Johnson & Johnson will split into two public companies

Johnson & Johnson Corporation plans to split into two public companies, the WSJ said : one will continue to produce personal care and hygiene products, and the other will focus on the production of medicines and medical equipment.

The world's largest health retailer, Johnson & Johnson, will separate its highly profitable but less predictable prescription drug and medical device business from its storied consumer goods division. According to the company's CEO Alex Gorsky, J&J will carry out the division of businesses in a year and a half to two years. According to him, the corporation decided to make such changes because the customers and markets of the two lines of work of the corporation have strongly moved away in recent years, especially during the pandemic. “The best way to ensure long-term sustainable growth and better meet the needs of patients and consumers is to make our consumer business a separate healthcare company,” explained Gorsky.

Disposable diapers, indigestion pills, and cough suppressants were the backbone of J&J in its early days. Today, the company's consumer retail business includes well-known global brands from Neutrogena skin moisturizers to Zyrtec allergy pills, as well as Johnson's Baby, a popular eponymous brand of baby products. Meanwhile, J&J's pharmaceutical business has also grown in recent years — it now sells drugs for the treatment of various diseases (including cancer), and the company has gained worldwide fame as a pharmaceutical manufacturer after it released a successful anti-COVID vaccine.

Sales of the consumer goods sector rose 1.1% last year after a 0.3% annual growth the previous year. And the pharmaceutical division of J&J showed growth multiple times higher: last year, sales grew by 8%, in the previous year - by 3.6%.

The company's chief financial officer, Joseph Walk, said the drug and medical device maker will retain the J&J name and remain the world's largest company with $80 billion in sales. And the $15 billion-a-year consumer company will compete with Procter & Gamble, Nestlé and L'Oréal.

• The WSJ recalls that J&J is not the first corporation to make a decision to diversify its business in recent times: its pharmaceutical competitors Pfizer and Merck have already announced that they intend to separate their consumer business from fast-growing pharmaceutical sales. This week, General Electric Corporation announced the division into three public companies at once (we detailed why this is necessary here ), followed by the Japanese Toshiba also pledged to divide the business into three different companies amid a corporate governance scandal.