Healthcare giant Johnson & Johnson to split into two companies

By Manas Mishra

(Reuters) – Healthcare conglomerate Johnson & Johnson (NYSE:) said on Friday it is planning to break up into two companies, splitting off its consumer health division that sells Band-Aids and Baby Powder from its large pharmaceuticals unit.

The move is in line with other multinational companies adopting the strategy to simplify their structure. Earlier in the day, Toshiba (OTC:) Corp announced similar plans, while General Electric (NYSE:) Co said on Wednesday it would break up into three to pare down its debt.

Johnson & Johnson said it will separate its consumer health business into a new publicly traded company.

Other drugmakers have in the past separated their consumer health businesses from their pharmaceutical units.

Rival Pfizer Inc (NYSE:) had in 2019 combined its consumer health unit with GlaxoSmithKline (NYSE:) plc in a joint venture, while Germany’s Merck KGaA sold its consumer health unit to Procter & Gamble (NYSE:) Co in 2018.

“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,” said Joaquin Duato, who is expected to become J&J’s chief executive officer in January.

The company is aiming to complete the planned separation in 18 to 24 months, sending its shares up 4% before the bell.

Johnson & Johnson retain its pharmaceuticals and medical device units, which sells its COVID-19 vaccine and drugs such as cancer treatment Darzalex. The units are expected to generate revenue of roughly $77 billion in 2021.

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