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J&J reveals cuts

J&J reveals cuts to Medical Device Unit

Sales for medical devices dropped 2.9% during the first nine months of 2015 and 3.4% in the US.
The company estimates that the actions announced will result in position eliminations of approximately 4 to 6 percent of the Medical Devices segment’s global workforce over the next two years

Johnson & Johnson has announced restructuring actions in its Medical Devices businesses to better serve the needs of customers and patients. The company is undertaking actions to strengthen its go-to-market model, accelerate the pace of innovation, further prioritise key platforms and geographies, and streamline operations while maintaining high quality standards. Sales for medical devices dropped 2.9% during the first nine months of 2015 and 3.4% in the US.

“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,” said Gary Pruden, Worldwide Chairman, Johnson & Johnson Medical Devices. “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.”

The actions are expected to result in annualised pre-tax cost savings of US$800 million to US$1.0 billion, the majority of which is expected to be realised by the end of 2018, including approximately $200 million in 2016. The savings will provide the company with added flexibility and resources to fund investment in new growth opportunities and innovative solutions for customers and patients. 

The company estimates that the actions announced will result in position eliminations of  approximately 4 to 6 percent of the Medical Devices segment’s global workforce over the next two years, subject to any consultation procedures in countries where required. 

Nevertheless, there could be some growth in the future from new product’s entering the market. By July 2015, the company had already submitted more than half of the 30 major device regulatory filings that it promised to accomplish by the end of 2016.

The company’s Consumer Medical Devices businesses, Vision Care and Diabetes Care, are not impacted by these actions.

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