Johnson & Johnson Announces Kenvue as New Consumer Health Company Name Ahead of IPO

Johnson & Johnson Announces New Company Name Post-Split – Kenvue.

On September 28 local time, Johnson & Johnson announced that it would name its consumer health-focused company Kenvue. The new logo centers on the "K" symbol, reflecting the company’s strengths, with the rectangular geometric shape representing scientific precision and the rounded edges evoking the warmth of care.

(Image source: Siqi Club)

This healthcare giant announced last November that it would spin off its consumer health division, which generates $14.6 billion in annual revenue, from its pharmaceuticals and medical devices businesses to operate as an independent publicly listed company. This split represents the largest reorganization in Johnson & Johnson's 136-year history and is expected to be completed next year.

Kenvue is positioned to compete with companies like Procter & Gamble and L'Oréal. In addition to Band-Aid and Tylenol, the company’s product portfolio will also include other brands such as Neutrogena, Aveeno, and Listerine. Meanwhile, Thibaut Mongon, who has worked at Johnson & Johnson for 20 years, has been appointed as the incoming CEO of Kenvue.

The name Johnson & Johnson will be retained for the pharmaceutical and medical device businesses, with Johnson & Johnson CEO Joaquin Duato leading the company.

"New Johnson & Johnson" Target: $80 Billion

In 2021, Johnson & Johnson ranked No.1 in the global pharmaceutical enterprises with a total revenue of 93.775 billion US dollars. Entering 2022, Johnson & Johnson's performance continued to rise. In the first half of this year, Johnson & Johnson's sales reached 47.446 billion US dollars, increasing by 4% year-on-year. Among them, the pharmaceutical business revenue was 26.186 billion US dollars; the medical device business revenue was 13.869 billion US dollars; and the consumer health business revenue reached 7.391 billion US dollars.

After the split, for the "New Johnson & Johnson" composed of pharmaceutical and medical device businesses, at the JPM conference earlier this year, Johnson & Johnson's new CEO Joaquin Duato stated that the overall business target is to reach $80 billion by 2025. To achieve this goal, Johnson & Johnson plans to submit 36 new indication applications for its existing 13 blockbuster products by 2025, which will be the main drivers of revenue growth by then.

Moreover, Johnson & Johnson will expand its acquisition plans in 2022, as approximately half of the company's pharmaceutical innovations originate from outside the company.

Over the past five years, Johnson & Johnson has invested approximately $10 billion in mergers and acquisitions in the medical device sector, with most transactions being medium to small in scale. Joaquin Duato stated that Johnson & Johnson has always regarded mergers and acquisitions as a key source of business growth, and its current cash reserves are sufficient to support the company’s strategic plans in this field.

In terms of pharmaceuticals, Johnson & Johnson will weigh external opportunities in its key therapeutic areas, such as immunology, oncology, neuroscience, hypertension, and cardiovascular diseases.

Notably, last month, Johnson & Johnson announced plans to discontinue the sale of its traditional talc-based baby powder products globally by 2023. For nearly a decade, the product has faced a mountain of cancer-related lawsuits.

Multinational pharmaceutical companies intensively split

The competition in the market is always brewing beneath the surface.

Including Johnson & Johnson, multinational pharmaceutical companies have been focusing on their core businesses through spin-offs and mergers and acquisitions over the years to enhance their core competitiveness. Especially this year, spin-off events have occurred frequently, with Novartis, GSK, 3M, and others successively announcing spin-offs and reorganizations.

A month ago, another multinational pharmaceutical company, Novartis, officially announced its plan to spin off its generics and biosimilars division, Sandoz, and list it as an independent company in Switzerland. This move will allow Novartis to focus on innovative drugs. After the split, Sandoz will become the largest listed generics company in Europe, and this process is expected to be completed in the second half of 2023.

In fact, Novartis has been reducing its other businesses. It spun off its Alcon eye care business in 2019 and agreed to sell nearly one-third of its voting stake in Roche last November. Last week, Novartis also announced a new strategy based on eight major drug brands following the spin-off of Sandoz.

On July 18 this year, GSK also completed its largest restructuring in 20 years, officially finalizing the spin-off process of Haleon, which has become an independent consumer health company. GSK's business will focus on four key areas: infectious diseases, HIV, oncology, and immunological diseases (including respiratory).

Just days after Haleon's spin-off, 3M also announced plans to spin off its healthcare business into a standalone company and list it independently. The transaction is expected to be completed by the end of 2023. According to public information, the post-spin-off 3M will continue as a material science innovation enterprise serving end markets, while the newly established healthcare company will focus on businesses such as wound care, oral care, healthcare IT, and biopharmaceutical filtration.

If we look back in time, in November last year, just three days before Johnson & Johnson announced its split, the international giant GE also announced a spin-off plan, splitting GE Healthcare, GE Aviation, and GE Energy Transition into three independent publicly traded companies. GE plans to execute a tax-free spin-off of GE Healthcare in 2023, after which it will focus more on precision medicine to address challenges posed by critical diseases and clinical treatments.

In fact, the spin-offs of multinational corporations are an inevitable behavior in the current market trend. From the perspective of the purpose of spin-offs, most of these multinational pharmaceutical companies aim to achieve strategic focus on core businesses through refined management, while also hoping to gain good capital returns through the spin-offs.

In fact, behind the spin-offs, these multinational pharmaceutical companies are also facing multiple development challenges, such as significant profit pressures and the approaching patent cliff. Spin-offs have become an increasingly common "standard operation" for companies to address these challenges. Therefore, under the current circumstances, spin-offs are regarded as the "remedy" for pharmaceutical companies to break through difficulties.

References:

[1] Biospace:Johnson & Johnson Announces Kenvue as the Name for Planned New Consumer Health Company

[2] Interface News: "Inescapable Fate of Split, Manufacturing Giant 3M to Spin Off Healthcare Business"

[3] Cai Jian Dao: "What Are the Patterns in Pharmaceutical Companies' Spin-offs? Johnson & Johnson, GE, Pfizer..."

[4] Device Home: "Annual Output Value of 60 Billion, Another Giant Splits Off Medical Device for IPO"

[5] Titanium Media: "3M Spin-off Surges 5%, A Chronicle of Insights from Pharmaceutical Spin-offs in China and Abroad Over the Years"

[6] E Pharm Exec: "Johnson & Johnson Q3 Announces New Consumer Goods Company Information. Ibrutinib Declines for the First Time, Downgrades Full-Year Forecast"

[7] China Securities Network: "Johnson & Johnson Switches Baby Powder Formula Globally, Unable to Withstand the Pressure of Numerous Cancer-Related Lawsuits"

[8] Interface News: "The consumer health products company after Johnson & Johnson's split will be named Kenvue, aiming to compete with companies like Procter & Gamble and L'Oréal."

[9] 21st Century Business Herald: "Top 10 Global Pharmaceutical Companies by Revenue in 2021: Pfizer Returns to 'Top Three', Johnson & Johnson Remains at the Top"

[10] 21st Century Business Herald: "Why Are Multinational Pharmaceutical and Device Giants Like 3M, GE, and GSK Undergoing Frequent Spin-offs to 'Slim Down'?"

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