| From: Sr K | 8/19/2021 6:44:39 PM | | | | | | J&J’s Gorsky to Leave as CEO, Duato to Take Helm
Alex Gorsky will become Johnson & Johnson’s executive chairman in January
Alex Gorsky made over J&J’s lineup to capitalize on technological advances. He spoke in Washington in March.PHOTO: AL DRAGO/BLOOMBERG NEWS
By
Jonathan D. Rockoff
Updated Aug. 19, 2021 5:43 pm ET
Johnson & Johnson Chief Executive Alex Gorsky is stepping aside, handing over the reins to the world’s largest health-products company to a longtime lieutenant after nearly a decade at the helm.
Mr. Gorsky, who is 61 years old, will become J&J’s executive chairman effective Jan. 3. Joaquin Duato, who had led J&J’s pharmaceuticals business before becoming a Gorsky deputy, will become chief executive and join the company’s board of directors.
Mr. Gorsky has led the company to tremendous growth, making over J&J’s lineup to capitalize on technological advances, and navigated manufacturing issues that had plagued its signature consumer-health business, as well as thorny opioid and talcum-powder lawsuits. He leaves J&J still battling a pandemic that upended its factories, offices and labs while the company pursued a Covid-19 vaccine.
Health issues in his family in part prompted Mr. Gorsky to pursue the change, he said in an interview Thursday.
“In spite of the tremendous challenges we faced with Covid-19, I could not be more optimistic about the future of healthcare and the important role that J&J will play going forward,” Mr. Gorsky said.
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| From: Sr K | 11/12/2021 8:52:41 PM | | | | | | 
Johnson & Johnson to Split Consumer From Pharmaceutical, Medical-Device Businesses, Creating Two Companies
Consumer business—home to Band-Aid and Tylenol—will be shed within 24 months
J&J’s consumer business includes the company’s namesake brand, Johnson’s Baby. SASHA MASLOV FOR THE WALL STREET JOURNAL
By
Jonathan D. Rockoff
and
Peter Loftus
Updated Nov. 12, 2021 11:20 am ET
Johnson & Johnson JNJ 1.20% plans to break up into two companies, splitting off the $15-billion-a-year division that sells Band-Aid bandages, Tylenol medicines and Johnson’s Baby Powder in a shift indicating just how much healthcare has changed since the company helped pioneer the industry.
The world’s largest health-products company by sales will separate its high-margin but less predictable prescription-drug and medical-device businesses from its storied but slower-growing consumer group, creating two publicly traded companies.
J&J will shed its consumer division in 18 to 24 months, Chief Executive Alex Gorsky said. J&J decided to make the change, he said, because the businesses, their customers and markets have diverged so much in recent years, including during the pandemic. Lawsuits that alleged use of Johnson’s Baby Powder caused cancer didn’t play a role, he said.
“The best path forward to ensure sustainable growth over the long term and better meet patient and consumer demands is to have our consumer business operate as a separate healthcare company,” Mr. Gorsky said in an interview.
What form the separation will take, what the new consumer-oriented company will be called and who will lead it are yet to be worked out, Mr. Gorsky said, though he said J&J planned to structure the transaction to be tax-free.
It is likely J&J would spin out its consumer unit and hold a stock offering, but no decision has been made, Mr. Gorsky said.
Chief Executive Alex Gorsky says Johnson & Johnson’s businesses, as well as their customers and markets, have diverged in recent years. Mr. Gorsky in 2017.PHOTO: CHRISTOPHER GOODNEY/BLOOMBERG NEWS
The decision comes after rivals including Pfizer Inc. PFE -0.90% and Merck MRK -0.02% & Co. decided to hive off their consumer businesses and double down on faster-growing pharmaceuticals.
This week, General Electric Co. GE 0.55% said it would break into three public companies, another example of large, diversified companies reassessing their structures and seeking to find stronger growth by separating into smaller units focused on their core competencies.
