Johnson & Johnson said on Friday that it is planning to break up into two companies, splitting off its consumer health division that sells Band-Aids and Baby Powder from its large pharmaceuticals unit.
The healthcare company will separate its consumer health business into a new publicly traded company and is aiming to complete the planned separation in 18 to 24 months, it said in a statement.
The company will retain its pharmaceuticals and medical device units, which sells drugs such as cancer treatment Darzalex. The units are expected to generate revenue of roughly $77 billion in 2021.
Commenting on the decision, Gorsky said, "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."
Consumer Health Company
The new consumer health company will have brands such as Neutrogena, AVEENO, Tylenol, Listerine, JOHNSON’s, and BAND-AID under its umbrella.
The company will determine and announce the board of directors and executive leadership of the new company in due course as the planned separation process progresses.
Alex Gorsky will serve as executive chairman of Johnson & Johnson and transition the chief executive officer role to Joaquin Duato, the current vice-chairman of the company’s executive committee, effective 3 January 2022.
Duato would continue to lead the new Johnson & Johnson following completion of the planned separation, the company added.
A 'Planned Transaction'
"This planned transaction would create two businesses that are each financially strong and leaders in their respective industries. 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 stated.
"Importantly, the new Johnson & Johnson and the New Consumer Health Company would remain mission driven companies with exceptional brands, commitments to innovation, and remarkable talent. Each company would carry on the Johnson & Johnson legacy of putting the needs and well-being of the people we serve first," he added.
In June, Britain's GSK unveiled a detailed plan to spin off its consumer healthcare venture with Pfizer into a separate company by the middle of next year.