Johnson & Johnson plans to split into two companies in the next two years, with one company centering on prescription drugs and medical devices while the other will center on health care products like Band-Aids and Listerine, the Associated Press reported. J&J said Friday that the split was meant to boost the speed and focus of each of the planned companies as they seek to keep up with their respective industry trends.
"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," CEO Alex Gorsky said in a statement.
The Johnson & Johnson name will remain with the company that sells medical devices, meant for orthopedics and surgery, and treatments like Darzalex, Erleada and Imbruvica. The company's pharmaceutical branch also manufactures a one-dose COVID-19 vaccine, one of three currently authorized in the U.S.
The other company, which would focus on J&J brands like Neutrogena, Aveeno, Band-Aid and Listerine, has not been named yet.
J&J, founded in 1886, is the biggest maker of health products in the world. The potential split still needs to be approved by the company's board of directors.
For more reporting from the Associated Press, see below:
Pharmaceuticals and medical devices pulled in a combined $19.6 billion in revenue in the company's recently completed third quarter, which turned out better than analysts expected. Consumer health brought in $3.7 billion.
J&J is beginning its split as it also undergoes a leadership transition. The company said in August that Gorsky will step down and be replaced in January by longtime company executive Joaquin Duato.
The split also comes as J&J deals with criticism from some Democrats in Congress over another corporate move. J&J is facing thousands of lawsuits claiming that its talc-based baby powder, which it has stopped selling in the U.S. and Canada, caused ovarian cancer.
U.S. Senators Dick Durbin of Illinois and Elizabeth Warren of Massachusetts, among others, recently sent a letter to the company asking for more information about a newly created subsidiary that filed for Chapter 11 bankruptcy protection.
The senators in a November 10 letter called the move a "corporate shell game" that would shield the company from liability in those cases.
Company officials said Friday that their announcement was "separate and distinct" from the baby powder situation.
J&J's announcement Friday comes just days after General Electric said that it plans to split into three separate companies.
It also follows similar moves by other large health care firms who sought to narrow their focus. Rival drugmaker Pfizer Inc. spun off its consumer health product business in 2019 to help create a joint venture with GlaxoSmithKline.
Another drugmaker, Merck & Co. Inc., slimmed down in June with a spinoff that combined its Organon women's health unit with its businesses selling biosimilars, or near-copies of pricey biologic drugs, and off-patent former blockbusters like respiratory drugs Singulair and Nasonex.
Shares of the New Brunswick, New Jersey-based Johnson & Johnson climbed more than 3 percent before the market opened. The company has been a component of the Dow Jones Industrial Average since 1997.
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