Johnson & Johnson’s breakup—which will separate such consumer brands as Tylenol, Neutrogena and Listerine from the pharmaceutical and medical device businesses—will give some much-needed freedom to consumer marketers who long toiled in the shadows of a much bigger health care company, say company veterans.
J&J announced the move on Friday to separate the J&J consumer business as a standalone publicly traded company, but that won’t be final for 18 to 24 months. That will leave time to determine, among other things, who will lead the consumer business and what it will be called. The pharma and device business, which will retain the Johnson & Johnson name, will be led by Joaquin Duato, set to take over from Alex Gorsky as CEO next year.
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As it stands, the consumer business doesn’t share much marketing operation overlap with the broader Johnson & Johnson, whose pharmaceutical and medical device brands are marketed primarily business-to-business through doctors and health institutions.
While pharmaceuticals and devices accounted for 83% of J&J’s $82.5 billion in revenue last year, they accounted for only 22% of media spending—or $151 million—according to Kantar. Almost all of that came on three brands—Xarelto, Stelara and Tremfya. The consumer business, with 17% of revenue, or $14 billion, accounted for 78% of media spending ($543 million), per Kantar. While pharma and medical devices get considerable unmeasured spending, the media breakdown helps illustrate how little the biggest part of J&J business focuses on direct-to-consumer marketing.
One area of overlap is media buying, where Interpublic’s J3 unit handles all of J&J, the 30th largest U.S. advertiser with $1.4 billion in all-in spending, according to the Ad Age Datacenter. The pharmaceutical brands that do media advertising do benefit from the scale that the larger J&J consumer media budget brings, said one former J&J executive. But margins on the pharma business are so much higher, and media spending so much lower as a percentage of sales, that the effect will be hard to notice, the executive said.