Johnson & Johnson revealed restructuring and layoffs for employees. It could result in the loss of at least 1,000 positions. Sports medicine products for trauma and extremities are being combined by J&J. Meanwhile, shoulder reconstruction is giving way to joint reconstruction. According to people who know the business, the cuts are likely to be felt across the board.
J&J spokesmen provided the following statement in response to concerns about the layoffs: “As the largest and most diverse healthcare company in the world, we are evaluating ways to be more inventive and competitive. In an environment that is changing quickly, we are developing. This is to fulfill better the patients’ requirements we serve globally.”
Johnson & Johnson is the world’s biggest and most extensive manufacturer of medical supplies. For the past 137 years, they have created innovations that can change people’s lives. Let us learn more about this Company’s layoffs in this article.
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Overview of J&J company
Johnson & Johnson (J&J) is an American global firm established in 1886. The Company creates consumer packaged goods, medications, and medical devices. One of the two U.S.-based businesses with a prime credit rating of AAA is J&J. It is higher than that of the U.S. government! Thus, J&J is one of the most valuable firms in the world.
Johnson & Johnson’s corporate headquarters are in New Brunswick, New Jersey, while its consumer division is in Skillman. About 250 subsidiary companies comprise the corporation, which operates in 60 nations. It sells its goods in more than 175 nations. On November 20, 2021, the business stated that it would be divided into two publicly traded businesses. It includes one specializing in consumer goods and the other in medicines and medical technologies.
Johnson & Johnson reported $97.773 billion in sales for the twelve months ending June 30, 2023. It was a rise of 2.29% from the previous year.
J&J considers job layoffs despite inflation
Johnson & Johnson exceeded third-quarter projections in 2022. But healthcare behemoth J&J’s chief financial officer, Joseph Wolk, hinted that job cuts might be ahead. The Company divides its three-pillar business into two and spins off its consumer segment, Kenvue. So he claimed that the business focuses on “right-sizing” itself.
Wolk noted that the “health care sector is more resilient” than other sectors severely affected by COVID and inflation. But he predicts that in 2023, there will be higher manufacturing.
Prices will continue to be a drag. Also, it will impact Johnson & Johnson’s financial performance.
J&J released good financial results for the third quarter of 2022 in the face of ongoing global macroeconomic problems. According to Joseph Wolk, the Company increased operational sales growth in the three market sectors. “It demonstrated the resilience of our industry and the flexibility of our organization.” In particular, he said the following:
1. We kept moving forward in our pharmaceutical business. We are advancing our pipeline and reaching our aim of $60 billion in pharmaceutical sales by 2025.
2. We also continue to experience growth in our MedTech business. So we make investments in innovation and commercial capabilities. Also, we observe demand for our most recent product launches.
3. We made significant strides in Consumer Health to launch the standalone business. We unveil Kenvue as its new name, goals, and branding.
The planned reorganization’s scope and affected roles still needed to be discovered. But Wolk told The Wall Street Journal it would be a minor restructuring.
J&J had 141,700 full-time employees worldwide at the start of 2022. It is an increase from 134,500 at the same time in 2021. The corporation employs about one-third of its staff in North America.
The MedTech sector was affected by Johnson & Johnson layoffs
The job cuts have reached Johnson & Johnson’s medtech division. This happened only a few weeks after it was reported that the Company was considering global layoffs. It’s due to a restructuring of the infectious disease and vaccine groups of its Janssen pharmaceutical division. Also, it was just as another wave of layoffs struck the Company’s consumer healthcare group ahead of a planned spinoff.
The corporation intends to start terminating a total of 352 employees in the state of California at the end of April. This was according to letters submitted in March 2023 in line with the WARN Act.
Even though J&J claimed a small year-over-year increase in its MedTech sector, layoffs still occur. The business attributed the growth to some of its products in its late January results release. It includes electrophysiological devices, contact lenses, and wound closure solutions.
Auris Health, a division of J&J, produces robotic surgery devices for endoscopic treatments. It was acquired in 2019 for $3.4 billion. It will be responsible for most job layoffs, which total nearly 300.
Verb Surgical is the robotic surgery firm once a joint venture between J&J and Alphabet’s Verily branch. But it moved completely under the J&J umbrella in 2020. This will be responsible for another 47 layoffs.
Ethicon is a company that produces surgical tools and technologies and has been a J&J subsidiary for over 50 years. Also, C-SATS is a company that was acquired in 2018. It has developed artificial intelligence-powered software to enhance surgeons’ training and performance reviews. These are also suffering less severely from the layoffs.
The layoffs are distributed between two locations in California. They are Redwood City and Santa Clara. Both sites are located in the Silicon Valley region, near San Francisco.
The job losses are planned for two weeks between April 30 and May 13. This is according to many WARN letters J&J sent to California’s Employment Development Department. Also, the department shared with Fierce Medtech.
According to the listings in the WARN alerts, they will impact a wide range of positions. This includes R&D engineers, sales representatives, manufacturing operators, data scientists, etc.
After layoffs, J&J triumphs in selling a Pennsylvania consumer health facility for $14 million!
A sizable facility that produced over-the-counter staples like Pepcid and Imodium for years under Johnson & Johnson is now ready to enter the market.
For $14 million, High Properties purchased the J&J consumer health center in Greenfield, Pennsylvania. This was according to the local news source, Lancaster Online. A copy of the contract verifying the sale, which was completed in late March 2023, has been seen by FiercePharma.
FiercePharma asked J&J and High Properties for comments on the situation, but neither responded immediately.
The change in ownership comes after Johnson & Johnson announced in March 2023 that it would cut 57 jobs at the factory in Lancaster County. This is also according to information provided in a regional WARN notification.
Those layoffs are scheduled to begin on April 28. It will come after previously reported plans to mothball the facility, which shuttered last year. This is according to Lancaster Online. According to J&J, the plant will be completely shut down by the fall of 2023.
The Johnson & Johnson layoffs are the result of many factors
J&J has been battling some difficulties, some unrelated to its MedTech company. For instance, Stelara (ustekinumab), the Company’s best-selling medication, is expected to lose its patent protection this year.
Next year, Simponi (golimumab), another medication, will begin to lose its patent protection.
On the consumer side, a federal appeals court judge recently delivered J&J a defeat over an elaborate legal strategy. It is known as a “Texas two-step” that the firm has used to shield itself from blame in talc-related lawsuits.
Joe Mullings is the CEO of The Mullings Group. It is a well-known medical device executive recruitment agency. He revealed that he knew many roles removed from the organization’s minimally invasive surgical robotics programs. This was in an interview on the March 2023 DeviceTalks Weekly podcast.
According to Mullings, the issue was not entirely caused by outside influences. He calculated that Johnson & Johnson increased its employment by 16% in the last two years. He said companies like this one have been overhired.
In J&J’s most recent annual report, 155,800 people were identified as employees. That is expensive, Mullings said. “You need to handle that expense.”
Conclusion
Johnson & Johnson is by no means the only business to announce layoffs lately. Over the past few months, several businesses have begun laying off employees. Tech businesses specifically cause the majority of the layoffs.
This occurs as the economy continues to hurt both businesses and customers. Months of inflation have put pressure on the market in the United States. To offset it, interest rates have been rising. There isn’t a resolution in sight; thus, more businesses will probably declare layoffs.
We are still dedicated to treating all affected staff fairly. We will be offering the necessary help during this transition. According to the letters, Amanda Wade, director of human resources for J&J’s medtech R&D and innovation business, said, “We look forward to organizing intervention services for our affected employees.”
