Wall Street learned this week that pharma giant Johnson & Johnson will be splitting into two companies, marking a huge change for the 135-year old company.
First reported by the Wall Street Journal, the New Jersey-based pharmaceutical giant, will separate into two publicly traded companies, creating an entirely new, rebranded consumer health business.
With more than 136,000 employees, J&J will split its consumer products arm — responsible for Band-Aids, Tylenol, Listerine and Neutrogena — from its pharmaceutical and medical device branches within 18 to 24 months, ithe company said on Friday.
Ashtyn Evans, senior Edward Jones Analyst, told Yahoo Finance that big pharmaceutical companies are increasingly focused “on their growth areas, and spinning off other areas that are … less innovative.”
“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,” Alex Gorsky, the company’s chief executive, said in a statement.
The company’s pharmaceutical and medical device divisions will operate under the Johnson & Johnson brand. It is not known what the new consumer health company will be named.
“For the new Johnson & Johnson, this planned separation underscores our focus on delivering industry-leading biopharmaceutical and medical device innovation and technology with the goal of bringing new solutions to market for patients and healthcare systems, while creating sustainable value for shareholders,” Gorsky said in the statement.
The company previously announced that Joaquin Duato, the vice chairman of its executive committee, will become Johnson & Johnson’s CEO in early Januar. Gorsky will remain executive chairman.
Gorsky said on an investor call Friday that changes in how consumers purchase products, and how those products are distributed, informed the strategy to split. In particular, Gorsky said, the pandemic has highlighted a shift in interest from consumers in personal care.
“We have consistently had the belief that our portfolio is rooted in strategy, however it is not anchored in strategy,” Gorsky said.
Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.