J&J plans to split into two public companies and separate consumer and drug businesses

Johnson & Johnson shares

jumped 3.6% in premarket trade Friday, after Chief Executive Alex Gorksy told the Wall Street Journal that the company plans to split into two companies, splitting off the consumer group from the prescription drugs and medical devices business. The company confirmed the story in a release early Friday. J&J will separate the consumer business in 18 to 24 months, he said, because its customers and markets have diverged so much from the rest of the business in recent years, including during the pandemic. “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. The company intends to conduct the separation on a tax-free basis, although details have yet to be worked out, said Gorsky. Pfizer Inc.

and Merck

have also decided to split their consumer and drug businesses, and earlier this week, General Electric Co.

announced a plan to break into three public companies. J&J shares have gained 3.6% in the year through Thursday, while the Dow Jones Industrial Average

has gained 17% and the S&P 500

has gained 24%.