Johnson and Johnson to split into 2 companies
New Delhi: US pharma giant Johnson and Johnson (JnJ) has recently announced that it is splitting into two companies, separating the division that sells Band-Aids and Listerine from its medical device and prescription drug business.
The move to separate the company's consumer health business, creating a new publicly traded company comes with the intent to accelerate innovation and serve patients and consumers.
The planned separation would create two global leaders that are better positioned to deliver improved health outcomes for patients and consumers through innovation, pursue more targeted business strategies, and accelerate growth.
In its press release, Johnson and Johnson stated that following the planned separation, the new Johnson and Johnson would remain the world's largest and most diverse healthcare company and continue its commitment to lead in global healthcare R&D and innovation, with a portfolio that blends its strong pharmaceutical and medical device capabilities focused on advancing the standard of care through innovation and technology.
Alex Gorsky will serve as Executive Chairman of JnJ and transition the Chief Executive Officer role to Joaquin Duato, currently Vice Chairman of the Company's Executive Committee, effective January 3, 2022. Duato would continue to lead the new Johnson and Johnson following completion of the planned separation.
The release further added that the New Consumer Health Company would be a leading global consumer health company, touching the lives of over one billion consumers around the world every day through iconic brands such as Neutrogena, AVEENO, Tylenol, Listerine, JOHNSON's, and BAND-AID and continuing its legacy of innovation.
The New Consumer Health Company's board of directors and executive leadership will be determined and announced in due course as the planned separation process progresses.
Gorsky said, "Throughout our storied history, Johnson & Johnson has demonstrated that we can deliver results that benefit all our stakeholders, and we must continually be evolving our business to provide value today, tomorrow and in the decades ahead. 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."
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Gorsky continued, "For the new Johnson & Johnson, this planned separation underscores our focus on delivering industry-leading biopharmaceutical and medical device innovation and technology with the goal of bringing new solutions to market for patients and healthcare systems, while creating sustainable value for shareholders. We believe that the New Consumer Health Company would be a global leader across attractive and growing consumer health categories, and a streamlined and targeted corporate structure would provide it with the agility and flexibility to grow its iconic portfolio of brands and innovate new products. We are committed to the success of each organization, as well as our company's more than 136,000 employees around the globe, who will remain the backbone of these businesses."
Duato commented, "This planned transaction would create two businesses that are each financially strong and leaders in their respective industries. 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. Importantly, the new Johnson & Johnson and the New Consumer Health Company would remain mission driven companies with exceptional brands, commitments to innovation, and remarkable talent. Each company would carry on the Johnson & Johnson legacy of putting the needs and well-being of the people we serve first."
According to the release, the planned separation is expected to create value for all stakeholders by aiming to achieve the following key goals:
• Increase management focus, resources, agility and speed to effectively address differing industry trends and to better meet the needs of the new Johnson & Johnson and the New Consumer Health Company patients and consumers;
• Further focus capital allocation based on the objectives of each independent company;
• Provide each company with a compelling financial profile that more accurately reflects the strengths and opportunities of each business and, as a result, offers investors a more targeted investment opportunity; and
• Align corporate and operational structures so each company is better able to drive growth and value creation.
Addressing the new Johnson & Johnson, the press release stated that the new Johnson & Johnson would continue to build on its offering of life-saving treatments, including DARZALEX, ERLEADA, IMBRUVICA, STELARA and TREMFYA, as well as medical device solutions across interventional solutions, orthopaedics, surgery and vision.
The Pharmaceutical and Medical Devices segments, which are expected to generate revenue of approximately $77 billion in Full-Year 20211 , are united by their shared and complementary focus on scientific research and development to serve similar end users – patients and healthcare providers – and operate in similar regulatory and competitive environments, the release read.
Further, the new Johnson & Johnson is expected to be better positioned to combine skills, expertise, and approaches to bring integrated, comprehensive, and more impactful care to patients, addressing diseases in areas such as oncology and eye health that require a combination of surgical, interventional, and pharmaceutical treatments.
The new Johnson & Johnson would continue to play a leading role in advancing the industry forward by creating novel solutions, bringing together treatments spanning therapeutics, robotics, artificial intelligence, and more, to change the way diseases are prevented, intercepted, and eventually cured.
At the same time, the release also mentioned that "the Medical Devices business would plan to accelerate its momentum across orthopaedics, interventional solutions, surgery, and vision, with an increased cadence of meaningful innovation enabled by a strong digital surgery pipeline and focus on execution across all geographies."
On the other hand, while describing the new Consumer Health Company post-separation, the release stated that the new Consumer Health Company would be a global leader with a powerful portfolio of iconic brands — comprising four $1 billion megabrands and 20 brands over $150 million — and leading positions in Self Care (OTC), Skin Health, and Essential Health, which includes baby care, feminine care, wound care, and oral health.
The Consumer Health segment is expected to generate revenue of approximately $15 billion in full year 2021 and, following the planned separation, the New Consumer Health Company would generate sales in over 100 countries, driven by world-class innovation capabilities and demonstrated business momentum.
In recent years, Johnson & Johnson stated that it has focused on the Consumer Health business and advanced its innovation, enabling it to reach more consumers with products that truly make a difference in people's lives while simultaneously expanding margins and delivering healthy financial results. These actions have bolstered positions in self-care, skin health, and essential health.
In its release, Johnson and Johnson mentioned, "The planned organisational design for the New Consumer Health Company is expected to be completed by the end of 2022 and will be subject to legal requirements including consultation with works councils and employee representatives, as required. Planned New Consumer Health Company employees are expected to continue participating in their current Johnson & Johnson pay, benefits and retirement programs through the end of 2022."
