Johnson & Johnson splitting its consumer health care business into separate company

Johnson & Johnson plans to separate its consumer health business, creating a new publicly traded company.

The new consumer health company would touch over one billion consumers around the world every day through brands such as Neutrogena, Aveeno, Tylenol, Listerine, JOHNSON’s, and BAND-AID.

“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 health care outcomes for people around the world,” Alex Gorsky, CEO, Johnson & Johnson, said in a statement. “For the new Johnson & Johnson, 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 health care systems, while creating sustainable value for shareholders.

The planned separation aims to achieve the following key goals:

• Increase management focus, resources, agility and speed to effectively address differing industry trends and to better meet the needs of the new Johnson & Johnson and the new consumer health company patients and consumers;
• Further focus capital allocation based on the objectives of each independent company;
• Provide each company with a compelling financial profile that more accurately reflects the strengths and opportunities of each business and, as a result, offers investors a more targeted investment opportunity; and
• Align corporate and operational structures so each company is better able to drive growth and value creation.

Following the planned separation, the new Johnson & Johnson would remain the world’s largest and most diverse health care company and maintain a portfolio that blends its pharmaceutical and medical device capabilities focused on materially advancing the standard of care through biopharmaceutical and medical device innovation and technology. Leveraging its long-standing strength in core areas of science, technology, regulatory, supply chain and global commercial reach, the new Johnson & Johnson would continue to build on its offering of life-saving treatments, including DARZALEX, ERLEADA, IMBRUVICA, STELARA and TREMFYA, as well as medical device solutions across interventional solutions, orthopaedics, surgery and vision.

The pharmaceutical business would advance its portfolio and pipeline of products, accelerating key therapeutic areas, such as oncology and immunology, while also advancing new therapeutic modalities such as cell and gene therapies. At the same time, the medical devices business would plan to accelerate its momentum across orthopaedics, interventional solutions, surgery and vision, enabled by a strong digital surgery pipeline and focus on execution across all geographies.

The new consumer health company would have a portfolio of iconic brands — comprising four $1 billion megabrands and 20 brands over $150 million — and leading positions in self care (OTC), skin health and essential health, which includes baby care, feminine care, wound care and oral health. The consumer health segment is expected to generate revenue of approximately $15 billion in full-Year 2021 and, following the planned separation, it would generate sales in over 100 countries.

The planned organizational design for the new company is expected to be completed by the end of 2022 and will be subject to legal requirements including consultation with works councils and employee representatives, as required.

This article was initially published by our sister publication Medical Economics.