Johnson & Johnson to Split Into Two Companies, Shares Rally
The new Johnson & Johnson company will focus on the medical devices and pharmaceuticals business, which sells its COVID-19 vaccine and other drugs.
This story originally appeared on The Epoch Times
Johnson & Johnson has announced plans to split into two companies, spinning off its consumer health division—which sells products like Band-Aids, Baby Powder, and Listerine—into a separate publicly traded company.
The consumer health business has been provisionally dubbed the New Consumer Health Company, according to a Nov. 12 statement, while the new Johnson & Johnson company will focus on the medical devices and pharmaceuticals business, which sells its COVID-19 vaccine and other drugs.
"The planned separation would create two global leaders that are better positioned to deliver improved health outcomes for patients and consumers through innovation, pursue more targeted business strategies and accelerate growth," the company said.
The New Consumer Health Company will have in its portfolio four $1 billion megabrands and 20 brands worth over $150 million, including such household names as Neutrogena, Aveeno, Tylenol, Listerine, and Band-Aid, the company said.
For the full year 2021, Johnson & Johnson's consumer health arm is expected to generate around $15 billion in sales, while the pharmaceutical and medical devices division is projected to bring in some $77 billion in revenues.
While details remain sparse, Johnson & Johnson expects the split to take place at some point in the next two years.
Alex Gorsky, Chairman and CEO of Johnson & Johnson, said that spinning off 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."
Gorsky will transition into the role of Executive Chairman of the new Johnson & Johnson company following the separation, with Joaquin Duato, currently Vic Chairman of the company's Executive Committee, will take the helm as CEO, effective Jan. 3, 2022.
"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," Duato said in a statement.
The new consumer health company's board of directors and executive leadership would be announced at a later time, Johnson & Johnson said.
Shares of Johnson & Johnson rose nearly 4 percent in premarket trading Friday following the announcement.
The move by Johnson & Johnson, which is the world's biggest health-products company, comes in the wake of similar announcements this week by industrial conglomerates Toshiba and General Electric and underscores how big, diversified corporations are under pressure to simplify their operations.
General Electric recently announced it is splitting into three public companies that will concentrate on aviation, healthcare, and energy.
By Tom Ozimek
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'