Siemens AG (NYSE:SI) may cut as many as 2,000 positions from its diagnostics and radiation treatment divisions, shifting its focus to lower-cost countries and reducing costs.

The European giant’s diagnostics arm, responsible for nearly one-third of sales in FY 2011, has lagged in the last two years, despite the $13 billion spent giving it an overhaul.

Sales were underwhelming for the most recent quarter and the division’s profitability is half of what it was two years ago, Businessweek reported.

The slump could lead to as many as 1,600 jobs lost from the division, adding to 400 planned cuts from the radiation therapy arm over the next two years.

Siemens announced plans to scale back its radiation therapy business last month, giving rivals Varian Medical Systems (NYSE:VAR) and Elekta AB (STO:EKTA B) a bump on The Street.

Meanwhile Siemens’ imaging arm remains a bright point for the company, beating out GE Healthcare (NYSE: GE) in computed tomography.

Siemens’ diagnostics arm employs about 15,000 and its health care division in general includes about 51,000 around the world, according to Businessweek.

Shares of SI were down 1% to $94.07 in afternoon trading as of about 1:00 p.m. today.