Johnson & Johnson wants to split into two companies

Healthcare conglomerate Johnson & Johnson (J&J) on Friday announced plans to separate its consumer products business from its pharmaceutical and medical device business, creating two publicly traded companies.

The split aims to create “two world leaders better positioned to improve health outcomes for patients and consumers through innovation,” the company said in a statement. The direction and new name of the consumer-focused division have yet to be announced. “We believe the new consumer-focused company will be a global leader in attractive and growing consumer health categories, and that a streamlined and focused business structure would give it the agility and flexibility to grow its business. portfolio of iconic brands and innovate new products, ”explained outgoing J&J CEO Alex Gorsky.

Gorsky told the Wall Street Journal that J&J, founded in 1886, decided on the split because the two companies, their customers, and their markets have diverged in recent years. The company said it expects to complete the transaction within 18 to 24 months. The pharmaceuticals and medical devices division, which includes advanced technologies like robotics and AI, would retain the Johnson & Johnson name and keep new J&J CEO Joaquin Duato, who is due to take office in the lead, at the helm. January.

The pharmaceuticals segments are expected to generate around $ 77 billion in revenue, while the consumer products division is expected to sell around $ 15 billion worth of products this year, the company said. J&J is currently the subject of more than 34,000 lawsuits in the United States alleging that its baby powder was contaminated with carcinogenic asbestos.

Gorsky told the Wall Street Journal that the decision to split the company in two was unrelated to his legal woes.

Johnson & Johnson plans to split into two companies, splitting the $ 15 billion a year division that sells Band-Aid bandages, Tylenol drugs and Johnson’s Baby Powder in a change indicating how much healthcare has changed since the company helped the pioneer Industry.

The world’s largest health products company by sales will separate its high-margin but less predictable prescription drugs and medical device businesses from its legendary but slower-growing consumer group, creating two publicly traded companies .

Johnson & Johnson (J&J) on Friday announced plans to split into two independent companies by separating its consumer health division from the pharmaceutical division.

The American group will separate its branch of consumer health, which manufactures in particular Band-Aid dressings, into a listed company and plans to complete the operation within 18 to 24 months, he said in a statement.

J&J will retain the pharmaceutical and medical device business, which is expected to generate around $ 77 billion (€ 67.2 billion) in revenue this year.

“We believe that the new Johnson & Johnson group and the new consumer health company (‘Consumer Health’) will both be able to allocate their resources more efficiently to meet the needs of patients and consumers, to boost their growth and deliver significant value, ”said Joaquin Duato, who will succeed Alex Gorsky as J&J CEO in January.

In pre-market trading, the American group gained 5%.

Johnson & Johnson’s announcement comes just days after a similar one from industrial group General Electric, which plans to split into three listed companies.

A few days after General Electric, Johnson & Johnson announced its split. The American health giant will split into two listed companies. The first will be specialized in general public health (dressings, Listerine, …). The second will specialize in prescription drugs and medical devices. In a press release, the firm assures us that this split will allow each of the companies to focus better and react more quickly to trends in their sectors.

The company selling prescription drugs and medical devices will retain the Johnson & Johnson name. It will include treatments such as Darzalex, Erleada, Imbruvica, Stelara and Tremfya, as well as medical devices in the areas of interventional solutions, orthopedics, surgery and vision.

The prescription drugs division also manufactures one of three Covid-19 vaccines currently approved for use in the United States.

The new consumer health company will be home to brands such as Neutrogena, Aveeno, Tylenol, Listerine, Johnson’s and Band-Aid. It is expected to generate revenues of around $ 15 billion for the year. No name has been released for the new company.

Johnson & Johnson expects the split to take place over the next two years, if approved by the company’s board of directors.

“Following a thorough review, the Board of Directors and the management team believe that the planned separation of the consumer healthcare business is the best way to accelerate our efforts to serve patients, consumers and healthcare professionals, create opportunities for our talented international team, drive profitable growth, and most importantly, improve healthcare outcomes for people around the world, ”said CEO Alex Gorsky .

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