Global pharmaceutical conglomerates to spin off consumer goods division?

Health Korea News focuses on drug development trends in the global market and the management status of overseas health and medical companies as interest in the global pharmaceutical and bio industries has risen significantly. We hope that this news will serve as a reference for the Korean people to make their overseas investment decisions.

American pharmaceutical company Johnson & Johnson

[헬스코리아뉴스 / 정우성] Large global pharmaceutical companies are splitting up their business units in a way that makes them independent. This is because each business unit can be operated as an independent company, enabling rapid decision-making and improvement of the market structure. It is also a measure to ensure that if one business unit faces a business crisis, other business units are not affected.

On the 11th (local time), US pharmaceutical company Johnson & Johnson (J&J) decided to split into a consumer goods corporation that sells baby powder bandages, and a pharmaceutical and medical device corporation. It is a method of separating the consumer sector and making it a new corporation within 18 to 24 months.

Competitors such as Pfizer and Merck have previously spun off the consumer goods division. J&J CEO Alex Gorsky said in an interview with the press on the same day that the company decided to split in order to achieve long-term growth and better meet consumer demand.

As a result, Johnson & Johnson, which boasts a 135-year history, is expected to become independent after being approved by the board of directors. No specific plans have been set, including the method of the spin-off, the new company’s mission, and the CEO.

The current name of Johnson & Johnson is said to be maintained by its existing legal entity, the Prescription Drugs and Medical Devices Business. The company’s annual sales reached $78 billion (90 trillion won) last year.

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In the case of general consumer health products, a new company that has not yet been named will take over. Sales of the consumer goods division amounted to $15 billion (17.5 trillion won) last year, including Band-Aid bandages, pain relievers Tylenol, mouthwash Listerine, and skin humectants Neutrogena and Abeno.

Johnson’s Baby Powder, which gave rise to its mission, is also in the consumer goods sector. Some analysts say that the reason for the division of the consumer goods division is because of the nature of being frequently involved in the risk of consumer class-action lawsuits. Sales of baby powder products in the United States have also been suspended due to controversy over carcinogens. In addition, although sales in the consumer goods division are stable, growth is slow.

On the other hand, the prescription drug and medical device businesses have great growth potential, but there is also a high risk of development failure. Johnson & Johnson is well known for prescription drugs such as Darzalex, Erleada, Imbruvica, Stellara, and Trempia.

GE Healthcare to focus on precision medical business

On the 9th (local time), General Electric (GE) also announced that it would split the company into three sectors by 2024: aviation, healthcare, and energy. It is a step-by-step spin-off of health care and energy-related business units.

GE Healthcare plans to focus on the precision medical business by spinning off by early 2023. The goal is to go public as a separate company. GE CEO Lawrence Culp said on the same day, “By establishing three global leading companies, we will have an advantage in terms of greater operational focus, strategic flexibility and capital utilization.”

GSK logo
GSK logo

UK GSK, hedge fund call for split

Earlier in June, British pharmaceutical company GlaxoSmithKline (GSK) announced plans to spin off its consumer healthcare business. It plans to list the new corporation on the UK stock market next year.

Existing GSK is in charge of pharmaceutical and vaccine businesses. GSK announced that it will focus on R&D investment in areas such as infectious diseases, HIV, oncology, and immunology.

Meanwhile, GSK has failed to develop a COVID-19 vaccine despite being the world’s largest vaccine company. Last year’s sales growth was only 3%, falling short of the target of 5%.

Elliott Management, a shareholder activist hedge fund that bought a multi-billion-pound stake in GSK earlier this year, contacted major shareholders, saying, “Let’s change our management and split our business into vaccines and pharmaceuticals.”

Korea MSD CI

Merck completes spin-off of women’s disease and biopharmaceutical business

Merck & Company (MSD), a US pharmaceutical company, also went through a spin-off last year. He founded Organon & Co., which is in charge of women’s health and expired patents. In the first half of this year, the company completed the spin-off process.

Based on the market-leading contraceptive and infertility treatment business, the company is focusing on biosimilar business focusing on cancer and inflammatory diseases while investing in R&D for skin, pain, respiratory and cardiovascular diseases.

Organon Chief Executive Officer Kevin Ali said of the company’s spin-off plans, saying, “Given Organon’s strong corporate reputation in the medical world, the new company name is a solid foundation for our company’s pursuit of global leadership and sustainable growth in the women’s health sector. It will be a cornerstone,” he said.

“Organon will provide new hopes and treatments to the world, and will become a company setting new milestones in women’s health in the future, and will also focus on important biosimilar businesses and traditional brands.”

Pfizer CI
Pfizer CI

Pfizer, patent expired drug business + Milan merger

In November last year, Pfizer merged with Mylan, which acquired Upjohn, a pharmaceutical business with expired patents, to form a separate corporation. The new company was launched under the name Viatris. Pfizer is a move to focus on innovative new drugs.

Viatris, which has about 45,000 employees worldwide, is headquartered in the United States and operates global centers in Pittsburgh, USA, Hyderabad, India, and Shanghai, China.

The company’s global portfolio includes more than 1,400 approved and globally recognized brand name drugs, generics, combination generics and brand name drugs, an ever-expanding biosimilar, and a variety of over-the-counter drugs across key therapeutic areas, including non-infectious and infectious diseases. made up of substances.

Milan generated sales mainly in the US and Europe, and Upzone in Asia and emerging markets. Another reason for the merger is that if the two companies merge, the market they can cover can be expected to increase.

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