Johnson & Johnson splits into two
Division selling Band-Aids to separate from medical devices, drugs.
Johnson & Johnson is peeling off a consumer health business that helped it become the world’s biggest health care products maker.
The company said Friday that it will separate its segment that sells Band-Aids, Listerine and over-the-counter medicines like Tylenol from its pharmaceutical and medical device business.
Company leaders told analysts that the split into two publicly traded companies will make each business more nimble in adapting to their respective markets. It also allows for a more precise allocation of capital.
CEO Alex Gorsky said that while the company’s broad focus has worked in the past, the split addresses segments that “have evolved as fundamentally different businesses.”
“We’ve seen a significant evolution in these markets, particularly on the consumer side,” Gorsky said, referring in part to a shift toward online shopping that accelerated during the pandemic.
The segment selling prescription drugs and medical devices — J&J’s two largest businesses — will keep the Johnson & Johnson name. Its products include the cancer treatment Darzalex, a COVID-19 vaccine and medical devices for surgery.
The new consumer health company has yet to be named. It will house brands including Neutrogena, Aveeno, and the iconic BandAids, which a company employee created more than 100 years ago.
Pharmaceuticals and medical devices pulled in a combined $19.6 billion in revenue in the recently completed third quarter, which turned out better than analysts expected. Consumer health brought in $3.7 billion.
The consumer health business has more than 20 brands that each have over $150 million in annual sales, Gorsky noted. He added that the portfolio includes names like Tylenol and children’s Tylenol that have reached all-time highs in market share.
J&J is beginning its split as it also undergoes a leadership transition. The company said in August that Gorsky will be replaced in January by longtime company executive Joaquin Duato.