J&J announces major business restructuring

Nov. 12, 2021

Like many mega-corporations, J&J has announced a plan to break into separate pieces to more quickly spur growth.

This week, the behemoth company that employs over 136,000 people globally announced that it will split into two companies — one focused on consumer health and the other on pharma and medical devices.

The spin off is expected to occur in about 18-24 months. J&J didn’t disclose any financial details of the plan. But other large pharma companies — such as GlaxoSmithKline — have broken themselves into smaller units so that each arm of the business is able to more rapidly respond to emerging global trends. The quicker responsiveness of smaller units could also accelerate M&A deals. 

Separating pharma into its own unit has also allowed companies to sharpen their focus on the development of new drugs with high growth potential. Last year, J&J’s drug unit accounted for 55% of the company’s total sales. 

J&J said that the split could also help generate growth in its consumer business, which has several potential blockbusters in its pipeline. The consumer arm is still staring down a mountain of potential penalties from talc-related lawsuits —  but the company’s CFO said that had no bearing on the decision to break into separate units.