Johnson & Johnson, Iconic Company Under Pressure, Plans to Split in Two (Published 2021) (2024)

For generations, Johnson & Johnson has been synonymous with American health care — and, at times, with American health care scandals.

Now the 135-year-old company is joining a growing roster of iconic American businesses that are splitting up as they seek to please restive shareholders and move past recent controversies.

On Friday, Johnson & Johnson announced plans to spin off its consumer-products division — famous for household-name but not-very-lucrative brands like Tylenol, Band-Aid and Neutrogena — into a separate company. Johnson & Johnson will keep its more profitable, faster-growing businesses in pharmaceuticals and medical devices.

The planned breakup comes after years of tribulations for Johnson & Johnson. The company is juggling lawsuits for its role in the opioid epidemic and over accusations that the talc once used in its baby powder had caused cancer in some customers. Even the company’s single-shot Covid-19 vaccine, once expected to be widely used around the world, has fallen far short of its promise because of production problems and fears about rare side effects.

Johnson & Johnson, with headquarters in New Jersey, is part of a parade of once-proud companies that have recently unveiled plans to break themselves up or radically shrink. This week alone, the industrial conglomerates General Electric and Toshiba announced that they would split up. In recent years, pharmaceutical companies including Merck, Pfizer and GlaxoSmithKline have also shed or reorganized their consumer-products operations to focus on businesses, in particular drugs, that enjoy fatter profit margins.

“We are at the point in the cycle where conglomerates are less popular,” said Erik Gordon, a professor who studies business strategy at the University of Michigan Ross School of Business. “The pharma companies in particular are trying to focus on pharma.”