J&J's DePuy Synthes Cutting Jobs As Part Of Reorganization
By Jof Enriquez,
Follow me on Twitter @jofenriq
Johnson & Johnson announced that its orthopedics subsidiary DePuy Synthes is letting go of 400 workers as part of a reorganization plan designed to meet new challenges in the market.
According to a Wall Street Journal report, Michael Orsinger, J&J’s worldwide chair of the global orthopedics group, said in a video message to employees that the reorganization is needed as “the external health care environment undergoes seismic shifts.”
The job cuts represent less than two percent of DePuy Synthes’ 23,000-strong workforce worldwide. WSJ report also said that DePuy plans to open 80 new positions as part of the restructuring.
The Philadelphia Business Journal cited Lorie Gawreluk, spokeswoman and VP of worldwide communications at DePuy, as saying that employee roles “won’t change or will change minimally,” and that the impact of the changes is global and “across many sites and areas” of the business.
In an interview with StaceyPageOnline.com, Gawreluk said, “DePuy Synthes Companies is transforming our operating model to enhance our ability to offer broader portfolio solutions to hospitals, provide superior product innovation and expert service to surgeons, reinforce our organizational capabilities and align our cost structure to our evolving environment.”
DePuy Synthes was created in 2012 when J&J bought Swiss-based Synthes Inc. for $20 billion and integrated it with its DePuy unit to better compete in the global market for devices that treat musculoskeletal injuries and spinal conditions.
That market is changing quickly, and medical device makers face increased pressure to cut prices as hospitals start to slash costs due to the U.S. Affordable Care Act, the WSJ article said.
Medical device makers are implementing other measures as a response to changes in the healthcare market. For instance, Medtronic recently bought Covidien to transfer its headquarters overseas and pay lower taxes, in addition to other factors.
Continued consolidation and increased M&A activity is expected in the medical device sector as companies seek to pool resources, become more efficient, and build scale, according to a Financial Times report.