BUSINESS Johnson & Johnson Says It Intends to Separate Its Consumer Health Businesses into Two Companies By Staff Monday, November 15, 2021 12:24 AM NEW BRUNSWICK, N.J.—Johnson & Johnson (NYSE: JNJ) announced last Friday its intent to separate the company’s consumer health business, creating a new publicly traded company. 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, the announcement said. Following the planned separation, the new Johnson & Johnson would remain the world’s largest and most diverse health care company and continue its commitment to lead in global health care R&D and innovation, with a portfolio that blends its strong pharmaceutical and medical device capabilities, including vision, orthopaedics and surgery.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 others. The New Consumer Health Company’s board of directors and executive leadership would be determined and announced in due course as the planned separation process progresses.As previously announced, Alex Gorsky will serve as executive chairman of Johnson & Johnson and transition the CEO role to Joaquin Duato, currently vice chairman of the company’s executive Committee, effective Jan.3, 2022. Duato would continue to lead the new Johnson & Johnson following completion of the planned separation.The planned organizational 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. The company is targeting completion of the planned separation in 18 to 24 months, subject to the satisfaction of certain conditions including, among others, consultations with works councils and other employee representative bodies, as required, final approval of Johnson & Johnson’s board of directors, receipt of a favorable opinion and Internal Revenue Service ruling with respect to the tax-free nature of the transaction, and the receipt of other regulatory approvals. There can be no assurance regarding the ultimate timing of the proposed transaction or that the transaction will be completed, the announcement said.Of the broad plan Gorsky commented, “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 health care professionals, create opportunities for our talented global team, drive profitable growth, and—most importantly—improve health care outcomes for people around the world.”He 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 health care 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.”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.Align corporate and operational structures so each company is better able to drive growth and value creation.The Pharmaceutical and Medical Devices segments, which are expected to generate revenue of approximately $77 billion in Full-Year 2021, are united by their shared and complementary focus on scientific research and development to serve similar end users—patients and health care providers—and operate in similar regulatory and competitive environments, the announcement said.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 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.