The cuts, which the company referred to as ‘position eliminations’, are estimated to affect between 7,000-8,000 employees worldwide, or 6-7 percent of the 117,000 global workforce.
The restructuring initiatives are designed to strengthen the company’s position as the world’s leading healthcare supplier.
“We are announcing a series of actions and plans designed to ensure that our company remains well-positioned and appropriately structured for sustainable, long-term growth in the health care industry,” William C. Weldon, Chairman and CEO of J&J said in a statement.
Primarily affecting management
The redundancies, which will primarily affect those in management, will not be offered on a voluntary basis, Carol Goodrich, J&J’s corporate media relations director, told CosmeticsDesign.
However, the company is keen to stress that the job cuts represent only one component of the savings, and that it remains sympathetic towards people affected.
“These types of changes are difficult under any circumstances, and will have a very personal impact on people who have been dedicated to the mission of Johnson & Johnson. We recognize their contributions to the achievements of our business, and are committed to treating them fairly and with respect throughout this process,” Weldon said.
As a result of the restructuring, increased operational efficiency and cost-savings are expected to be realized, which will allow the company to prioritize its innovation efforts around growth opportunities in health care and focus on bringing new products to market.
Savings of up to $1.7bn
J&J predicts that the plans will generate savings of $800m-$900m in 2010, rising to $1.4bn-$1.7bn when fully implemented by 2012, and which will in turn provide additional resources
The associated restructuring charge, expected to be in the range of $1.1-$1.3bn (pre-tax) in the fourth quarter of 2009, is to be treated as a special item. Consequently, this will not affect share prices which have been set at $4.54-4.59 per share in the company’s earning guidance for 2009.
Johnson & Johnson is keen to continue its investment in new growth platforms within the healthcare industry, having previously acquired Cougar Biotechnologies and Elan Corporation’s AIP programme.