The trimmer J&J, which will keep the name, will still stand as the world’s largest health-products company, with yearly sales approaching $80 billion, Chief Financial Officer Joseph Wolk said. The consumer company will be among the industry’s largest, after competitors such as Procter & Gamble Co. PG 0.11% , Nestlé SA and L’Oréal SA.
J&J shares rose more than 1% Friday on the news.
“Given that there is not much synergy between the consumer business and the other JNJ segments, this initiative makes sense,” Wells Fargo analyst Larry Biegelsen said in a note to investors.
The separation will kick off the biggest change in direction in J&J’s 135-year history. Disposable diapers, indigestion tablets and cough remedies powered J&J during its first century, then provided the diversification that helped the company ride out the ups and downs of its riskier but higher-reward pharmaceuticals and medical-devices businesses.
The decision to pull all Tylenol from store shelves during a safety scare in 1982 endeared J&J to many consumers.
Today, the consumer-health business sells well-known brands—from Neutrogena skin moisturizers to Zyrtec allergy pills—that include four that ring up $1 billion in sales each year and 20 generating more than $150 million in annual sales. The unit is also home to J&J’s namesake brand, Johnson’s Baby.
The division has grown apart from J&J’s other units in recent years. Sales are growing more slowly than at the other businesses, and have lower margins. It depends on recognition of name brands such as Aveeno, Neutrogena and Listerine, which are marketed directly to consumers.
A worker checked safety seals on Tylenol bottles after Johnson & Johnson returned the medicine to stores in 1982.PHOTO: LEIF SKOOGFORS/CORBIS/GETTY IMAGES
Endorsements by celebrities and sales via e-commerce websites increasingly play the decisive role in commercial success. “People are now looking to folks that they idolize and say, ‘If that product works for them, it’s going to work for me, too,’ ” Mr. Wolk said in an interview.
Prescription drugs and medical devices require different corporate skill sets. They undergo tight regulatory scrutiny before they can go on sale and are monitored closely afterward. Their commercial success depends heavily on the choices of doctors and hospitals as well as payment by health insurers.
Prescription drugs and devices also spring from more-advanced research than consumer goods. The next-generation drugs and devices are requiring yearslong and heavy investments in research into human genetics and molecular biology, artificial intelligence and optical recognition.
J&J’s pharmaceuticals business, which sells therapies for diseases ranging from prostate cancer to pulmonary arterial hypertension, developed one of only three Covid-19 vaccines authorized in the U.S.
The company’s pharmaceuticals business produced one of the three U.S.-authorized Covid-19 vaccines.PHOTO: MARIO TAMA/GETTY IMAGES
Wall Street also has different expectations for the businesses. The consumer unit’s sales rose 1.1% to $15 billion last year, after growth of 0.3% the previous year. In contrast, J&J’s pharmaceutical unit posted sales growth of 8% last year and 3.6% the previous year.
The consumer division has generally contributed the smallest profit of J&J’s three main divisions, less than the contribution from prescription-drug sales or medical-device sales.
While J&J’s pharmaceutical sales have surged in recent years, the consumer business was recovering from a series of recalls, including of millions of bottles of Tylenol and other over-the-counter medicines in 2009 and 2010, because of manufacturing problems.
In addition, it has faced lawsuits alleging talc-containing Johnson’s Baby Powder caused cancer or mesothelioma. J&J has said its talc-containing baby powder is safe, doesn’t contain asbestos and doesn’t cause cancer. It created a subsidiary and placed it in bankruptcy to resolve the talc claims quickly.
Mr. Gorsky said J&J has corrected the manufacturing issues that led to recalls. It upgraded the plant in Fort Washington, Pa., that makes Tylenol. In July, the Food and Drug Administration lifted a consent decree that had put three consumer-division manufacturing plants under scrutiny.
One risk of splitting off the consumer division is that J&J will have less of a buffer to smooth out sales and profit if one of the remaining divisions stumbles or encounters a market downturn.
