The skin- and oral-care businesses make up $2 billion to $3 billion in annual global sales. But the package-goods business is dwarfed by that of J&J's pharmaceuticals and medical devices, which make up the bulk of the $46 billion powerhouse.
J&J's skin-care brands include Neutrogena, Aveeno, Clean & Clear and the flagship Johnson's brand in the U.S. Its smaller oral-care holdings include Reach toothbrush and dental implements.
A J&J spokeswoman declined to comment, but as part of its review McKinsey is benchmarking J&J's consumer brands, their management and long-term prospects against competitors. While J&J's skin-care business grew 12% last quarter in the U.S. and 8% globally, the company faces increasingly aggressive competition from more-focused competitors, including a resurgent Procter & Gamble Co., with Olay and Crest; Unilever, which has been expanding Dove; Colgate-Palmolive Co.; and L'Oreal.
Should J&J sell its skin-care business, it likely would have no trouble finding buyers, said Banc of America Securities analyst William Steele, who doubts that will happen.
The Reach oral care business would be a more likely candidate for divestiture, said industry watchers and executives. J&J "either needs to get bigger or get out" of oral care, said another analyst.
BriteSmile, a $40 million-plus operator of tooth whitening spas and dental-franchise operations, with an $8 million prestige oral-care products business, would be one intriguing possibility for acquisition, as would the oral-care businesses of Pfizer (marketer of Listerine) or GlaxoSmithKline (marketer of Aquafresh), he said. But none of those companies has indicated an interest in selling.
In skin care, acquisition candidates are fewer, but Banana Boat, the biggest among the brands Playtex Products has been shopping, would be a good fit with J&J's Neutrogena business, said private-equity and investment banking executives.