Johnson & Johnson will separate consumer products business into new company

Popular Johnson & Johnson brands like Tylenol, Aveeno and Listerine will soon be housed within a new company over the next two years.

The New Jersey-based health care corporation said Friday that it will be separating its consumer products business from its pharmaceuticals and medical devices division as part of an effort to better serve the needs of its patients and customers.

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The new consumer brands company, a name for which has not been revealed yet, will be a publicly-traded entity and independent from Johnson & Johnson. The new organization's design is expected to be formed by the end of 2022, with the formal separation slated to be completed within 18-24 months.

Johnson & Johnson's consumer products segment is expected to generate roughly $15 billion in revenue this year and would be available in over 100 countries following the separation, the company said. 

Other notable consumer health brands that Johnson & Johnson sells include Benadryl, Motrin, Zyrtec, Nicorette, Sudafed and Band-Aid.

"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,” Johnson & Johnson CEO Alex Gorsky said.

After the separation, Johnson & Johnson will remain focused on manufacturing pharmaceuticals and medical devices, which include its one-dose COVID-19 vaccine, cancer treatments, prescription drugs and surgical tools. The corporation's medical branch is expected to generate $77 billion in revenue this year.

Joaquin Duato, the vice chairman of the corporation's executive committee, will take over as Johnson & Johnson's CEO Jan. 3. A leadership team for the new consumer products company has not been formed yet.

Johnson & Johnson is the latest health care corporation in recent years to spin off its consumer products arm into a new company, according to the New York Times.

Merck sold its consumer health business to Bayer for over $14 million in 2014. Two years ago, Pfizer and GlaxoSmithKline agreed to merge their respective consumer brands into a new company that is expected to go public in 2022.

Other notable corporations, such as General Electric and Toshiba, have recently unveiled plans to break up their businesses into several parts in an effort to improve their stock prices and simplify their corporations.

One of Johnson & Johnson's most well-known consumer products, its talc-based baby powder, has been at the center of a number of lawsuits that allege it may cause cancer. The corporation has denied such claims and insisted that the product is safe, but J&J stopped sales of its talc-based baby powder in North America last year.