J&J to break-up company into pharma and consumer divisions

JOHNSON & Johnson is spinning off the division behind consumer brands such as Listerine mouthwash and Neutrogena skin care, in a split of the 135-year-old company meant to sharpen its medical business.

The US conglomerate said it expected to carve out its consumer healthcare arm within the next 18 to 24 months, creating two publicly listed companies. Consumer health is the smaller part of J&J’S business, and is on track to generate $15bn (£11bn) in sales this year compared with $77bn for its pharmaceutical division.

The unit makes some of the world’s best-known household brands, including Band-aid and Benadryl.

A break-up will put J&J’S consumer division in direct competition with industry titans such as Procter & Gamble, the owner of Pampers nappies and Head & Shoulders, and Unilever, which makes Dove soap and Marmite.

Alex Gorsky, chief executive of J&J, said a split was the best way to “improve healthcare outcomes for people around the world”.

Joaquin Duato, vice chairman of J&J’S executive committee, will take over from Mr Gorsky as chief executive in

January and run the remaining business, which is behind the Janssen Covid-19 vaccine and also makes medical devices.

Shares in J&J rose as much as 4pc on the news. The company’s share price has swelled more than 16pc since the pandemic started owing to the success of its vaccine.

The announcement comes as J&J reels from the fallout from thousands of legal claims that its talcum baby powder contained traces of asbestos that causes cancer. A US court last year ruled the company would have to pay $2.1bn in damages.

The firm has never admitted wrongdoing but stopped selling the product in the US and Canada in 2020. J&J insisted that the split is not linked to the case.

The break-up comes as British rival Glaxosmithkline prepares to spin out its own consumer healthcare division.

Brian Mcnamara, who will head up the separated GSK consumer health arm, has said the company will be on the hunt for takeover opportunities after the break-up. GSK is expected to make a play for wellness and nutrition brands, which have become increasingly popular among health conscious consumers since the pandemic hit.

Separately yesterday, Japan’s oldest conglomerate Toshiba unveiled its own plans for a break-up.