J&J has long touted its diversified business model as a strength. At various points, weakness in one unit would be offset by strong sales in another. At times in the mid-2000s, J&J’s consumer business was posting the strongest sales growth of the three main units.
The unit was bolstered in 2006, when J&J bought Pfizer Inc.’s consumer business, including Listerine, for $16.6 billion.
A stand-alone consumer business, however, won’t be able to draw on a well-endowed parent while it competes with bigger rivals.
A French research-and-development lab for Johnson & Johnson in 2017.PHOTO: CHARLY TRIBALLEAU/AFP/GETTY IMAGES
The new company will be in a better position standing alone to allocate resources and make other decisions, said Joaquin Duato, vice chairman of J&J’s executive committee, who will become chief executive in January and eventually lead the pharmaceutical and medical-device company.
The leaner J&J, he said, will remain diversified by providing products for a range of diseases and based on various technologies, from cellular therapy to robotic-assisted surgery.
The remaining J&J, he added, will intensify efforts to create products that combine medical devices with drugs, such as one in development that identifies lung tumors and then targets them with a cancer therapy. Another experimental product aims to treat bladder-cancer patients using a device that delivers a drug.
The split, Mr. Duato said in an interview, “is going to create two strong companies with fit-for-purpose models for the changing trajectory of health.”
Rival drugmakers have also been shedding units selling cough pills, daily vitamins and skin lotions in recent years.
In 2019, Pfizer and GlaxoSmithKline GSK 0.30% combined their over-the-counter businesses into a joint venture, GSK Consumer Healthcare, which sells pain medicine Advil. Merck sold its consumer business, which makes Coppertone sunscreen, to Bayer AG for $14.2 billion in 2014.
For J&J, the Covid-19 pandemic has accelerated the divergent potential of its pharmaceutical and consumer businesses and intensified discussions among board members about separating them, Mr. Gorsky said.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Peter Loftus at peter.loftus@wsj.com
Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved.
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| From: Sr K | 2/25/2022 10:39:43 PM | | | | | | Judge Backs J&J Talc Bankruptcy, Keeping Cancer Lawsuits Frozen
A bankruptcy judge allowed a J&J subsidiary to stay in chapter 11, signing off on an emerging legal strategy for profitable companies to resolve mass litigation
The decision maintains a pause on further jury trials on allegations that Johnson’s Baby Powder caused ovarian cancer or contained asbestos, which the company denies.PHOTO: SOUMYABRATA ROY/ZUMA PRESS
By Jonathan Randles
Updated Feb. 25, 2022 12:07 pm ET
A bankruptcy judge allowed Johnson & Johnson to use chapter 11 to drive a settlement of litigation linking its baby powder to cancer, backing a controversial tactic that has helped profitable companies freeze roughly a quarter of a million injury lawsuits.
Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., ruled Friday against personal-injury lawyers who asked to throw out the chapter 11 filing of a J&J subsidiary created last year to move into bankruptcy about 38,000 pending lawsuits over allegedly dangerous talc-based products.
Judge Kaplan ruled the subsidiary, LTL Management LLC, didn’t file for chapter 11 in bad faith to gain an unfair edge over personal-injury claimants, as they had alleged, but for the legitimate purpose of resolving mass litigation. Instead he sided with J&J, which argued chapter 11 provides cancer victims with a fairer and more efficient forum to receive compensation than the civil jury system.
“This chapter 11 is being used, not to escape liability, but to bring about accountability and certainty,” Judge Kaplan said.
The judge’s ruling signed off on an emerging legal strategy for profitable companies to access the benefits of chapter 11 without placing valuable business assets in bankruptcy. Plaintiffs’ lawyers and academics opposed to J&J’s strategy have said it could provide other solvent corporations a blueprint for tapping chapter 11 while avoiding filing bankruptcy themselves.
The decision maintains a pause on further jury trials on allegations that Johnson’s Baby Powder caused ovarian cancer or contained asbestos, which the company denies.
