Johnson & Johnson will spin off its consumer health business in a massive company shake-up.
It will continue to develop pharmaceuticals and medical devices, but will create a new publicly traded company to sell household products.
The separation reflects the growing divergence between the slow-and-steady world of selling shampoos, mouthwash and moisturisers, and the high-risk high-reward of developing and marketing mass-produced drugs.
The healthcare giant believes the separation will create two global companies with more focused business strategies while accelerating growth.
Following the planned separation, the new Johnson & Johnson would remain the world’s largest healthcare firm.
The new consumer health company would also be a major player in its market with brands such as Listerine and Johnson’s.
Alex Gorsky will serve as executive chairman of Johnson & Johnson, and will leave his chief executive officer role to Mr. Joaquin Duato in January.
Duato is currently vice chairman of the company’s executive committee.
Commenting on the announcement, he said: “We believe that the new Johnson & Johnson and the New Consumer Health Company would each be able to more effectively allocate resources to deliver for patients and consumers, drive growth and unlock significant value.”
He would continue to lead the new Johnson & Johnson following completion of the planned separation.
The company said it was aiming to complete the separation in 18 to 24 months, sending its shares up three points percent before close of play on the London Stock Exchange.
This also follows Toshiba’s decision earlier today to split its empire in three, with conglomerates looking to adapt to changing needs in an evolving market place.