Johnson & Johnson Splitting Up Consumer Health And Healthcare Businesses

Johnson & Johnson (J&J) announced Friday in a press release that the company plans to split up its healthcare and its consumer health sectors into separate companies.

The name of the “New Consumer Health Company” has not been announced yet. Alex Gorsky, CEO of J&J, will transition the role of CEO to Joaquin Duato effective Jan. 3, 2022, but will remain at the company as an executive chairperson. Gorsky has served as CEO and chairperson since 2012.

He commented on the split, “following a comprehensive review, the Board and management team believe that the planned separation of the Consumer Health business is the best way to accelerate our efforts to serve patients, consumers, and healthcare professionals, create opportunities for our talented global team, drive profitable growth, and – most importantly – improve healthcare outcomes for people around the world.”

J&J believes that the split will increase management focus, resources, agility, and speed to address different industry trends and better meet consumer needs. The current company will focus on prescription drugs and medical devices, which include the creation of the J&J Covid-19 vaccine and advanced technologies like robotic and AI. J&J expects this sector to make $77 billion in revenue for 2021.

The yet-to-be-named company will focus on self-care and over-the-counter products like Band-Aid, Aveeno, Neutrogena, and Listerine among others. According to CNBC, the company will also be involved in ongoing litigation from lawsuits that claim J&J’s Baby Powder causes cancer, something the company denies. This sector is expected to generate $15 billion in revenue for 2021. Both companies will be publicly traded.

Soon-to-be CEO Duato said of the split, “we believe that the new Johnson & Johnson and the New Consumer Health Company would each be able to more effectively allocate resources to deliver for patients and consumers, drive growth, and unlock significant value.”

J&J expects the completion of the separation in 18 to 24 months but clarified in the press release that “there can be no assurance regarding the ultimate timing of the proposed transaction or that the transaction will be completed.”

J&J joins Toshiba and General Electric that also announced their splits. General Electric and Toshiba plan to split into three companies.