Johnson & Johnson announced in November that it plans to spin off its consumer businessBy November 2023, it will be a publicly traded company.

Wall Street was not surprised by this news.

“The analyst community has been talking about splitting up J&J for years,” said Jared Holz, health-care equity strategist at Oppenheimer. “The timing of the split is important, simply because so many have been curious about what’s happening now.”

Johnson & Johnson is the biggest pharmaceutical company in the United States based on market cap. The 2021 Fortune 500 List, which ranks the top U.S. companies based on their total revenues, ranked it 36th. The company has experienced dividend growth for nearly 60 years and has consistently outperformed the S&P 500 for the past 25 years.

Louise Chen (Cantor Fitzgerald managing director) stated that the market suggests companies focus on core competencies, and allow for diversification. There have been many instances of large-pharma seperating core assets.

Investors’ reactions to the spinoff have been moderate so far. The stock moved only slightly higher in November after the news.

Chen explained that the separation of consumer business from execution carries some risk. Chen stated, “I believe that investors have not yet been convinced about the standalone earnings potential for both companies.”

The split could also face other obstacles. It has dealt with numerous legal challengesOver the years there have been many violations that occurred, some of them ongoing. These violations could lead to settlements or fines.

Watch the video above to learn why Johnson & Johnson is splitting up and what risks may be heading its way.