Johnson&Johnson to be divided into two entities

Johnson&Johnson to be divided into two entities

In the greatest shake-up in the company’s 135-year history, Johnson & Johnson (JNJ.N) wants to split into two businesses, splitting its consumer health segment, which distributes Band-Aids and Baby Powder, from its pharmaceuticals and medical devices business.

The move by the world’s largest health-products firm follows similar statements this week by industrial heavyweights Toshiba(6502.T) and General Electric(GE.N), and highlights how enormous, diverse corporations are under pressure to streamline.

This has been the case in the healthcare industry, where the low-risk, high-reward labour of creating and marketing medications has progressively split from the slow-and-steady business of selling consumer items like moisturisers and shampoos.

Johnson & Johnson has said that it will spin off its consumer health business into a new publicly listed company, similar to competitors GlaxoSmithKline plc (GSK.L) and Pfizer Inc (PFE.N), who intend to do so next year.
Merck KGaA (MRCG.DE), a German pharmaceutical company, sold its consumer health segment to Procter & Gamble Co (PG.N) in 2018.

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“The new Johnson & Johnson and the new consumer health company would be able to more efficiently deploy resources to deliver for patients and customers, generate growth, and unlock tremendous value,” said Joaquin Duato, who will take over as CEO of J&J in January.

The business said it expects to complete the planned split in 18 to 24 months, sending its stock up 4% before the market opened.

Johnson & Johnson’s pharmaceuticals and medical device divisions will continue to offer the COVID-19 vaccine, as well as medications like Darzalex for cancer therapy and medical devices. In 2021, the divisions are estimated to produce $77 billion in sales.

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