Johnson & Johnson splits into two companies and removes the division that sells plasters and Listerine from its medical device and prescription drug business.
The world’s largest health products manufacturer, founded in 1886, said Friday that the move will help improve the focus and speed of any company to address trends in its various industries.
The company that sells prescription drugs and medical devices – J & J’s two largest companies – will retain the Johnson & Johnson name. The company sells treatments such as Darzalex, Erleada, Imbruvica, Stelara and Tremfya as well as medical devices for orthopedics and surgery.
The pharmaceutical arm also makes one of three COVID-19 vaccines currently approved for use in the United States.
The new consumer health company, yet to be named, will house brands such as Neutrogena, Aveeno, Tylenol, Listerine, Johnson’s and Band-Aid.
“After a thorough review, the board and management team believe that the proposed separation of the consumer health business is the best way to accelerate our efforts to serve patients, consumers and healthcare professionals, opportunities for our talented global community Create team and drive profitable growth, “and most importantly, improve health outcomes for people around the world,” CEO Alex Gorsky said in a statement.
Johnson & Johnson anticipates the split will take place within the next two years if the company’s board of directors approves.
Pharmaceuticals and medical devices combined sales of $ 19.6 billion in the company’s recently completed third quarter, better than analysts expected. Consumer Health raised $ 3.7 billion.
J&J begins its split as it is also undergoing a change in leadership. The company announced in August that Gorsky would be leaving and will be replaced by longtime company director Joaquin Duato in January.
The split also comes as J&J grapples with criticism from some Democrats in Congress about another corporate move. J&J has faced thousands of lawsuits alleging that its talc-based baby powder, which is no longer sold in the US and Canada, caused ovarian cancer.
Among others, US Senators Dick Durbin from Illinois and Elizabeth Warren from Massachusetts recently sent the company a letter asking for more information about a newly formed subsidiary that had filed for Chapter 11 bankruptcy protection.
In a letter dated November 10, the senators called the move a “corporate hut game” that would protect the company from liability in these cases.
Company officials said Friday that their announcement was “separate and distinct” from the baby powder situation.
J & J’s announcement on Friday came just days after General Electric announced it would split into three separate companies.
It also follows similar steps taken by other large healthcare companies trying to narrow their focus. Competitive drug maker Pfizer Inc. spun off its consumer health products business in 2019 to form a joint venture with GlaxoSmithKline.
Another drug maker, Merck & Co. Inc., slimmed down in June with a spin-off that combined its Organon women’s health division with its businesses that sell biosimilars, or near-copies of expensive biological drugs, and ex-blockbusters that are unpatented , like Singulair and Nasonex.
New Brunswick, New Jersey-based Johnson & Johnson shares rose more than 3% before the market opened. The company has been part of the Dow Jones Industrial Average since 1997.
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