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Johnson & Johnson announced Tuesday that under a restructuring of its medical devices unit, it will cut approximately 4 percent to 6 percent of the segment's global workforce over the next two years, representing around 3000 positions. The company noted that the actions, which are expected to lead to cost savings of between $800 million and $1 billion, will affect its orthopaedics, surgery and cardiovascular units, while the consumer medical devices, vision care and diabetes care businesses will not be impacted.
According to Johnson & Johnson, the restructuring is designed "to strengthen its go-to-market model, accelerate the pace of innovation, further prioritise key platforms and geographies, and streamline operations." Gary Pruden, worldwide chairman of Johnson & Johnson's medical devices unit, remarked that "the bold steps we are taking today are to evolve our offerings, structure and footprint and increase our investment in innovation." He added "these actions recognise the changing needs of the global medical device market."
The company said it expects to cut about $200 million in costs this year as a result of the move, with most of the anticipated savings to be realised by the end of 2018, providing the company with "added flexibility and resources to fund investment in new growth opportunities and innovative solutions." Johnson & Johnson also said it would book restructuring charges of around $2 billion to $2.4 billion, of which roughly $600 million will be recorded in the fourth quarter of 2015.
Meanwhile, Johnson & Johnson confirmed its previous guidance for full-year 2015 earnings per share of $6.15 to $6.20, which excludes special items such as restructuring charges, with overall sales of between $70 billion and $71 billion. The company also noted that it will use a new format to report sales in the medical devices segment when it releases its fourth-quarter earnings on January 26.
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