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article imageJohnson and Johnson cut 3,000 jobs

By Tim Sandle     Jan 25, 2016 in Business
One of the biggest healthcare companies in the U.S. has announced a high number of job cuts in its medical device business.
In total, Johnson and Johnson is preparing to cut some 3,000 jobs. This equates to 2.5 percent of the New Jersey based pharmaceutical giant’s global workforce and 6 percent of its employees in the medical device arm of its business. The geographical areas where the cuts will be made have yet to be announced. The cuts will be spread over a two year period.
Johnson and Johnson is one of the oldest healthcare companies in the U.S. It was founded by three Johnson brothers in 1885: Robert Wood Johnson, James Wood Johnson and Edward Mead Johnson. Today the company has three divisions: medical devices, consumer health and pharmaceuticals.
The aim of the restructuring is to save $1 billion in employee costs per year (before tax), by the time of the 2018 tax year. The cuts reflect the company’s falling fortunes in the medical device sector.
Medical devices are instruments or implants, used to diagnose, prevent, or treat disease or other condition. Unlike a drug, there are no chemicals used. An example is a pacemaker or breast implant. In recent years the regulator controls on medical devices has increased, with the standards now being similar to those for pharmaceutical products, especially for implants intended to be sterile. The U.S. Food and Drug Administration (FDA), for example, has a series of regulations in place.
There are also signs that the medical device sector has slowed down; while sales are rising purchase price pressure from hospitals has forced prices downwards. Speaking with The Wall Street Journal, newly appointed product development, Gary Pruden stated that the “layoffs are “an opportunity to reshape our business to accelerate growth through meaningful innovation.”
The announcement of the cuts led to an increase in the Johnson and Johnson share price.
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