J&J cuts nearly 5,000 jobs in restructuring move

Johnson & Johnson (J&J) has said it is going to slash its workforce of 120,500 by 4,820 in a restructuring move designed to reduce costs.

The job losses will be focused on its pharmaceutical division and the Cordis cardiovascular business. J&J will also close some facilities and consolidate administrative functions.

Sales of J&Jís key products are falling due to generic erosion, while others have been affected by safety concerns. The anaemia drug Procrit (epoetin alfa) has had Medicare reimbursement restrictions imposed on it by the FDA, after safety concerns were identified when treating certain cancers. Falling sales are affecting J&Jís three top drugs which bring in approximately USD 8.5bn, as well the drug-eluting Cypher heart stent.

J&J has not been more specific as to where job cuts will strike, but has admitted that it will be informing affected staff in following months. Major cuts could include the New Jersey unit, which has 13,000 employees, as well as the Cypher unit, which employs 6,000 globally.

A Motley Fool report has said that J&J has allowed more autonomy in its different business units and has acquired more businesses compared with other pharmaceutical companies. Thus, there is room to cut costs and consolidate different operations, but also indicates an internal cultural shift.

Despite the negative press J&J has a robust pipeline, with 10 new drugs queuing up to reach the market. However, the company needs get its timing right and make sure that the company learns from the mistakes made by Pfizer with torcetrapib.