Medtronic Confirms Global Layoffs Amid Ongoing Restructuring and Business Realignment
Medtronic
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Yesterday (U.S. time June 13), Medtronic, the world's largest medical device company, issued a statement to the "Star Tribune" regarding itsGlobal Layoffs Rumor Confirmed。
As early as last month, news of Medtronic's global layoffs had already leaked, with several foreign media outlets, including the well-known MassDevice, reporting on the story.
A laid-off employee told MassDevice that,Layoffs cover the entire company, while another employee said,Medtronic Plans to Outsource Their Work。
Some employees also shared their experiences with MedtronicEndoscope、Structural HeartAndENTNews about layoffs in departments such as...
In fact, traces of Medtronic's frequent layoffs can be found in the news from recent months.
In May 2024, Medtronic laid off 35 employees in Israel, accounting for approximately 3% of the company's total workforce in Israel.
It was reported that the layoffs mainly targeted Mazor Robotics, a company acquired for $1.7 billion in 2018.
In April 2024, Medtronic cut 44 jobs in Carlsbad, California, which was confirmed to be related to the divestiture of Medtronic's respiratory business.
FDA records show that the address is a plant of Nellcor Puritan Bennett Corp., a respiratory monitoring and ventilator brand acquired by Medtronic when it purchased Covidien.
In the first half of last year, Medtronic proposedEarly Retirement Incentives Accused of Being Disguised Layoffs；
In April 2023, in a letter to employees, Medtronic announced the start of layoffs in its international operations.
In August 2023, the total compensation of executives and the median salary of employees for the 2023 fiscal year were disclosed.The chairman and CEO's compensation is $15.4 million (approximately RMB 112 million), an increase from last year's salary.Reduced14%. At the same time, the median employee salary alsoDecreased by 14%, which is $67,073 (approximately RMB 490,600).
In the annual report recently filed with the U.S. Securities and Exchange Commission, Medtronic estimated that its global workforce exceeds95,000 People, andThis figure was in February 2022101,867 people。
It is worth noting that, in addition toLayoffs, Pay CutsOverseas, MedtronicUpstream Supply Chain、Management StructureAndKey Business DirectionsThere are also changes above.
"This year, we will close more than 5 production bases, andIntegrate 8 distribution centers into 2 super distribution centers。"In JanuaryAt the J.P. Morgan Healthcare Conference，Jeff · Martha said.
According to Medtronic's latest annual financial report, the company has 78 factories worldwide, with 15 of them being the largest production bases.
Within the United States,In addition to Minnesota, the company also has domestic manufacturing operations in Connecticut, California, Colorado, Arizona, Florida, Massachusetts, and Puerto Rico.
Globally,The company has global manufacturing bases in Mexico, China, Ireland, Switzerland, France, Italy, and the Dominican Republic.
Ranked by area, theThe Company's Five Largest Manufacturing PlantsLocated respectivelyConnecticut、Puerto Rico、Mexico、ChinaAndMinnesota。
In addition to the adjustments in factories and distribution centers, Masha also mentioned significant cuts in suppliers during the meeting.Including the withdrawal from approximately 200 non-strategic suppliers。
Martha said that currently completedMetalThe Request for Proposal (RFP) process can save approximately 10%, while similarPlasticThe RFP process has just begun.
In fact, Medtronic's significant "move" against suppliers had been foreseen.
As early as 2022,Executive Vice President of Medtronic Supply ChainGreg Smith once clearly stated that high inventory levels are one of Medtronic's biggest opportunities.It is expected that the company will pay more attention in the future.Strategic Supplier。
At that time, Smith defined this term as "something that can satisfy ourQualityAndServiceDemand,Cost-competitive and innovative"And continuously promote improvements in suppliers."
Smith said, "We can use these new ideas to provide better products. The better service you offer to customers, the more repeat customers your business will gain, and the better you can build your brand."
When asked whether Medtronic's supplier list would be longer or shorter two years from now, Smith said he expected it to beShorter。
In terms of regional management structure, Medtronic has also taken action.
Take the Chinese market as an example. With the continuous advancement of the centralized procurement policy, it is not uncommon for product unit prices to plummet by 70% or 80% compared to previous levels.Huge profits have been slashed, and even top medical device companies like Medtronic are "crying out in pain."
"Considering our business in ChinaScaleAndBreadth"The impact of the bulk procurement policy on us has exceeded that of many of our competitors."Medtronic Chief Financial Officer Karen Parkhill stated.
