130-year-old Johnson & Johnson will split into two public companies

Johnson & Johnson announced plans Friday to separate into two public companies, splitting off its consumer health arm responsible for household names such as Band-Aid, Tylenol and Listerine, among many others. 

J&J hasn’t yet developed a name for the new consumer health company but said it is expected to generate about $15 billion in revenue in 2021. Leaders hope to complete the separation by the end of 2022.

The more than 130-year-old conglomerate’s pharmaceutical and medical device division, meanwhile, is projected to bring in $77 billion in revenue next year and offers higher growth potential than its healthcare product arm. 

The move reflects a widening gap between its businesses, customers and markets, and will allow J&J to accelerate growth and improve outcomes for patients and consumers, the company 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,” Chief Executive Alex Gorsky added Friday.

The announcement comes just days after General Electric said it will split into three separate companies focused on healthcare, aviation and energy. GE had been slowly selling off pieces of its company over recent years after struggling to deliver value to its shareholders.

Gorsky will continue operating as executive chairman of Johnson & Johnson and hand over the CEO role to Joaquin Duato, current vice chairman of the firm’s executive committee, effective Jan. 3, 2022.

We believe that the new Johnson & Johnson and the new consumer health company would each be able to more effectively allocate resources to deliver for patients and consumers, drive growth and unlock significant value,” Duato added. “Each company would carry on the Johnson & Johnson legacy of putting the needs and well-being of the people we serve first.”

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