Johnson & Johnson plans split in two to focus on pharma business

12 Nov 2021

Image: © Sundry Photography/Stock.adobe.com

The healthcare giant is planning to split into two public companies within the next 18 to 24 months.

Johnson & Johnson has revealed plans to spin out its consumer health business and place its focus firmly on pharma and medtech.

In a statement today (12 November), it said it would create a new publicly traded consumer health company, which will include brands such as Neutrogena, Listerine and Johnson’s. A name has not yet been revealed for this new company.

Following the separation, Johnson & Johnson will then focus on healthcare R&D with its pharmaceutical and medical device units, which are expected to generate $77bn in revenue this year.

Alex Gorsky, Johnson & Johnson CEO, said the board and management believed the split is “the best way to accelerate our efforts to serve patients, consumers and healthcare professionals” and drive profitable growth.

“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,” he added.

Joaquin Duato, who is due to take over from Gorsky as CEO in January 2022, will lead the new Johnson & Johnson after the separation.

Duato said that the plan would “create two businesses that are each financially strong and leaders in their respective industries”.

The company is expecting that the separation will be completed in 18 to 24 months, subject to approvals.

Johnson & Johnson has more than 136,000 employees worldwide. This includes a workforce of more than 5,000 in Ireland, with sites across the country for its Janssen, DePuy Synthes, Cerenvous and Johnson & Johnson Vision Care businesses.

Splitting up

Johnson & Johnson is not the first major company to announce a split recently.

Toshiba also outlined plans today to spin off its energy and infrastructure business as well as its device and storage business.

Earlier this week, General Electric said it plans to split into three separate public companies, spinning out its medical and energy businesses from its aviation unit.

One of the biggest structural changes revealed in past year was IBM’s plans to spin out its IT infrastructure business in a bid to focus more on sectors such as AI and cloud. The separation was completed earlier this month.

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Sarah Harford is sub-editor of Silicon Republic

editorial@siliconrepublic.com