Johnson & Johnson says it will separate its segment that sells Band-Aids, Listerine and over-the-counter medicines from its pharmaceutical and medical device business
It is the third major company to announce plans to break up its business this week after General Electric and Toshiba. US pharmaceutical giant Johnson & Johnson has announced plans to break up, splitting its consumer health arm that sells Band-Aid and Tylenol from its pharmaceutical division that includes the single-shot Covid-19 vaccine.
The spin-off will create "two global leaders that are better positioned to deliver improved health outcomes for patients and consumers through innovation," Johnson & Johnson said in a statement on Friday. The company plans to complete the separation in 18-24 months, creating two publicly-traded companies, and the transaction will "qualify as a tax-free separation." Alex Gorsky, CEO of the 135-year-old company, said the decision to create a new consumer health business was made following a "comprehensive review." Gorsky will stay on as executive chair but at the start of January his vice-chair Juaquin Duato will take over as CEO. "This planned transaction would create two businesses that are each financially strong and leaders in their respective industries," Duato said. J&J Chief Financial Officer Joseph Wolk said the split is not linked to the legal woes, nor to the company's recent bankruptcy proceedings. The company said its more than 136,000 employees around the world "will remain the backbone of these businesses."The consumer health branch, which produces Neutrogena skin care products and baby powder, generated $3.7 billion in the third quarter of 2021, nearly 16 percent of the group's total revenue.The company is still dealing with the fallout from thousands of lawsuits over its talcum powder containing traces of asbestos that causes cancer.The firm has never admitted wrongdoing but stopped selling talc-based baby powder in the US and Canada in 2020. Art Hogan of National Securities noted that the "consumer unit has been beset by lawsuits," while J&J's pharmaceutical arm has long been its strongest performer.
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