Johnson & Johnson is restructuring and plans to reduce its global work force by 4% or approximately 4,820 jobs, in an effort to counter losses as a result of falling sales of its heart stents due to safety concerns and impending patent expirations for key drugs Risperdal and Topamax. The company expects to save $1.3 billion to $1.6 billion in 2008.
The company predicts that restructuring charges will be between $550 million and $750 million in the second half of 2007. According to the company, the restructuring primarily impacts its pharmaceuticals segments and its Cordis stent-making unit in Miami Lakes, FL. Under the restructuring, J&J will consolidate certain operations at the pharmaceuticals segment and integrate its Cordis business. J&J also plans to fire as many as 800 employees from its Alza and Scios subsidiaries.
"The actions we are taking are to ensure we've addressed the short-term pressures on the business," chief executive officer William Weldon told analysts during a conference call. "We believe we actually will be strengthening ourselves coming out of all of this."
"This type of impact is difficult but necessary," chief financial officer Dominic Caruso said, adding that J&J will use attrition and hiring freezes in certain areas of the business to lessen the impact on employees.
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