Justice scale, healthcare, cost

GE, J&J to Split Off Healthcare, Medical Device/Pharma Businesses

By MedTech Intelligence Staff
Justice scale, healthcare, cost

The global giants believe the strategic moves will make their businesses stronger and more profitable long-term.

Early this week General Electric Company announced that it would spin off its healthcare division, and today Johnson & Johnson released its plan to separate its businesses—one focused on drugs and medical devices and the other on consumer health products—into two separate companies.

GE plans to spin off its healthcare business, which generated $17 billion in revenue last year, in early 2023 (the company is also spinning off its energy business and will be left with its aviation business). The company states the move will make its businesses stronger and in a position to achieve long-term growth. “The world demands—and deserves—we bring our best to solve the biggest challenges in flight, healthcare, and energy,” stated GE Chairman and CEO H. Lawrence Culp, Jr. in a company press release. “By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees. We are putting our technology expertise, leadership, and global reach to work to better serve our customers.” The healthcare division, which has yet to be named, will be led by Peter Arduini, who will take on the role of president and CEO of GE Healthcare on January 1, 2022.

J&J expects its move to separate its consumer health businesses will “create two global leaders that are better positioned to deliver improved health outcomes for patients and consumers through innovation, pursue more targeted business strategies and accelerate growth.” Already announced in August, Alex Gorsky will step down and Joaquin Duato (vice chairman of J&J’s executive committee) will move into the role of CEO effective January 3, 2022. “For the new Johnson & Johnson, this planned separation underscores our focus on delivering industry-leading biopharmaceutical and medical device innovation and technology with the goal of bringing new solutions to market for patients and healthcare systems, while creating sustainable value for shareholders,” stated Gorsky in a company press release. “We believe that the New Consumer Health Company would be a global leader across attractive and growing consumer health categories, and a streamlined and targeted corporate structure would provide it with the agility and flexibility to grow its iconic portfolio of brands and innovate new products.”

“The new Johnson & Johnson is expected to be better positioned to combine skills, expertise and approaches to bring integrated, comprehensive and more impactful care to patients, addressing diseases in areas such as oncology and eye health that require a combination of surgical, interventional and pharmaceutical treatments. The new Johnson & Johnson would continue to play a leading role in advancing the industry forward by creating novel solutions, bringing together treatments spanning therapeutics, robotics, artificial intelligence and more, to change the way diseases are prevented, intercepted and eventually cured.” – J&J press release

The company’s drug and medical devices businesses are expected to bring in $77 billion in revenue for 2021.

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