USA – Johnson & Johnson, the world’s largest health-care conglomerate, has announced plans to separate its consumer products business from its pharmaceutical and medical device operations, resulting in the formation of two publicly traded companies.
The consumer arm – comprised of million- and billion-dollar brands and offering products such as mouthwash, shampoo, and skincare – will form a new publicly traded company in the next 18 to 24 months.
The pharmaceutical and medical device division, which includes advanced technologies such as robotics and artificial intelligence, would keep the Johnson & Johnson name and would be led by J&J’s incoming CEO, Joaquin Duato.
Meanwhile, the new Johnson & Johnson will focus on its key pharmaceutical areas and thus remain committed to changing the trajectory of human health.
It highlights its commitment in key therapeutic areas such as oncology and immunology, while also pledging to continue advancing new therapeutic modalities such as cell and gene therapies.
Following the separation, J&J will concentrate its efforts on the pharmaceutical and medical device segments, which are expected to generate approximately US$77 billion in revenue this year, according to the company.
J&J’s pharmaceutical portfolio
J&J’s pharmaceutical business focuses on six therapeutic areas including cardiovascular & metabolism, Immunology, Infectious diseases and vaccines, Neuroscience, Oncology, and Pulmonary Hypertension.
The prescription and pharmaceutical products that make up the majority of the new J&J company cover a wide range of therapeutic areas, including cancer drugs, vaccines, and heart medications.
J&J’s most well-known product is arguably its Covid-19 vaccine; the company’s one-shot jab is the only single-dose coronavirus vaccine on the market and is sold on a non-profit basis.
According to J&J’s executive vice president, the company is planning to switch to a commercial pricing model for the vaccine either next year or in 2023.
Other commercial successes in J&J’s pharma portfolio include the inflammatory disease therapy Stelara, the monoclonal antibody Darzalex for the treatment of multiple myeloma; the lymphoma and chronic graft-versus-host disease drug Imbruvica, which was developed in collaboration with AbbVie; and the antibody-based plaque psoriasis treatment Tremfya.
Pharma’s consumer spin-offs
J&J is not the first pharmaceutical giant to divest its consumer division in favor of its more profitable pharmaceutical division.
The news comes just days after General Electric announced plans to split into three separate publicly traded companies, separating its medical and energy divisions from its aviation division.
After failing to sell its consumer health segment, Pfizer divided itself into three business units in 2018. Only a few months later, the company announced a partnership with fellow pharma leader GlaxoSmithKline (GSK) to merge their two consumer health businesses into a single joint entity with an estimated £9.8 billion (US$13.06 billion) in annual sales.
GSK, which owns a larger portion of the companies’ shared consumer division, announced last month that it was “on track” to spin off the business, with the split expected to happen as soon as mid-2022.
Also, in 2018, US corporation Proctor & Gamble acquired German drugmaker Merck’s consumer health business.