Johnson & Johnson to tighten belt

       Johnson & Johnson said on Tuesday it would trim layers of management, cut thousands of jobs, and set other restructuring moves in order to save up to $900 million next year.
       The New Jersey-based company said the cuts would affect 6 to 7% of its global workforce of roughly 118,700 workers,or potentially more than 8,000 jobs.
       The lay-offs will prompt a restructuring charge of up to $1.3 billion pretax in the fourth quarter. Still, the company confirmed adjusted profit guidance between $4.54 and $4.59 per share for 2009.
       Johnson & Johnson plans to simplify its business structure and projects that it will save between $1.4 billion and $1.7 billion annually after the restructuring is complete in 2011.
       The company, the world's most diversified health-products maker, saw its revenue fall 5% in the third quarter as intensifying generic competition slashed sales of about a half-dozen of its prescription drugs, including the schizophrenia drug Risperdal and the epilepsy treatment Topamax.
       Chairman and CEO William C. Weldon said the moves were meant to position the company for long-term growth in an evolving, and sometimes turbulent,market.
       "These types of changes are difficult under any circumstances, and will have a very personal impact on people who have been dedicated to the mission of Johnson & Johnson," he said."We recognise their contributions to the achievements of our business, and are committed to treating them fairly and with respect throughout this process."
       The new restructuring programme comes on the heels of management's decision to reorganise its comprehensive care business in August. That unit was created under a 2008 restructuring programme with the goal of boosting sales,though sales were down during the first half of 2009. The unit makes medical devices and tests.
       "When you look at the total economic environment, I don't think anybody knows what's going to happen," Weldon said."But nobody expects it to come back tomorrow."
       He said the move was based on a broad, global view of the changing healthcare industry, taking into account national and international markets. As for health care reform, management has said it needs more clarity on what any future plan could look like before assessing a more concrete impact on the business."The restructuring programme is also not a move to centralise J&J's operations," Weldon added.
       "We're trying to make sure we've really set ourselves up for the future," he said."We have such a rich portfolio that we have to make sure we have the resources to invest."