Johnson & Johnson announced today that it is planning to break itself up into two companies, one operating its Consumer Health division and the other focused on its Pharmaceutical and Medical Devices units.
The move will see the company separate its Consumer Health business into a new publicly-traded company, controlling brands such as Neutrogena, Aveeno, Tylenol, Listerine, Johnson’s, and Band-Aid.
Rival GSK is currently undergoing a similar spinoff of its Consumer Healthcare arm.
Johnson & Johnson stated that it was aiming to complete the planned separation in the next 18 to 24 months. The Board of Directors and leadership for the ‘New Consumer Health Company’ will be announced later as the planned separation process progresses.
The Consumer Health business is expected to generate revenue of approximately $15bn this year and, following the planned separation, the new company would generate sales in over 100 countries.
The main Johnson & Johnson company will retain its pharmaceuticals and medical device units, which make various medicines and treatments. This side of the business is expected to generate revenue of around $77bn in 2021.
Alex Gorsky will serve as Executive Chairman of Johnson & Johnson, with the already planned transition of his Chief Executive role to Joaquin Duato, currently Vice Chairman of the company’s Executive Committee, being completed in January.
“This planned transaction would create two businesses that are each financially strong and leaders in their respective industries,” said Duato.
“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.”
NAM Implications:
- This move will endow each company with promotional flexibility
- …without compromising the other.
- Rivals need to anticipate even more focused initiatives from the separated companies.
