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J&J to cut up to 3,000 jobs in key business unit

Published on 20/01/16 at 09:42am

Johnson & Johnson has announced a restructuring of its medical devices business unit that could result in up to 3,000 jobs being cut worldwide, in a bid to save $1 billion year by 2018.       

The move will slash as much as 6% of the unit, which accounts for a large proportion of J&J’s global business. Some 60,000 staff – nearly half of its workforce – will be axed, with the cuts expected to be in orthopaedics, surgery and cardiovascular operations. As a result of the cuts, the company expects to save about $200 million in 2016 alone.

Its orthopaedics division, which makes joint hip replacement prostheses, is believed to be hit hardest. However J&J confirmed its consumer medical devices businesses, vision care and diabetes care would be unaffected by the restructuring.

The world’s largest healthcare company says the savings will give it greater flexibility and will free up funds to invest in “new growth opportunities and innovative solutions for customers and patients”.

This statement could fuel speculation that the company is planning one or more acquisitions in the coming months, potentially in the very unit that it is cutting. In its 2015 Q3 financial results, J&J was revealed to have $37 billion in cash assets.

Medical devices is one of three J&J business units, alongside pharmaceuticals and consumer products. The unit has endured poor performance in recent years, with sales falling 10% in the first nine months of 2015, to $18.7 billion.

Gary Pruden, worldwide chairman of Johnson & Johnson medical devices, comments: “As a market leader, we are committed to leveraging our breadth and scale to shape the future of the medical device industry, for the benefit of those we serve. The bold steps we are taking today are to evolve our offerings, structure and footprint and increase our investment in innovation.  These actions recognise the changing needs of the global medical device market and will deliver more value to customers, increasing our competitive advantage and driving growth and profitability for our business.”

J&J said it expects to record pre-tax restructuring charges of approximately $2.0 billion to $2.4 billion.

Joel Levy

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