Johnson & Johnson To Cut 8,000 Jobs
The world’s largest healthcare company is not as healthy as it used to be. Barely seven months after J&J announced that it would cut 900 jobs it has announced that it will cut another 8,000 worldwide in an effort to save itself $1.7 billion dollars by 2011.
The November 2 announcement follows one from the spring, which announced that J&J would cut 900 positions from subsidiary Ortho-McNeil-Janssen, which employs 1,200 at its research and development facility in Titusville. Johnson & Johnson, however, has been mum on where any cuts announced in this latest round will be.
The New Brunswick-based pharmaceutical giant employs about 4,400 in the area. Janssen also has been trying to expand its operations in Titusville to almost 4,000 workers, and has been in talks with Hopewell Township about the plans. There is no word, however, whether J&J’s planned cuts will have any effect on Janssen’s plans.
Position eliminations, according to Johnson & Johnson CEO William Weldon, will be only one component of the savings. The company estimates that position eliminations will be 6 to 7 percent of its global workforce. There are approximately 117,000 employees at more than 250 locations.
The November 2 statement speaks of “global restructuring initiatives designed to strengthen the company’s position as the world’s leading global health care company.” While it is still on top, J&J has felt the twin sting of increasing competition and a pending legal hurdle.
In October the firm announced a 1-percent profit increase in its third-quarter earnings report. The lackluster showing was blamed on the global recession and the consequently intensifying market for cheaper generic products that is gouging sales of the company’s blockbuster prescription drugs.
The company’s growth belongs entirely to sales of medical devices, which rose 2.3 percent to $5.84 billion. However, J&J is spooked by a state-proposed $4 billion tax on medical devices. CFO Dominic Caruso told the Associated Press last month that the tax was twice what J&J thinks it should be — about 3 percent of total medical device industry revenues, now approximately $125 billion a year. Sales of prescription drugs, the former lifeblood of J&J, have all faltered as 2009 has slogged on. The company’s once-top-selling division has seen sales fall 19 percent, and faces a new set of generic competitors.
According to the company, it plans to concentrate on innovation and on bringing “key new products to market.”
The company hopes to increase efficiency and generate savings of between $1.4 and $1.7 billion over the next year. These savings are designed to provide revenue that the company hopes to invest in new growth platforms, launch new products, and “provide flexibility to adjust to the changed and evolving global environment.”
Johnson & Johnson (JNJ), One Johnson & Johnson Plaza, New Brunswick 08903; 732-524-0400; fax, 732-214-0332. William C. Weldon, chairman & CEO. Home page: www.jnj.com.
Pfizer To Close Wyeth Facility
Less than a month after New York-based pharma giant Pfizer acquired rival Wyeth, the firm announced it would close 15 of its 20 R&D sites in the United States, including Wyeth’s 425-person site on Ridge Road.
Last month’s blockbuster $68 billion buyout of Wyeth came with ominous rumors of several site closings.
On November 9, Pfizer announced that it would cut an undisclosed number of its staff and reduce its square footage by at least 35percent.
When the Wyeth deal was announced in January, Pfizer stated that it would seek to cut 10 percent of its global staff.
That translates to roughly 8,000 jobs, the same number of cuts rival Johnson & Johnson announced it would make from its worldwide staff last week.
Though Pfizer did not specifically mention the fate of Fort Dodge Animal Health, the 95-person veterinary and animal research site on Deer Park Drive, it is almost certain to close. Fort Dodge was Wyeth’s long-serving animal health research and development arm until the sale. Part of Pfizer’s announcement was the five locations it plans whereto maintain its R&D functions. Pfizer plans to operate sites only in Cambridge, Massachusetts; Groton, Connecticut; Pearl River, New York; La Jolla, California; and Britain.
Pfizer did not set a timetable for the closures. It merely stated, “While these changes are expected to bolster productivity and reduce costs, they will result in staff reductions. “
Wyeth (PFE), 865 Ridge Road, Princeton, 08540; 732-329-2300; fax, 732-274-4205. www.pfizer.com.