Drugmaker Johnson & Johnson plans to split into two publicly traded companies, one of which will focus on consumer health products and the other on pharmaceutical and medical device operations.
The Nov. 12 announcement marks perhaps the biggest shake-up in the New Brunswick-based company’s 135-year history, at a time when it’s beset by legal action over allegations that its talcum powder contained cancer-causing agents. J&J officials have denied the allegations.
Under the arrangement, the New Consumer Health Company would continue making consumer-based products such as Band-Aid adhesive strips, Tylenol pain killers and Listerine mouthwash. The medical device and pharmaceutical business will focus on prescription drugs and medical devices, including the company’s COVID-19 vaccine.
The consumer health business would take on the litigation from the Baby Powder suits, according to CNBC.
“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 health care outcomes for people around the world,” outgoing Chief Executive Officer Alex Gorsky said in a statement.
Gorsky will be J&J’s executive chairman and transition the CEO role to Vice Chairman Joaqquin Duato on Jan. 3 next year, the company said.
J&J said the restructuring would ideally take between 18 and 24 months. The Consumer Health company is expected generate $15 billion in revenue for the full year 2021; the pharmaceutical and medical devices operations are projected to take in $77 billion, according to the company.
“Our goal is really to create two global leaders – a pharmaceutical and medical device business that has great potential today … and of course, the consumer business that’s got iconic brands,” Gorsky told CNBC’s “Squawk Box” in an interview after the announcement.
In October, J&J created a subsidiary to hold its liabilities for the talc-related claims. The unit then filed for Chapter 11 bankruptcy protection. On Nov. 10, the North Carolina judge hearing the case ruled that it should be moved to New Jersey.