Health-care conglomerate Johnson & Johnson has announced its plan to separate the company’s consumer health business from its pharmaceutical division, creating a new publicly traded company.
In a press statement, the company said, “The planned separation is aimed at delivering improved health outcomes for patients and consumers through innovation, pursuing more targeted business strategies and accelerating growth.”
Alex Gorsky will serve as Executive Chairman of J&J and transition the Chief Executive Officer role to Joaquin Duato, currently Vice-Chairman of the Company’s Executive Committee, effective January 3, 2022. Duato would continue to lead the new J&J following completion of the planned separation.
Although J&J’s consumer health unit is its smallest, the products within it have huge brand recognition. Benadryl, Listerine and Band-Aid will soon come under the new separate entity, which is yet to be named. The split is expected to occur in 18 to 24 months. Its Board of Directors and executive leadership would be determined and announced in due course.
J&J’s pharmaceutical arm is its biggest, generating $45.6 billion in sales last year. Its medical device unit, meanwhile, brought in $23 billion, and its consumer health segment produced $14 billion. Due to fewer people having elective surgery during the pandemic, the company’s medical device division was the only one to see a year-over-year decline in revenue.
The planned organisational design for the new consumer health company is expected to be completed by the end of 2022 and its employees are expected to continue participating in their current J&J pay, benefits and retirement programmes through the end of 2022.
In a statement to the media, Gorsky said, “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 healthcare outcomes for people around the world.”
He said that this planned separation underscores its focus on delivering industry-leading biopharmaceutical and medical device innovation and technology with the goal of bringing new solutions to market for patients and healthcare systems while creating sustainable value for shareholders.
Duato believes that this planned transaction would create two businesses that are each financially strong and leaders in their respective industries.
Also, J&J’s consumer unit has been under scrutiny in the past, as multiple lawsuits allege its product could be linked to ovarian cancer in some users.
In the statement, it further added that the new consumer health company would be expected to benefit from a strong investment-grade profile and balance sheet that would allow it to build on its long history of innovation and maintain and extend its leadership position across important and growing categories.
BestMediaInfo reached out to J&J’s officials for the latest updates for the Indian market, but no statement has been given so far.