Johnson & Johnson plans to spin off its consumer health division to focus on pharmaceuticals and medical devices in the biggest shake-up in the U.S. company’s 135-year history.
The company said it was aiming to complete the separation in 18 to 24 months at a cost of $500 million to $1 billion. J&J shares, part of the Dow Jones Industrial Average, were up 1.5%. The pharmaceutical and medical devices unit will retain the J&J name and the company expects a tax-free spinoff.
The planned separation would create two global leaders that are better positioned to deliver improved health outcomes for patients and consumers through innovation, pursue more targeted business strategies and accelerate growth.
Following the planned separation, the new Johnson & Johnson would remain the world’s largest and most diverse healthcare company and continue its commitment to lead in global healthcare R&D and innovation, with a portfolio that blends its strong Pharmaceutical and Medical Device capabilities focused on advancing the standard of care through innovation and technology. As previously announced, Mr. Alex Gorsky will serve as Executive Chairman of Johnson & Johnson and transition the Chief Executive Officer role to Mr. Joaquin Duato, currently Vice Chairman of the Company’s Executive Committee, effective January 3, 2022. Mr. Duato would continue to lead the new Johnson & Johnson following completion of the planned separation.
The New Consumer Health Company would be a leading global consumer health company, touching the lives of over one billion consumers around the world every day through iconic brands such as Neutrogena, AVEENO, Tylenol, Listerine, JOHNSON’s, and BAND-AID and continuing its legacy of innovation. The New Consumer Health Company’s Board of Directors and executive leadership would be determined and announced in due course as the planned separation process progresses.
Mr. Gorsky said, “Throughout our storied history, Johnson & Johnson has demonstrated that we can deliver results that benefit all our stakeholders, and we must continually be evolving our business to provide value today, tomorrow and in the decades ahead. 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.”