The world of pharmaceuticals experienced an uproar after the announcement of Johnson & Johnson splitting into two different public companies.
One of the leading pharmaceutical giants, Johnson & Johnson, announced it will be splitting into two companies. It will separate the Band-Aids and Listerine division from the prescriptive drugs and medical devices business.
The company stated that this split will help it focus on each division individually and will also make them improve in different industries.
The company announced that the organization which will sell the prescriptive drugs and medical equipment will keep the patent name, i.e. Johnson & Johnson. This said company will also deal with treatments such as Erleada, Stelara, Darzalex, and Tremfya as well as all the interventional solution medicines for vision, surgery, and orthopedics.
The prescriptive drugs division is also manufacturing the Covid-19 vaccine which has been approved by the United States of America for public administration.
The new company will be having the brands such as Listerine, Aveeno, Neutrogena, Johnson’s, Band-Aid, and Tylenol.
The name of the new company is yet to be made public.
It is expected that the new company will be able to generate around $15 billion of revenue this following year on its own.
If the board of directors of Johnson & Johnson approves the split; then it is expected that complete separation will occur in the time frame of two years.
The CEO of Johnson & Johnson’s released an official statement saying “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.”
The shares of Johnson & Johnson surged about 3% as the company announced the split.
The news was totally unexpected for the market, especially the rivals, but this is not something which hasn’t taken place in the past.
In 2019, Pfizer Inc. announced it will create a joint venture with GlaxoSmithKline as a spin-off for its commercial health product business.
Merck & Co. Inc. followed a similar trait in June when it combined with Organon women’s health unit to manufacture copies of pricy biological medicines and drugs. It also dealt with an off-patent partner to manufacture respiratory medicines like Nasonex and Singulair.
Johnson & Johnson’s split-up announcement sums up how much the health care industry has changed. The health care market is also engulfed with competition and this is one of the reasons why Johnson &Johnson split up its high-margin products from its slower-growing consumer products.