Johnson & Johnson Tightens Belt

Johnson & Johnson will cut 3–4% of its workforce, or up to 4,820 jobs, and consolidate yet-to-be-named sites to reduce costs and improve profitability. Earlier this year, it decided to close R&D facilities in California and New Jersey and eliminate about 700 jobs. Recently, AstraZeneca and Bristol-Myers Squibb announced similar plans (C&EN, July 30, page 31).

J&J's business spans diagnostics, consumer health, medical devices, and pharmaceuticals, but its drug and Cordis cardiology operations will bear the brunt of the job cuts. Despite solid financial results so far in 2007, the cutbacks are designed to save $1.3 billion to $1.6 billion in 2008 and offset negative events in pharmaceutical and coronary stent markets.

These events include declining sales for J&J's second-largest product, the anemia drug Procrit, which amounted to $3.2 billion in 2006. The firm will also face patent expirations in the next few years for its lead product, the antipsychotic Risperdal, and the epilepsy drug Topamax. In 2006, they pulled in a combined $6.2 billion, 27% of J&J's drug sales.

The company will invest aggressively in its future growth, including spending on R&D to support its late-stage drug development pipeline, CEO William Weldon said in a conference call last week. J&J anticipates filing for regulatory approval of three new drugs by the end of this year and another seven to 10 between 2008 and the end of 2010.

The company will take a restructuring charge of $550 million to $750 million, but it anticipates meeting its higher earnings goal of more than $4.00 per share, or roughly $11 billion-$12 billion in earnings, for 2007.