JOHNSON & Johnson said it would reduce its global work force by up to 4 percent, or up to 4,820 jobs, to cut costs due to slumping sales of heart stents and its No. 2 drug, plus looming patent expirations.
The health care giant, which employs about 120,500 people in 57 countries, said the restructuring -- its largest ever -- would bring pretax charges of US$550 million to US$750 million later this year, as well as other, unspecified steps besides job cuts.
Excluding the charges, the New Brunswick, New Jersey-based maker of contraceptives, contact lenses, prescription drugs and baby products still expects to meet its 2007 profit targets. The company said the moves should generate pretax annual cost savings of US$1.3 billion to US$1.6 billion next year and similar amounts after.
Johnson & Johnson shares rose 43 cents to US$60.50 in regular trading, then rose 53 cents in after-hours trading.
"The actions we are taking are to ensure we've addressed the short-term pressures on the business," Chief Executive Officer William Weldon told analysts during a conference call. "We believe we actually will be strengthening ourselves coming out of all of this."
Johnson & Johnson, the world's No. 5 drugmaker according to market researcher IMS Health, said the restructuring primarily targets Cordis Corp., its Miami-based stent-making unit, and its pharmaceuticals segment, which soon will face generic competition for two top drugs.
Three of the company's top drugs, with combined sales of about US$8.5 billion, are vulnerable.
J&J's top seller, anti-psychotic drug Risperdal, loses patent protection next June; Topamax, for epilepsy and other disorders, does so in March 2009. Risperdal had 2006 sales of US$3.3 billion; a newer, twice-a-month injected version -- which still will be patent protected -- had sales of US$900 million. Topamax had 2006 sales of about US$2 billion.