On the heels of Raytheon, Toshiba, and GE, healthcare conglomerate Johnson & Johnson announced plans Friday to split its consumer products business from its pharmaceutical and medical device operations, creating two publicly traded companies.
Alex Gorsky, J&J’s chief executive, said the planned separation 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”.
The consumer products division, which is forecast to generate $15bn in sales this year, will be split off in 18 to 24 months, most likely via a stock offering.
J&J’s pharmaceutical and medical devices divisions are forecast to generate $77bn in sales in 2021.
JNJ shares soared on the news…
Today’s announcement comes just days after J&J suffered a blow in its longstanding talc product litigation when a North Carolina judge moved the bankruptcy case for LTL Management LLC – a recently created bankrupt remote Johnson & Johnson subsidiary – to New Jersey on Wednesday, saying it is the most logical venue since it is where most lawsuits involving its talc products were filed.
“Throughout our storied history, Johnson & Johnson has demonstrated that we can deliver results that benefit all our stakeholders, and we must continually be evolving our business to provide value today, tomorrow and in the decades ahead,” outgoing CEO Alex Gorsky said in a statement.
As The FT reports, J&J is following many other large pharmaceutical companies that have shed their consumer divisions, including GSK and Pfizer, which formed a joint venture from their consumer health units that they plan to spin off in the middle of next year. The pharmaceuticals industry is shifting towards slimmed-down companies focused on innovation, including high-priced specialist drugs.
