The company said Friday that it will separate its segment that sells Band-Aids, Listerine and over-the-counter medicines like Tylenol from its pharmaceutical and medical device businesses.
Company leaders told analysts that the split, which will create another publicly traded company for the consumer health side, will make each business more nimble in adapting to their respective markets.
CEO
“We've seen a significant evolution in these markets, particularly on the consumer side,” Gorsky said, referring in part to a shift toward online shopping that accelerated during the COVID-19 pandemic.
An analyst asked company leaders during a Friday call to discuss the split why they were making the change now, when they have touted J&J’s diversity in the past as a way to help offset a downturn in a particular segment.
“I think we have consistently had the belief that our diversified portfolio is rooted in strategy,” Gorsky said. “However, it’s not anchored in strategy.”
“(J&J) gives its companies a lot of autonomy,” he said.
The segment selling prescription drugs and medical devices — J&J's two largest businesses — will keep the
The new version of J&J also will get incoming CEO
The split comes at an ideal time for a leadership change, said
He noted that the new CEO takes over what will become a completely different company, one that won't have easy metrics for comparing to past performances and evaluating progress.
“It buys time for decisions to be made on what to do next," Brozak said. "This is the perfect vehicle for a management change.”
Pharmaceuticals and medical devices pulled in a combined
Consumer health brought in
A leader and name for the new consumer health company have yet to be announced. It will house brands including Neutrogena, Aveeno, and the iconic Band-Aids, which a company employee created more than 100 years ago.
That segment has more than 20 brands that each have over
Last month, J&J announced that it had created a separate subsidiary to deal with those claims, and that subsidiary filed for voluntary Chapter 11 bankruptcy protection.
Company officials said that the split they announced Friday was “separate and distinct” from that baby powder liability and the bankruptcy proceedings.
But Morningstar analyst
J&J's announcement comes just days after
It also follows similar moves by large pharmaceutical rivals
Shares of
J&J shares had already climbed about almost 4% so far this year, while the Dow has jumped about 17%.
J&J has been a component of the Dow Jones Industrial Average since 1997.
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