“The bankruptcy code was never intended to be abused in this way by massively profitable corporations as a means to delay or prevent cancer victims from having their day in court,” said Jon Ruckdeschel, a lawyer representing individuals with cancer claims against J&J.
J&J officials testified they explored the bankruptcy strategy after the Supreme Court declined in June to review a $2.1 billion judgment in Missouri for 20 women who alleged the baby powder caused ovarian cancer.
J&J has said its talc-based products are safe but stopped selling the product in the U.S. and Canada in 2020 as the number of injury lawsuits grew, saying the litigation and widespread advertising by plaintiffs’ lawyers had sowed misinformation about the safety of the product.
Injury claims are expected to continue for decades to come as more former talc users get sick, according to the company, which has said bankruptcy is its only option for resolving those future claims and defining its talc liability.
Friday’s ruling follows a week-long trial examining J&J’s use of a Texas law that lets companies fill subsidiaries like LTL that have limited business operations with legal liability for injury litigation before those units file for bankruptcy. Committees of people blaming talc for their illnesses argued that bankruptcy law didn’t permit LTL’s filing, saying it was a litigation tactic designed to sap their negotiating leverage and sidestep jury trials.
Judge Kaplan found that rather than hindering and delaying payments, a settlement through bankruptcy “may indeed accelerate payment to cancer victims and their families.”
Earlier this month, the Senate Judiciary Committee scrutinized how J&J and a handful of other companies engineered similar corporate restructurings in Texas to hive off tort liabilities and shift them into chapter 11, and is considering legislation to reign in the practice. The company used the Texas law to separate the talc liabilities from its consumer-health business and place them in LTL, which filed chapter 11 two days after its creation in October, carrying pending and future talc claims with it.
Talc lawsuits against J&J in federal and state courts have been paused since LTL filed bankruptcy in October and will now stay on hold while the chapter 11 case moves forward, giving the consumer-health giant time to try to build support for a broad settlement. J&J has offered $2 billion so far, an amount that could increase during the bankruptcy, according to testimony by a company lawyer.
J&J officials denied at trial that it acted in bad faith or to shortchange claimants by moving its talc liabilities to LTL. Lawyers for LTL said claimants could rely on a funding agreement with J&J to cover any amounts the subsidiary is deemed to owe, which it cited as a critical piece of evidence supporting the chapter 11 case.
The trial provided insight into how J&J has sought to address the talc litigation. John Kim, chief legal officer of bankrupt LTL, testified that several months before the bankruptcy, J&J was close to settling most of its talc liability for between $4 billion and $5 billion.
In an attempt to ease concerns from injury claimants, an LTL lawyer said it would agree to bring in an examiner to conduct an independent investigation of the prebankruptcy maneuvers if the bankruptcy moves forward. Talc claimants said J&J turned to bankruptcy to stem the damage costly jury verdicts have had on its brand, while the company argued that continued jury trials would result in “lottery-like” outcomes where some plaintiffs win big and others get nothing.
A J&J spokeswoman said Friday that the company is confident that an independent examination of LTL’s formation and chapter 11 filing will reach the same conclusion as Judge Kaplan.
“LTL stands ready to work with claimants’ counsel and the mediator to reach an equitable and efficient resolution as ordered by the bankruptcy court,” the J&J spokeswoman said.
Injury claimants also disputed LTL’s assertion that talc litigation was so significant that it posed a serious financial risk to J&J’s consumer-health business, necessitating the Texas restructuring and subsequent bankruptcy.
Judge Kaplan disagreed, finding that jury verdicts for ovarian cancer and mesothelioma lawsuits, coupled with defense costs, would imperil “the continued viability of all J&J companies.”
“No public or private company can sustain operations and remain viable in the long term with juries poised to render nine- and ten-figure judgments, and with such litigation anticipated to last decades going forward,” he said.
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| From: Sr K | 4/24/2023 8:40:49 PM | | | | | | | a Kenvue IPO could come as early as next week. Shares would trade on the NYSE under the ticker "KVUE." |
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