Is bigger better. In a world in which conglomeration has become a bad word, the healthcare giant is making the case that what Johnson & Johnson CEO Alex Gorsky calls “broad-base advantages” is a good thing, offering “consistent financial experience, wide-ranging expertise, and a customer base that spans from consumers to hospitals to governments,” according to Fortune. But while the company sticks to its legacy guns as “a sprawling, old-fashioned conglomerate,” the healthcare industry has been moving more toward decentralisation, spinning off pharma and consumer divisions to “unlock value.” Abbott freed USD 92 mn for shareholders when it spun off its pharma division while Baxter freed USD 4 bn doing the same, according to Goldman Sachs research. In fact, “There is absolutely no evidence that these businesses create more value as a result of being together,” says Daniel O’Keefe, a managing director at Artisan.

But J&J doesn’t agree. “In Gorsky’s view, decentralized didn’t have to mean disconnected. The whole point of a broad-based health care enterprise was that the different business units could work together to find synergies, cross-fertilize ideas, and reap cost savings that could be reinvested in the business. That, thought Gorsky, was the best way to unlock value.”