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J&J cuts business unit

US healthcare giant slashes business unit as recession and generic competition take hold

US healthcare firm Johnson & Johnson (J&J) is reportedly consolidating its management team and has plans to cut the smallest of its four business units.

The company, which is expected to announce further changes in coming weeks, is getting rid of its comprehensive care business – one of three divisions created when J&J restructured in January 2008 with the aim of boosting sales. The move is designed to ensure that the company continues to operate effectively.

Comprehensive care comprises units manufacturing contact lenses, artery-opening stents, and related guidewires, cathers and diagnostic tests – each unit has its own dedicated sales and marketing personnel, research, manufacturing and administrative staff. In 2008, revenue for the business totalled $10bn.

Revenue and net income at J&J has dropped in recent quarters, with sales at the comprehensive care unit falling 8 per cent in the first half of 2009. Both the consumer and prescription medicines units have suffered as a result of the global economic downturn. Generic competition to two of J&J's leading products, schizophrenia drug, Risperdal (risperidone) and epilepsy treatment, Topamax (topiramate), has also taken its toll.

J&J has not yet announced any job cuts related to cutting comprehensive care.

27th August 2009

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