Johnson & Johnson announced restructuring and layoffs to employees over the past week that could eliminate at least 1,000 jobs, according to people inside and outside of the company.
The reorganization included folding the company’s Mitek Sports Medicine business into another business, according to Rajit Kamal, the outgoing worldwide president of sports medicine and shoulder reconstruction. While not addressing layoffs, Kamal described the move in a LinkedIn post yesterday. J&J is combining sports medicine products into trauma and extremities. Meanwhile, shoulder reconstruction is moving into joint reconstruction.
“I am very confident that the new structure will drive focus and synergy to enable growth for both our Sports Medicine and Shoulder Reconstruction business,” Kamal wrote. Kamal’s role with the company is unclear.
“I know and have worked with both Sharrolyn Transfedt Josse [worldwide president, Velys Digital Surgery] and Oray Boston Jr. [worldwide president of Trauma, Extremities, Craniomaxillofacial and Animal Health] and am confident that under their leadership, [DePuy Synthes] will continue to drive focus and growth for both Sports Medicine and Shoulder Reconstruction business,” Kamal said.
People familiar with the company said the cuts are likely to be felt companywide.
When asked about the layoffs, J&J spokespeople shared a company statement with MassDevice: “As the world’s largest, most diversified healthcare company, we are constantly assessing ways to be more innovative and competitive. We are evolving amidst a rapidly changing environment to better meet the needs of the patients we serve around the world.”
A number of factors behind the Johnson & Johnson layoffs
New Brunswick, New Jersey–based J&J has been wrestling with several challenges, including some unrelated to its MedTech business.
For example, the company’s top-selling drug Stelara (ustekinumab) is expected to lose patent protection this year. Another drug, Simponi (golimumab), is expected to lose its protection next year.
On the consumer side of the business, a federal appeals court judge recently dealt the company a setback over a complex legal maneuver — nicknamed a “Texas two-step” — that J&J has employed to shield itself from liability in talc-related lawsuits.
In an interview in this week’s DeviceTalks Weekly podcast, Joe Mullings, CEO of The Mullings Group, a prominent medical device executive search firm, confirmed that he knew of several positions eliminated in the minimally invasive surgical robotics programs within the company.
“These were people who were very close friends of the firm, and they’re not kids,” Mullings said. “They’re adults who have put 20 to 30 years of their life into a project or into a company.”
Mullings says external pressures were only part of the problem. Companies like Johnson & Johnson have overhired over the past two years, according to Mullings, who estimated that the company added 16% to its workforce in that time. J&J’s most recent annual report listed a total of 155,800 employees.
“That costs money,” Mullings said. “You’ve got to take care of that expense.”
Johnson & Johnson MedTech is the world’s second-largest medical device business, according to our sister site Medical Design & Outsourcing’s MedTech Big 100 report.
Medtech may not be as recession-proof
Medtech has shown some resilience in the present environment. Some major medical device companies even released positive earnings in the latest round of reports. That was especially true in the orthopedic device space, where pent up demand built up during the COVID-19 pandemic.
However, major medtech companies such as Johnson & Johnson presently face a host of challenges:
- Health provider customers in the U.S. and elsewhere are grappling with staffing shortages and operational challenges. They’re also more conservative about expenditures, especially big-ticket purchases.
- Medical device makers are grappling with macroeconomic challenges including inflation, higher interest rates and supply chain problems. Plus, a strong U.S. dollar makes it harder for American companies to sell overseas.
- U.S. medtech companies have had to wrestle with Chinese government efforts to hold down healthcare costs through changes to the procurement process for the country’s national health system.
In fact, MassDevice has reported on more than 19,000 medtech workers let go across the industry since mid-2022.
Industry watchers say more job reductions are on the way. (Have a tip about layoffs at your company or within the industry? Let us know.)
DeviceTalks Editorial Director Tom Salemi contributed to this report.
