In July Johnson & Johnson took the axe to its pharma division in a bid to cut up to $750 million in costs. Included in the cuts was a plan to reduce the company's workforce by four percent, or almost 5,000 employees. According to J&J, the cuts are designed to improve the company's cost structure and ensure profitable growth in the coming years. While J&J plans plans to continue investing in new technologies, it faces some significant patent losses among its current therapies. In addition, both J&J and Amgen have been embroiled in the anemia drug safety controversey, which has impacted sales of the company's best-selling drug Procrit. Medicare, which spends more money on anemia drugs than any other pharmaceutical, recently decided [1] to limit the amount of anemia drugs that it will reimburse for.
Two of J&J’s biotechs, Alza and Scios, bore the brunt of the cuts. Acquired for $12 billion six years ago, J&J is closing Alza's Mountain View facility and will lay off 600 workers. The pharma giant is also largely ending the R&D efforts at Alza, which had been structured to tweak the pharma giant's therapies. Scios--which markets Natrecor [2]--has already seen the pink slips fly and more cuts are expected. Two other J&J companies working in medical devices are also expected to undergo significant restructuring, related primarily to the problems the company has been having [3] in the drug-eluting stent market.
- see this release [4] on the cuts
J&J Timeline:
J&J restructures pharma unit, laying off workers. Report [5]
J&J: Natrecor study failed to reveal two deaths. Report [2]
J&J makes big cuts at Alza and Scios. Report [6]
Amgen, J&J win a round in anemia controversy. Report [7]
Congress spotlights J&J stent ops. Report [3]
J&J won't pursue broader uses of Procrit. Report [8]
New rules limit use of anemia drugs. Report [9]
Links:
[1] http://www.fiercebiotech.com/story/new-medicare-cap-on-anemia-drugs-could-hammer-amgen/2007-05-15
[2] http://www.fiercebiotech.com/story/j-amp-j-natrecor-study-failed-to-reveal-two-deaths/2006-01-04
[3] http://www.fiercepharma.com/story/congress-spotlights-j-j-stent-ops/2007-08-14
[4] http://www.fiercebiotech.com/press-releases/press-release-johnson-johnson-plans-improve-overall-cost-structure
[5] http://www.fiercebiotech.com/story/j-j-restructures-pharma-unit-laying-workers/2007-07-31
[6] http://www.fiercebiotech.com/story/j-j-makes-big-cuts-alza-and-scios/2007-08-01
[7] http://www.fiercebiotech.com/story/amgen-j-j-win-round-anemia-controversy/2007-09-12
[8] http://www.fiercepharma.com/story/j-j-wont-pursue-broader-uses-procrit/2007-09-06?utm_medium=rss&utm_source=rss
[9] http://www.fiercebiotech.com/story/new-rules-limit-use-of-anemia-drugs/2007-07-31
[10] http://www.fiercebiotech.com/special-reports/3-bayer
[11] http://www.fiercebiotech.com/special-reports/top-5-layoffs-2007
[12] http://www.fiercebiotech.com/special-reports/5-amgen