An entry sign to the Johnson & Johnson campus shows their logo in Irvine, California
Mark Ralston/AFP via Getty Images
Johnson & Johnson
announced plans on Friday to split from its consumer health division, spelling the end of the last great pharmaceutical conglomerate.
Johnson & Johnson (ticker: JNJ) shares were up on the news, which comes two months before a planned CEO transition, in which longtime Johnson & Johnson executive Joaquin Duato is slated to replace Alex Gorsky in the top post.
Johnson & Johnson said that the split will take 18 to 24 months. The consumer health division, which the company said is expected to generate $15 billion in revenue this year, will become a new publicly traded company, selling big-name brands home health brands like Band-Aid, Tylenol, and Listerine.
The pharmaceutical and medical devices divisions, which the company expects to generate revenue of $77 billion this year, will stay behind as a separate company, selling a range of treatments and devices, from balloons used in sinus procedures to bladder cancer therapies. Johnson & Johnson has chosen not to split those two business segments.
Today, with a market value of $432.5 billion, Johnson & Johnson is the largest pharmaceutical company in the world. Johnson & Johnson says that the stay-behind pharmaceutical and medical device business will remain the biggest pharmaceutical company in the world.
Johnson & Johnson stock was up 4.9% in premarket trading Friday, while
S&P 500
futures had advanced 0.2% and
Dow Jones Industrial Average
futures had risen 0.2%.
Johnson & Johnson has become something of an anachronism in recent years, as its competitors have shed their consumer health divisions one after another.
Pfizer
(PFE) handed its consumer health business to
GlaxoSmithKline
(GSK) in 2019; Glaxo is planning on spinning off the combined business soon.
The market has taken time to warm up to those deals.
Johnson & Johnson would be the third company with plans to break up that were revealed this week. General Electric (GE) said it will break itself up into three parts, while
Toshiba
has said it plans to split up as well.
Write to Ben Levisohn at ben.levisohn@barrons.com
