Johnson & Johnson is one of the largest and oldest companies in the healthcare field. It plans to Separate The company said that its consumer health department will be separated from other business units. This move will leave two different entities, each of which is more conducive to independent development, rather than as part of a single company.
The remaining company will be responsible for the pharmaceutical and medical device business, which will retain the name of Johnson & Johnson. The unnamed consumer health business will become a public company. Johnson & Johnson Chairman and CEO Alex Gorski said on Friday’s conference call that the spin-off will make the remaining company a more flexible organization that can make acquisitions as needed.
He said: “Our goal is to continue to achieve outstanding performance in each market segment where Johnson & Johnson will continue to compete.”
The spin-off announced on Friday is expected to take 18 to 24 months, and the transition will be led by Joaquin Duato, currently vice chairman of Johnson & Johnson’s executive committee. In August, the New Brunswick, New Jersey-based company announced Duato Gorski As CEO; Gorski will step down on January 3 for family health reasons.
For decades, consumer products have been part of a key diversification strategy for maintaining the financial health of healthcare companies. Stable sales of consumer goods sold over the counter in pharmacies and grocery stores offset the peaks and troughs of revenue from medicines and medical devices. However, consumer products such as mouthwash and soap do not have much in common with innovative medical therapies (such as biological treatments for chronic diseases). Johnson & Johnson is the latest major company to conclude that putting all these products inside the same company may no longer make sense.
Several large pharmaceutical companies have split the consumer products division and generic products into separate entities, while the remaining companies are focusing on medical products that require intensive research and development. GlaxoSmithKline and Pfizer establish a joint venture Started selling over-the-counter products three years ago. Pfizer’s generic and generic drugs merge with Mylan The new company Viatris was established last year.
This strategy continues to work this year. In June, Merck’s legacy drugs, biosimilars and women’s health products were split into the new listed company Organon. This trend has also spread to medical device companies. Becton Dickinson announced plans to divest its $1.1 billion diabetes care products business in May Become an independent listed company.Last month, Novartis announced a Strategic review Sandoz is its division that sells generic drugs and biosimilars. If a spin-off occurs, Novartis will have a large amount of cash available for research and development and transactions.Last week, Novartis announced that it will Sold its stake in the company back to Roche for nearly $21 billion.
Johnson & Johnson consumer health products are well-known brands, even if consumers are not aware that they are manufactured by Johnson & Johnson. The product lineup includes Listerine, Band-Aid Bandages and Tylenol. Johnson & Johnson expects that this business unit will generate approximately $15 billion in revenue by 2021, an increase of 7.1% over 2020 sales.
Pharmaceuticals and medical devices account for the largest share of Johnson & Johnson’s total revenue, and each market segment itself is healthier than consumers. The total revenue of medicine in 2020 is US$45.5 billion; for medical devices, this figure is US$22.9 billion. The company said that both business units focus on scientific research and development, and operate in a similar regulatory and competitive environment. Johnson & Johnson expects the total revenue of these two divisions to reach 77 billion U.S. dollars in 2021.
Johnson & Johnson expects to complete the organizational structure of the new consumer health company by the end of 2022. The company intends to split the tax exemption for Johnson & Johnson shareholders, believing that the IRS needs to sign the tax-exempt nature of the transaction. The transaction also requires the final approval of Johnson & Johnson’s board of directors.
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