Johnson & Johnson to cut 3,000 jobs in its medical devices unit

US healthcare major Johnson & Johnson (J&J) yesterday said that it would cut around 3,000 jobs in its medical devices unit over the next two years, in order to focus on more innovative products.

The company estimates that the actions will result in job cuts of around 4 to 6 per cent of the Medical Devices segment's global workforce over the next two years.

The job cuts will affect J&J's orthopedics, surgery and cardiovascular operations and the company's Consumer Medical Devices businesses, Vision Care and Diabetes Carewill not be affected.

New Jersey-based J&J currently employs around 60,000 within its medical devices unit, part of a global workforce of about 127,000.

The job cuts are expected to bring in pre-tax cost savings of $800 million to $1 billion, the majority of which are expected to be realised by the end of 2018, including approximately $200 million in 2016.

The company said that the savings will provide it with added flexibility and resources to fund investment in new growth opportunities and innovative solutions for customers and patients. 

As part of the restructuring, the company expects to record pre-tax restructuring charges of approximately $2 billion to $2.4 billion, which will be treated as special items, of which approximately $600 million will be recorded in the fourth quarter of 2015. 

J&J's medical device unit had sales of nearly $19 billion in the first nine months of 2015, but declined by 10.4 per cent.

The cuts come after sales of its prescription drugs, devices and consumer medicines fell due to a weakening global economy and unfavorable currency exchange rates.

''As a market leader, we are committed to leveraging our breadth and scale to shape the future of the medical device industry, for the benefit of those we serve,'' said Gary Pruden, global chairman of J&J Medical Devices.

''The bold steps we are taking today are to evolve our offerings, structure and footprint and increase our investment in innovation.  These actions recognize the changing needs of the global medical device market and will deliver more value to customers, increasing our competitive advantage and driving growth and profitability for our business,'' he added.