J&J to cut 3,000 jobs in major shakeup—is it a prelude to an acquisition?
- Johnson & Johnson announced on Monday that it would be culling 3,000 jobs, or between 4% and 6% of the global workforce in its medical devices division, over the next two years in a major restructuring effort, according to an SEC filing.
- The company believes that it will achieve somewhere between $800 million and $1 billion in pre-tax cost savings as a result of the restructuring, about $200 million of which is expected to be realized this year and the majority of which should register by the end of 2018.
- J&J will also also expects to add between $2 billion and $2.4 billion in pre-tax restructuring charges to its books within the next two years, according to the filing. The layoffs will stem from the company's cardiovascular, orthopedics, and surgery device units (leaving the diabetes, diagnostics, and vision care units intact).
Medical devices make up a huge share of Johnson & Johnson's global business, so these job cuts are a big deal for the firm. A little less than half of the company's total worldwide workforce is in its medical devices unit, meaning the layoffs will amount to a 2-3% overall reduction in global jobs.
As Reuters notes, J&J is already sitting on quite a bit of cash, and these cuts will (over the long term) add to that haul. That has some analysts speculating that the U.S. pharma giant is still in the hunt for an acquisition, potentially to beef up the very medical devices division that it will be trimming over the next several years.
Johnson & Johnson has had to face a prominent controversy involving its now-defunct Prosima pelvic mesh product. At the end of 2015, a Philadelphia jury awarded a woman a $12.5 million judgment in her suit against the company and its device, which faces many other ongoing suits. J&J won its first trial centering on the product last fall.