Healthcare giant Johnson & Johnson is to spin off its consumer arm, known for its Band-Aid plasters, baby shampoo and Listerine mouthwash, to focus on developing medicines and medical devices. The New Jersey-headquartered firm, which employs 136,000 people worldwide, said it would remain the world’s largest healthcare company even after the shake-up, the biggest in its 135-year history. The consumer division, which is expected to generate $15bn (£11bn) in sales this year and employs 19,000 people, will be split off in 18 to 24 months’ time, probably through a stock offering, following similar moves from rivals such as GSK. J&J will be left with its pharmaceutical and medical devices businesses, which make drugs for prostate cancer and other diseases, vaccines and surgical tools and are forecast to generate revenues of $77bn this year. It is the only major pharma company to have developed a single-shot vaccine for Covid-19, sold on a not-for-profit basis; all the other vaccines require two jabs. The new publicly traded consumer health company will have four megabrands with $1bn annual sales – Tylenol, Band-Aid, Johnson’s (baby products) and Listerine – and make a host of other well-known products ranging from Neutrogena and Aveeno creams to Zyrtec allergy pills. It has leading positions in over-the-counter products such as cold and flu remedies and painkillers; skin health and beauty products; baby and feminine products; wound care treatments; and oral health products. J&J is following other large healthcare companies that have spun off their consumer divisions to create slimmed-down pharmaceutical businesses focused on developing lucrative specialty drugs. GSK and New York-based Pfizer teamed up in 2018 to form a £10bn joint venture from their consumer health arms and plan to spin off the venture next summer. Meanwhile, the German drugmaker Merck sold its consumer health division to the consumer products group Procter & Gamble in 2018. Andrew Duncan, senior equity analyst at the investment house Killik & Co, said: “I don’t expect the J&J shake-up – or GSK’s for that matter – to have a significant impact on underlying operations, and certainly consumers shouldn’t see much difference. After all, it’s not clear how creating a standalone consumer entity will help J&J to sell more Listerine. “What is more obvious perhaps is the rationale for J&J management to separate the lower-growth consumer unit from the high-margin pharmaceutical and medical devices units. It will be hoped that this will encourage investors to place a higher valuation on the individual pieces compared to the current conglomerate valuation, eventually creating more value for shareholders.” J&J’s move is the third big corporate break-up announced globally this week. Outside the healthcare sector, the 129-year-old industrial conglomerate General Electric is breaking itself up into three public companies; and the Japanese conglomerate Toshiba announced on Friday that it is splitting into three businesses after years of scandals. J&J employs 4,030 people across the UK, at its HQ and manufacturing, research and development sites in High Wycombe, Pinewood, Blackpool, Leeds and London. This includes 590 people at its consumer health division in High Wycombe. J&J’s consumer arm faces an avalanche of lawsuits alleging its baby powder was contaminated with cancer-causing asbestos, which the company has denied. It stopped selling baby powder in the US and Canada last year. Alex Gorsky, J&J’s chief executive, said the decision to split off the consumer division was not related to the lawsuits. The pharmaceuticals and medical division has also faced lawsuits. J&J has settled most of the lawsuits filed by thousands of men who claim the anti-psychotic drug Risperdal caused them to grow breasts. The company also faces a spate of lawsuits over the role its painkillers have played in the US opioid crisis. Gorsky said: “The planned separation of the consumer health business is the best way to accelerate our efforts to serve patients, consumers, and healthcare professionals, create opportunities for our talented global team, drive profitable growth, and – most importantly – improve healthcare outcomes for people around the world.” He kicked off the process before he becomes executive chairman of J&J on 3 January and hands the chief executive role on to Joaquin Duato, who is currently vice-chairman of the firm’s executive committee. Duato will continue to lead the new J&J after the shake-up. Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “J&J has been a bit of a black box healthcare conglomerate for years. There are businesses that are individually attractive, but all together in a big wrapper where investors stakes in the businesses they like are diluted by exposure to others they may not have found so attractive. Splitting up deals with that problem.”