Johnson & Johnson announced in November that it plans to spin off its consumer business into a new publicly traded company by November 2023.

The news didn't surprise Wall Street.

"The analyst community has been talking about splitting up J&J for years," said Jared Holz, health-care equity strategist at Oppenheimer. "The timing situation is critical, just because people have been very curious or intrigued as to why now."

Johnson & Johnson is the biggest pharmaceutical company in the United States based on market cap. It was ranked 36th on the 2021 Fortune 500 List of the largest U.S. corporations based on total revenue. The company has experienced dividend growth for nearly 60 years and has consistently outperformed the S&P 500 for the past 25 years.

"What the market is saying is that companies should focus on their core competencies and let us diversify," said Louise Chen, managing director at Cantor Fitzgerald. "We've already seen several examples of large pharma separating out noncore assets."

So far, investors' reaction to the spinoff has been mild, with the stock moving only modestly higher on the news in November.

"There are some risks to this execution from separating out the consumer business," Chen said. "I think investors aren't fully convinced yet of the standalone earnings potential of both companies."

There are other potential headwinds to the split. The company has been dealing with numerous legal challenges over the past several years, many of which are ongoing and could result in as-yet-unknown fines and settlements.

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