Johnson & Johnson (J&J) has announced global restructuring initiatives designed to strengthen its position in the world’s health care industry. The company is taking steps to prioritize its innovation efforts around the many growth opportunities in health care and to execute aggressively on bringing key new products to market.
The company’s plans are expected to increase its operational efficiency and generate annualized, pre-tax cost savings of $1.4-$1.7 billion when fully implemented in 2011, with $800-$900m expected to be achieved in 2010.The associated savings will provide additional resources to invest in new growth platforms that ensure the successful launch of its many new products. The continued growth of its core businesses will provide flexibility to adjust to the changed and evolving global environment.
J&J said that cost savings will be achieved primarily by reducing layers of management, increasing individual spans of control and simplifying business structures and processes across the company’s global operations.
J&J estimates that position eliminations will be in a range of 6-7% of its global workforce, subject to any consultation procedures on these plans in countries where required. Position eliminations will form only one component of the savings.
William Weldon, chairman and chief executive officer of J&J, said: “Johnson & Johnson has long adhered to a broad-based operating model and set of sound management principles that have driven our success. We will announce a series of actions and plans designed to ensure that our company remains well-positioned and appropriately structured for sustainable, long-term growth in the health care industry.”