The world's largest company in health products (in terms of sales), Johnson & Johnson, announced yesterday (Friday) a split into two companies - one for prescription drugs and medical accessories and the other for consumer products.
The company, which is worth close to half a trillion dollars and a net profit (before tax) of $ 15 billion a year, sells mainly drugs and medical equipment - two divisions that make up about 83% of the company's sales.
In 2020, the company sold prescription drugs (oncology, psychiatry, vaccines, etc.) worth $ 45 billion and medical equipment for operating rooms, worth $ 23 billion, with products sold to the public, such as baby talcum powder, Tylenol (the American version of paracetamol), skin care products such as shampoo And soap and the like, accounted for only 14 billion of its revenue.
The company has announced that existing shareholders and investors will benefit from shares in both companies, at the end of this complex process that will last between a year and a half to two years.
In recent years the world's largest pharmaceutical companies have focused more on the medical field and less on consumer products.
In recent years, the pharmaceutical giants, Mark, Pfizer and Glasgow Smith Klein, have also made a similar decision - to focus on prescription drugs and abandon off-the-shelf products.
"We are at a time when giants are unpopular," the New York Times quoted Professor Eric Gordon of the Michigan School of Business. This is one of the three main reasons eighty are now commentators on the dramatic move, by one of the companies most identified with American industry in general - a company founded in 1886.
First, there is a general trend of huge companies in the world, such as General Electric and Toshiba, each of which has recently announced its split into two or three companies.
In the case of Johnson & Johnson there may also be a good legal reason - the company is facing many huge lawsuits.
In one of the largest, the authorities 'lawsuit over the painkillers' addiction to a number of pharmaceutical companies (including Teva), the company has already paid about half a billion dollars.
The company is facing another huge lawsuit on suspicion of carcinogens in baby talcum powder.
A prosaic reason is the different expertise needed to run an innovative pharmaceutical company and consumer goods company.
In fact, both divisions are now hurting the company - consumer products cannot bring in profit margins similar to medicines and medical accessories and owning them only lowers the profit margins accepted in pharmaceutical companies.
After the split, its consumer products company will also be one of the largest and most powerful in the market.
Product from Johnson & Johnson, Photo: Reuters
In the last decade, Johnson & Johnson has tripled its value and managed to maintain the highest credit rating in the United States (AAA) - higher than the rating of the United States itself.
Although the company stuck to its plan to come out with a vaccine to Corona, the U.S. administration continued to believe in it and injected it with about half a billion dollars, at the expense of future orders of hundreds of millions of vaccines. To remain relevant in the field in which it lost to Pfizer in a big way, Johnson & Johnson has invested large sums in Israel, including through an investment fund in the Pitango partnership.