Money & The Economy

Healthcare Giant Splits Into Two Separate Companies

Johnson and Johnson (J&J) announced Friday that it plans to break up its two companies, separating its consumer health business into its own publicly-traded company.

The health care giant said it would separate the division that sells consumer products like Band-Aids, Listerine and Tylenol from its riskier and faster-growing pharmaceutical and medical device business, according to a company press release. The consumer division, which generates $15 billion in revenue a year, will operate independently in the next 18 to 24 months.

“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,” chief executive Alex Gorsky said in the press release.

The segment selling prescription drugs and medical devices will keep the J&J name while the consumer health company has not yet been named, according to the press release. Consumer health has four brands that generate over $1 billion in annual sales and another 20 bringing in over $150 million.

By separating into two companies, the consumer brand will have the ability to be more agile, adapting to trends within the market and allowing for better allocation of capital, Gorsky said.

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