Health-care conglomerate Johnson & Johnson has announced on Friday its plans to split into two publicly traded companies which, if approved, will occur in the next 18 months to two years.
In its Friday’s news release, the company’s CEO Alex Gorsky noted that this separation underscores their focus on delivering industry-leading biopharmaceutical and medical device innovation and technology.
At the same time, he emphasized J&J’s goal to create sustainable value for shareholders while offering new solutions for patients and healthcare systems to the market.
Gorsky underlined that the new strategy is in the best long-term interest of all their stakeholders since its aim is to create two global leaders: one that would be a global leader across attractive and growing consumer health categories and another one -streamlined and targeted corporate structure- to grow the iconic portfolio of brands and innovate new products.
The 135-year-old company was already undergoing a major transition with the departure of Gorsky’s as CEO though he’ll remain executive chairman of the new J&J.
The separation plan envisions the first company, which will keep the Johnson & Johnson name, to handle the riskier, but faster-growing division for medical devices, prescription drugs, the COVID-19 vaccine and treatments such as Darzalex, Stelara and Tremfya.
It will also keep at its helm J&J’s incoming CEO Joaquin Duato, who is taking over the role in January.
The second company, the name of which wasn’t revealed, will be behind consumer health products and brands such as Tylenol, Neutrogena, Listerine, Aveeno, Band-Aid and Johnson’s.
On top of that, the company plans to keep its total dividend “at least at the same level” of about 2.6% following the change.
After General Electric and Toshiba, J&J is the third major company that announced plans to break up its business this week. After the announcement, shares of J&J climbed up more than 3,5% on Wall Street in premarket trading.
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