N.J. pharma giant Johnson & Johnson will split into 2 publicly traded organizations and rebrand consumer health business

Johnson & Johnson, the New Jersey-based pharmaceutical giant, will separate into two publicly traded companies, making an altogether new, rebranded consumer health business, the organization reported Friday.

Health-care aggregate Johnson & Johnson reported plans Friday to split its consumer products business from its pharmaceutical and medical device operations, making two publicly traded companies. The news sent shares higher in premarket trading.

Its a significant change for the 135-year-old institution situated in New Brunswick.

The separation will sheer off its household products unit, producer of Band-Aid bandages, Aveeno and Neutrogena skincare products, and Listerine, from its less secure, yet faster-growing division that makes and sells prescription drugs and medical devices, including its Covid-19 vaccine.

Johnson & Johnson, which has more than 136,000 employees, will split its consumer products arm — responsible for Band-Aids, Tylenol, Listerine, and Neutrogena from its pharmaceutical and medical device branches within 18 to 24 months, the organization said. The decision was first revealed by The Wall Street Journal.

“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,” Alex Gorsky, the company’s chief executive, said in a statement.

The organization said it desires to finish the transaction in 18 to 24 months. The pharmaceutical and medical device division, which incorporates trend-setting innovations like advanced mechanics and man-made brainpower, would hold the name Johnson and Johnson and keep J&Js approaching CEO, Joaquin Duato, at its steerage.

The company’s pharmaceutical and medical device divisions will work under the Johnson & Johnson brand. It’s unclear what the new consumer health organization will be named.

“For the new Johnson & Johnson, this planned separation underscores our focus on delivering industry-leading biopharmaceutical and medical device innovation and technology to bring new solutions to market for patients and healthcare systems, while creating sustainable value for shareholders,” Gorsky said in the statement.

The organization previously reported that Joaquin Duato, the vice-chairman of its executive committee, will become Johnson & Johnson’s CEO toward the beginning of January, while Gorsky will stay executive chairman.

Gorsky let The Wall Street Journal know that every one of the claims charging the company’s talc-based Baby Powder product caused cancer was not a factor in the decision.

NJ Advance Media detailed earlier this month that Johnson & Johnson made a spin-off organization in Texas in mid-October and unloaded its talc-related liabilities into the recently made LTL Management. It then re-established the side project in North Carolina and filed for bankruptcy protection. The technique has been used frequently enough by solvent organizations confronted with personal injury claims that it has a name the “Texas two-step.” The move enraged plaintiffs who considered it to be an attempt by the organization to skirt liability regarding any harm its product might have caused.

A North Carolina judge moved the bankruptcy case to New Jersey on Wednesday, saying it is the most logical venue since it is the place where most claims including Johnson & Johnson’s talc products were filed.

The New York Times noticed that J&Js decision to split into two organizations is a move progressively used by immense companies to fulfill shareholders.

Duato is taking over the role in January as previously planned. Those sections are relied upon to create generally $77 billion in revenue while the consumer products division is forecast to sell about $15 billion in products this year, the organization said.

Its yet-to-be-named customer products organization will likewise inherit litigation stemming from lawsuits over claims that its Johnson’s Baby Powder causes cancer, charges the organization has passionately denied.

Gorsky said the consumer division has four brands alone that create more than $1 billion in annual sales. By separating it, the organization can give “even more agility” and “a better opportunity for capital allocation,” he said.

Shares of J&J were up over 3% in premarket trading after the declaration.

J&J was at that point going through a significant change with Gorsky’s departure as CEO. He will stay on as executive chairman of the new J&J, the organization said.

Moreover, the organization said it wanted to keep its total dividend “at least at the same level” after the change. J&J presently sports a dividend yield of around 2.6%.

The declaration comes only days after General Electric said it intends to split into three separate publicly traded companies, turning out its medical and energy units from its aviation unit.