Coming off a successful first quarter in which four of its 7 businesses posted double-digit organic growth, Boston Scientific ($BSX) is now planning a makeover. The Marlborough, MA-based devicemaker announced a global restructuring program on Wednesday to "support long-term growth and innovation."
|Boston Scientific CEO Michael Mahoney|
The reorg will focus on "developing global commercialization, technology and manufacturing capabilities in key growth markets, continuing implementation of the company's plant network optimization strategy and expanding operational efficiencies." It will start some restructuring programs immediately, aiming to get the bulk of the work done by the end of 2018, the company said in a release. But it didn't drop any hints on what the new Boston Sci will look like.
The company expects its worldwide workforce to remain around the 25,000-employee mark. While there will be layoffs, it will create new jobs in "areas of growth." The restructuring scheme will cost around $175 million to $225 million, and the company expects to save between $115 million and $150 million in pretax operating expenses by 2020. It plans to reinvest a "substantial" share of these savings in unspecified "strategic growth initiatives."
"We are taking these steps to build on our momentum and meet the challenges of affordable health care around the globe," said CEO Michael Mahoney in the statement. "We will continue to invest in strategic growth opportunities that enhance our reach, capabilities and efficiency to sustain our global competitiveness. These initiatives can help us deliver innovative solutions to more patients and enable profitable growth over the long term."
Recent moves suggest that the company may be seeking a stronger foothold in emerging markets, including countries in Asia and Latin America. Mahoney mentioned in the Q5 2015 call that the devicemaker was launching some of its core SFA metal stents in China and Japan, which would propel growth for that business and help the company to continue expanding globally. Boston Sci is also building up its Peripheral Intervention business in China and Brazil, and in April last year, it partnered with China's Frankenman Medical Equipment. The tie-up has the Chinese surgical device maker developing and manufacturing endoscopic products as well as commercializing some Boston Scientific products in the Chinese market.
As of Q1 2016, Boston Sci's fastest-growing divisions include Peripheral Intervention, Interventional Cardiology, Endoscopy and Urology and Pelvic Health. The company's stock price has been climbing since 2013, up 77.6% from June 2014 and up 28.5% over the past year.
- here's the statement