Johnson & Johnson to cut about 3000 jobs in medical devices

The move is slated to put a $2 billion to $2.4 billion pre-tax hit on the balance sheet, the company said, including $600 million during the 4th quarter of 2015.

Johnson & Johnson on Tuesday announced it would slash up to 6 percent of its workforce in its medical devices division as part of an effort to cut $1 billion in annual costs.

However, its Vision Care, Diabetes Care, and Consumer Medical Devices businesses will not be impacted by the restructuring. J&J stated that the restructuring would allow the company more flexibility to fund new growth.

The manufacturer reaffirmed its previous full-year 2015 guidance that it provided in the third quarter of $70 billion to $71 billion in sales and adjusted full-year earnings of $6.15 to $6.20 per share, excluding special items like the restructuring charges.

The New Brunswick, New Jersey, company said that amounts to more than 2 percent of its global workforce of around 127,000 people and 4 percent to 6 percent of its employee total in medical devices.

J&J’s medical-device business was the company’s largest unit, and its fast-growing sales of artery-opening stents, knee-replacement parts and other surgical tools fueled the company’s sales growth while its prescription-drugs and consumer-health businesses flagged.

Johnson & Johnson (NYSE:JNJ) has declared that it plans to restructure its Medical Devices business to better serve the needs of customers. Most of the savings was expected before 2018 year end, including over $200 million during 2016.

Leerink Swann analyst Danielle Antalffy said Tuesday’s announcement increases the likelihood of an acquisition to boost the company’s medical device prospects.

The company expects to post fourth quarter results on January 26, according to the article.

The Medical Devices unit covers orthopaedics, surgery and cardiovascular products.

J&J has big plans for the year ahead after stumbling a bit with its devices business last year.

The company’s shares rose about 1 per cent to $98.25 in premarket trading.