Johnson & Johnson, the New Jersey-based pharmaceutical giant, will separate into two publicly traded companies, creating an entirely new, rebranded consumer health business, the company announced Friday.
It’s a major change for the 135-year-old institution based in New Brunswick.
Johnson & Johnson, which has more than 136,000 employees, will split its consumer products arm — responsible for Band-Aids, Tylenol, Listerine and Neutrogena — from its pharmaceutical and medical device branches within 18 to 24 months, the company said. The decision was first reported by The Wall Street Journal.
“Following a comprehensive review, the Board and management team believe that 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 healthcare outcomes for people around the world,” Alex Gorsky, the company’s chief executive, said in a statement.
The company’s pharmaceutical and medical device divisions will operate under the Johnson & Johnson brand. It’s unclear what the new consumer health company will be named.
“For the new Johnson & Johnson, this planned separation underscores our focus on delivering industry-leading biopharmaceutical and medical device innovation and technology with the goal of bringing new solutions to market for patients and healthcare systems, while creating sustainable value for shareholders,” Gorsky said in the statement.
The company previously announced that Joaquin Duato, the vice chairman of its executive committee, will become Johnson & Johnson’s CEO in early January, while Gorsky will remain executive chairman.
Gorsky told The Wall Street Journal that all the lawsuits alleging the company’s talc-based Baby Powder product caused cancer was not a factor in the decision.
NJ Advance Media reported earlier this month that Johnson & Johnson created a spin-off company in Texas in mid-October and dumped its talc-related liabilities into the newly created LTL Management. It then re-established the spin-off in North Carolina and filed for bankruptcy protection. The strategy has been used often enough by solvent companies faced with personal injury lawsuits that it actually has a name — the “Texas two-step.” The move angered plaintiffs who saw it as an attempt by the company to skirt responsibility for any damage its product may have caused.
A North Carolina judge moved the bankruptcy case to New Jersey on Wednesday, saying it is the most logical venue since it is where most lawsuits involving Johnson & Johnson’s talc products were filed.
The New York Times noted that J&J’s decision to split into two companies is a move increasingly used by huge corporations to satisfy shareholders.
Staff writer Elizabeth Llorente contributed to this report.
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Spencer Kent may be reached at email@example.com.