Veteran healthcare company Johnson & Johnson is going to split into two companies. The unit, which sells products like Band-Aid and Johnson’s baby powder, will be separated from its larger pharmaceuticals unit. The management of the company has taken this decision to further simplify its structure. Multinational companies around the world adopt this strategy to keep their structure simple. Earlier, Toshiba Corp. had announced a similar plan. Whereas on Wednesday, General Electric Co had said that it would split into three parts to reduce its debt.
Consumer health business will be different
Johnson & Johnson said it would run its consumer health business under a separate company. Even before this, some other pharmaceutical companies have separated their consumer health business from the pharma unit. Johnson & Johnson’s competitor company Pfizer formed a joint venture in 2019 by merging its consumer health unit with GlaxoSmithKline. Germany’s Merck sold its consumer health unit to Procter & Gamble in 2018.
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The process of separation will be completed in two years
Johnson & Johnson’s pharma unit and consumer health unit will be separated in one and a half to two years. After this decision of the company, its shares increased by four percent before the closing of the stock market. Johnson & Johnson will retain the pharmaceuticals and medical device units. This unit sells the COVID-19 vaccine and Darzalex, a drug used in the treatment of cancer. These units are expected to generate revenue of $77 billion this year.
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