Johnson & Johnson announced today that it would cut about 3,000 jobs in its medical devices division over the next two years as part of a restructuring effort to save $1 billion in annual costs and focus on more innovative products, as the division continues to take losses due to a strong U.S. dollar.
The job cuts will impact the company's orthopedics, surgery and cardiovascular operations, and while spokesperson Ernie Knewitz revealed that there are no immediate plans to eliminate specific products, he failed to disclose in which regions the cuts would be taking place.
"The savings will help us grow our (device) business," he said, according to Reuters. "That could involve acquisitions, but it will also involve investing in our own internal programs."
J&J's medical device division is the company's poorest-performing segment. In its third quarter earnings report, J&J announced sales of $6.1 billion, marking a decrease of 7.3 percent as compared to the third quarter of 2014. Following suit, sales rose 0.9 percent, but the negative effect of currency rates dragged down revenue by 8.2 percent.
As part of the restructuring, which will affect 4 to 6 percent of the company's global head count in medical devices, J&J said it will spend $2 to $2.4 billion in pretax charges, of which about $600 million will be recorded in the fourth quarter of 2015.
"These actions recognize 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," said Gary Pruden, the worldwide chairman of the medical devices business.
Despite the slumping revenue in medical devices, J&J said it would not make any changes to its $10 billion share repurchase program announced during its third quarter earnings report.
