Recently, U.S. industrial giant General Electric (GE) has announced its plan to spin off its business and form three industry-leading, global public companies focused on the growth sectors of aviation, healthcare, and energy.
Like GE, now J&J to spin-off consumer products and focus on pharmaceuticals.
According to Reuters’ report, Johnson & Johnson plans to spin off its consumer health division that sells Listerine and Baby Powder to focus on pharmaceuticals and medical devices.
Alex Gorsky, J&J’s chief executive, said the planned separation was a “momentous event” in the company’s 135-year history and called it the best way to serve patients, consumers, and healthcare professionals.
“We do think it is a big and bold initiative, but ultimately we think this is about increasing innovation and accelerating growth,” he said.
Gorsky said J&J had to adapt to a rapidly changing healthcare landscape caused by digitisation, artificial intelligence, and the shift to a more personalised care model.
The company said it was aiming to complete the separation in 18 to 24 months at a cost of $500 million to $1 billion.
Similarly, on Friday, Japanese technology conglomerate Toshiba has announced the restructuring to improve its competitiveness, spinning off its energy infrastructure and computer devices businesses.
The energy infrastructure spinoff will include Tokyo-based Toshiba Corp.’s 0.96% nuclear power operations, including the decommissioning efforts at the nuclear plant in Fukushima that suffered meltdowns after an earthquake and tsunami in March 2011.
The energy business will also include the company’s sustainable energy and battery businesses. Its annual sales total about 2 trillion yen ($18 billion).
The other spinoff and stand-alone company encompasses Toshiba’s computer devices and storage operations, with annual sales of 870 billion yen ($7.6 billion).
Toshiba will remain a third independent company, holding what’s left, such as its flash memory company Kioxia Holdings Corp. and Toshiba Tec Corp., which makes office equipment.
Toshiba said its restructuring would be completed by March 2024.
Chief Executive Satoshi Tsunakawa said the two kinds of businesses being spun off were very different, with the business cycle for devices much faster than that for infrastructure, and the device business requiring heavy investments.
“It will unlock immense value by removing complexity, it enables the businesses to have much more focused management, facilitating agile decision making, and the separation naturally enhances choices for shareholders,” Tsunakawa said of the new structure.
