- Title: J&J to spin off consumer products and focus on pharmaceuticals
- Date: 12th November 2021
- Summary: PARA, BRAZIL (NOVEMBER 11, 2021) (REUTERS) (SOUNDBITE) (Portuguese) PALAEONTOLOGIST, ELVER MAYERS, SAYING: "To show the potential of the area here on the map, within this geological formation. There had been no actual records before. The first point is to (investigate this site) and now we are studying this material, to learn more about the diversity of dinosaurs that live
- Embargoed: 26th November 2021 21:16
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- Location: NEW BRUNSWICK, NEW JERSEY AND BAY SHORE, NEW YORK, UNITED STATES / UNKNOWN LOCATION
- City: NEW BRUNSWICK, NEW JERSEY AND BAY SHORE, NEW YORK, UNITED STATES / UNKNOWN LOCATION
- Country: USA
- Topics: Company News Markets,Economic Events,United States
- Reuters ID: LVA005F3AODHJ
- Aspect Ratio: 16:9
- Story Text: Johnson & Johnson plans to spin off its consumer health division that sells Listerine and Baby Powder to focus on pharmaceuticals and medical devices in the biggest shake-up in the U.S. company's 135-year history.
The move by the world's largest health products company follows similar announcements by conglomerates Toshiba, General Electric, as well as J&J rivals, and underscores how big, diversified corporations are under pressure to simplify their structures to increase focus.
This has particularly been the case in healthcare, where the slow-and-steady business of selling products such as shampoos and moisturizers has increasingly diverged from the high-risk, high-reward work of developing and marketing blockbuster drugs.
Echoing J&J Chief Executive Alex Gorsky's comments that the company had evolved into different businesses, Chief Financial Officer Joseph Wolk said rival public consumer companies tend to be valued more richly by investors than the J&J consumer unit.
"That, quite frankly, was getting lost within Johnson & Johnson," Wolk said. "Similarly, I think - in terms of pharmaceuticals and medical devices - that prevented the spotlight from being shone on those businesses."
The company said it was aiming to complete the separation in 18 to 24 months at a cost of $500 million to $1 billion. J&J shares, part of the Dow Jones Industrial Average , were up 1.5%. The pharmaceutical and medical devices unit will retain the J&J name and the company expects a tax-free spinoff.
Some analysts argued for investor caution.
Johnson & Johnson's Band-Aids baby shampoo and cough remedies have long been the face of the company.
But its pharmaceutical and medical equipment business, which makes cancer treatments, vaccines and surgical tools, is on track for nearly $80 billion in sales this year, far ahead of the $15 billion its consumer products are expected to bring in.
The higher growth outlook comes despite disappointing sales of Johnson & Johnson's COVID-19 vaccine following a string of production setbacks and fierce competition from rivals Pfizer Inc and Moderna .
Johnson & Johnson's consumer division has faced nearly 40,000 lawsuits alleging its Baby Powder and other talc products contained asbestos later linked to mesothelioma and caused ovarian cancer in women using it for personal hygiene, which the company denies.
In October, it created a separate subsidiary to hold the talc liabilities, which then filed for bankruptcy protection.
J&J on Friday said its breakup decision had nothing to do with the talc litigation or the bankruptcy maneuver.
A 2018 Reuters investigation found J&J knew for decades that asbestos, a known carcinogen, lurked in its Baby Powder and other cosmetic talc products.
The company stopped selling Baby Powder in the United States and Canada in May 2020, in part due to what it called "misinformation" and "unfounded allegations" about the talc-based product. J&J maintains its consumer talc products are safe and confirmed through thousands of tests to be asbestos-free.
J&J's medical device and pharmaceuticals business also has faced tens of thousands of lawsuits for products including DePuy and Pinnacle implants, surgical mesh products and Xarelto blood thinner.
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