J&J’s $40 Billion Split-Off Sets Stage for Pharma, Medical Tech Expansion

livemint.com:

Johnson & Johnson plans to tap billions in proceeds from the recent split-off of its consumer-health business to fuel growth in pharmaceuticals and medical technology through capital allocation, which could include new acquisitions and investments in product offerings and robotics. The New Brunswick, N.J.-based healthcare giant in May sold shares in Kenvue, which owns brands such as Band-Aid and Tylenol, through an initial public offering that netted J&J $13.2 billion in cash. In August J&J shed about 80% of its Kenvue shares through a roughly $40 billion split-off, whereby some investors chose to trade in their shares of J&J for Kenvue ones.

The moves marked the conclusion of a multiyear effort, a plan decided upon in 2019 and put into action in 2021 when J&J embarked on untangling its finances and operations for such a split. The split allows J&J’s executives to focus more on developing innovations and expanding the businesses of medical technologies and pharmaceuticals. “We need to be a top-tier medical tech company and a top-tier pharmaceutical company, first and foremost," Chief Financial Officer Joseph Wolk said.

“That is what’s going to carry us for the medium term." J&J’s targets for acquisitions are businesses with scientific expertise and commercial capabilities that could benefit from J&J’s global reach, Wolk said. The company’s growth will continue to stem from a 50-50 split between organic, in-house development and expansion through acquisitions and partnerships, as it has historically, he said. “It’s got to make good strategic sense.