are you looking for opportunities?
We are strategic investors in the first place. We are not financial investors. We do not invest in order to make money for Johnson & Johnson. We invest to build the pipeline and the portfolio of the sectors within J&J. So we look at opportunities and making investment in those companies that have assets or technologies or platforms that are of interest to one of the three sectors – medical devices, consumer or the pharmaceutical group.
So we work very closely with the three sectors to look at opportunities and to determine whether investments in those companies in the end would lead to either an acquisition or a licensing or distribution deal, anything that will help us to build the pipeline for Johnson & Johnson and its three sectors. That is the way we think about it.
Do you feel you are doing things that are further away from the business and may be quite disruptive to it? Do see your role as disruptor rather than just delivering what the business feels it needs?
That is something we are going through as we speak. I believe JJDC should start to play a more prominent role in looking at opportunities that do not easily fit today within the strategies of the sector, but are technologies that are potentially transformational towards the future. And trying to learn more about these technologies through an equity investment is something that is important.
But in the end it is something that has to be in areas that have at least some support by key leaders within Johnson & Johnson. We have learned, from the past and from our own mistakes, that we might want to make an investment because it is something that we like, but it may never find a home within Johnson & Johnson because no one is interested in bringing it in or they do not see the strategic intent at all – then it is financial, it is not strategic anymore. And these things, then, often do not give us the returns we would be looking for.
So investing in what we call white space – maybe that is not a great word, in potentially transformation technologies – is something I think is an important role we could play. But to me it is going to be very important that either the executive committee or the management committee of Johnson & Johnson support those kinds of investment, so at least they acknowledge that this is something that might be transformational for the future of Johnson & Johnson.
How do you support the ventures you invest in?
It depends on circumstances, of course. We are not sitting on the boards of every company in which we make an equity investment. It is part of the negotiation. It depends how much money we are putting in, it depends on the syndicate, it depends on the other investors. Obviously, if you make a very small investment, then they are not going to agree that you would be sitting on the board.
But in those companies where we have a significant investment, we always ask to take a board seat, or a board seat and a seat on a scientific advisory board. We take that very seriously – once we are on the board and have made that equity investment, we believe we have a fiduciary responsibility to ensure the company is successful. So we will also bring in the resources of the corporation to help the company, if they have issues or questions with respect to manufacturing, with respect to regulatory environment with respect to pricing and reimbursement, with respect to access to retailers and things like that.
We will help them out and put them into contact with the specialists that we have within the three sectors of Johnson & Johnson, and help them to really develop their technologies better, more successfully, more efficiently, more effectively, because that, in the end, is in our own interests. In the end, we are making that investment because we believe there is something that might lead us to acquire this company, or might lead us to do a licensing deal with this company – we do it for our own self-interest also, not just for the company. It is also of interest to us because then we are putting that company into a better position for us to be able to onboard that.
Illustrate what you just described with one or two examples of recent investments?
We have made a very important investment in a company we have co-created with Verily, which is the healthcare arm of what is now called Alphabet, Google before that. We poured in a tremendous amount of money to build a new surgical robot. We are putting in not just money. We have seconded people. They are working very closely with our Ethicon affiliate to develop instruments that would work with the robot.
Another example is when we made an equity investment in a company based in California that is developing a completely new breast pump. Very innovative. We have put those people in touch with retailers, so that they understand what it takes to commercialise a consumer product like this one to the retail sector.
We have an investment in a company that is developing a medical device to treat heart failure. They have a product in the marketplace in Europe to treat hypertension. They have some issues with respect to reimbursement. We have brought in our people to help them out in thinking through how to improve that situation. We have brought in our people to help them out in developing their clinical trials and their protocols.
In all the companies in which we have a board seat, we will bring in, or we will offer at least, the resources of Johnson & Johnson. Those are the things that we do on an almost day-to-day basis, when we make an equity investment.
You can listen to this and other interviews on a podcast, subscribe at gaulesqt.podomatic.com. Andrew Gaule supports innovation programs and collaborations with “innovative new value chains” in global organisations as CEO of Aimava. If you have interview ideas, email andrew.gaule@aimava.com or James Mawson jmawson@globalcorporateventuring.com