2013's biggest job-cutters in medical devices and diagnostics (so far)

While many of the big-time medical device companies are forecasting sunny earnings for 2013, that hasn't slowed down the march to trim payroll, as companies from Accuray ($ARAY) to Zimmer ($ZMH) have announced thousands of layoffs since Jan. 1.

For some, like Abbott Laboratories ($ABT) and Medtronic ($MDT), the job cuts are designed to pare down sluggish units and reinvest in more successful segments. Abbott announced hundreds of layoffs in its medical device business, cutting some losses amid slipping demand for old-generation stents, but the company is still profiting off its growing diagnostics arm, and CEO Miles White said he expects the CE marked Absorb to become a "workhorse" for the company once it wins FDA approval.

It's a similar story for Medtronic, as the world's largest devicemaker disclosed this week that it's cutting thousands of jobs around the world to save $225 million per year. The cuts are centered on Medtronic's struggling spinal and cardiac rhythm management businesses, and cutting manufacturing jobs will allow the company to invest in fast-growing spaces like atrial fibrillation and neuromodulation.

For the likes of Boston Scientific ($BSX) and Quest Diagnostics ($DGX), however, the payroll slashing has a bit more immediacy. Boston Scientific is deep into CEO Mike Mahoney's plan to return the company to growth, and, in the short term, that means rolling out new devices and trimming costs. The Massachusetts device giant is mounting a sizable job-cutting initiative in 2013, looking to save between $100 million and $115 million.

Quest is in a similar position. As demand for diagnostic tests dries up and Medicare reimbursement woes put the future in jeopardy, the company is looking to lop off hundreds of jobs by year's end, part of a wide-ranging restructuring effort designed to cut spending by $500 million. Along the way, Quest has shipped off many of its diagnostic products units and is investing in clinical testing and contract research, redefining its business to stave off softening sales in its flagship units.

While the stated reasons always vary, underlying every layoff announcement--even the ones buried in paragraph 27 of otherwise cheery press releases--is an understanding that the business of selling medical devices and diagnostics has changed. Companies are shifting priorities in response to a changing healthcare market, where cost-effectiveness has become just as important as clinical efficacy. Med tech companies are moving away from mainstay products with so-so reputations and doubling down on technologies that can help reduce repeat hospital visits and save money for patients, payers and providers.

That transition is unlikely to be painless, however, and these are hardly the last layoffs we'll see in 2013.

-- Damian Garde (email | Twitter)

Theragenics ($TGX)

Job cuts: 139

Savings: $3.3 million to $3.6 million

Analogic ($ALOG)

Job cuts: 140

Savings: $6 million


Job cuts: 143

Savings: $40 million

Roche Diagnostics ($RHHBY)

Job cuts: 170

Savings: Not disclosed


Job cuts: 450

Savings: $30 million to $40 million


Quest Diagnostics

Job cuts: 600

Savings: $100 million and $115 million

Abbott Laboratories

Job cuts: 650

Savings: Not disclosed

Covidien ($COV)

Job cuts: 783

Savings: Not disclosed

Boston Scientific            

Job cuts: 1,000

Savings: $100 million to $115 million


Job cuts: 2,000

Savings: $225 million


2013's biggest job-cutters in medical devices and diagnostics (so far)

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