Such changes are not only reflected in performance but also strikingly evident in market share. Previously, major Western medical device manufacturers like Medtronic dominated China's drug-eluting stent market. However, now (after the national coronary stent procurement in China),Chinese stent manufacturers account for more than 75% of the market share.。
Once the financial report was released, Medtronic's Cardiovascular Platform in the China region also faced integration. In March 2023,Medtronic Announces Cardiovascular Platform Traditions in China7 TeamsWill be merged into3 units, respectively byLin Song, Huang Fang, Tao JiaLed by three responsible persons.
Medtronic stated that byBy the end of the 2024 fiscal year, more than 80% of the business in the Chinese market will be affected by volume-based procurement.
In this way, the intensity of "cost reduction and efficiency enhancement" in its China-related business will also be further expanded.
In June 2023, Medtronic CEO Martha shared his asset divestiture strategy and the high-growth areas he hopes to invest more in at the Goldman Sachs Annual Global Healthcare Conference.
Among them, the "subtraction" measures includeKidney Care/Dialysis Business、Patient MonitoringAndRespiratory Intervention BusinessPeeling。
A series of initiatives have also been put on the agenda,On April 1 last year, Medtronic officially announced the establishment of a partnership with DaVita, one of the three giants in the dialysis industry.Mozarc Medical, the new company willFocus on Home Kidney Care Business。
In February this year,Medtronic Officially Exits Ventilator Business.
Regarding the "Addition" strategy, Martha proposed to increase investment in five key areas: neurovascular, structural heart, soft tissue robotics, diabetes, and AFib (atrial fibrillation).
In the "addition and subtraction" operations of the group's business direction, it will inevitably be accompanied by the continuous integration and optimization of the supply chain, management structure, and employees.
At previous global conferences, Martha has even moreWill“Comprehensive transformation taking hold”——"Full-scale transformation"Listed as a key focus for Medtronic in 2024, reasonably predict that the above-mentioned series of reshuffling actions will continue.
It is worth mentioning that, after the global wave of layoffs in 2023, events such as layoffs, divestitures, and reorganizations still occur frequently in the medical device industry, and Medtronic is not an isolated case.
Johnson & Johnson:
On May 13, Johnson & Johnson announced plans to sell its 9.5% stake in Kenvue, its consumer health business that was spun off and went public nearly a year ago.
This represents Johnson & Johnson's complete divestment of its remaining shares in Kenvue, marking its full exit from the consumer health business to focus on medical devices and pharmaceuticals.
Smiths Medical:
Recently, according to a report by The Keene Sentinel, ICU Medical, a leading U.S. infusion equipment company, will close its manufacturing plant located in the Keene area of New Hampshire by the end of 2025.
Currently, the plant has approximately 220 employees, all of whom will be laid off as the factory gradually shuts down in the future. However, Smiths Medical has committed to notifying all employees 60 days prior to their layoffs and plans to provide severance compensation and benefits to these employees.
Fresenius Group:
On May 2, according to Reuters, Fresenius Group will spin off its rehabilitation business Vamed.
Buyer PAI PARTNERS (“PAI”) will acquire a 67% controlling stake, while Fresenius will retain a 33% share to participate in future development.
Fresenius Group has four major business segments in total. This is another business spin-off following last year's "King of Dialysis" Fresenius Medical Care.
So, in 2024, under the strategic tightening of several leading medical device companies, will "layoffs, plant closures, and divestitures" become常态化 actions in the industry?
First, in order to minimize negative impacts and ensure a smooth transition, the "layoffs" at most companies are not a simple and abrupt one-size-fits-all approach, but rather a "long-term" measure carried out alongside business restructuring.
InJohnson & Johnson OrthopaedicsFor example, last October,Johnson & Johnson Medical stated,Is restructuring its DePuy Synthes orthopedics business，With"The gradual divestment of markets and product lines with lower profitability"Layoffs and plant closures will also continue as part of the restructuring over the next two years.
As a medical device giant,BDMedical RulesPublished "2" even earlier.025 Strategy ("BD 2025 Strategy")》，Clearly identify "simplification" as one of the key pillars, and explicitly state to "Reduce the complexity of the entire manufacturing network and rationalize the product portfolio", relevant actions will continue until 2025.
For example, it was officially closed at the beginning of the year.Lakeland Plant, FloridaTheStryker, whose plant closure was confirmed at the end of 2021 and has been ongoing for nearly two years with successive layoffs.
It can be seen that after the largest layoffs in more than 10 years last year, there will probably be a prolonged "aftershock period." The cost-cutting winter for major medical device manufacturers is unlikely to recover quickly in the short term.
In addition to the "seeking development" of large companies, "survival" is also a key motivation for many less-established medical device enterprises to choose measures such as layoffs and reorganization.
With the development of technology, mergers of large companies, and the intensification of involution, the time cycle for innovative enterprises to build up their strength is shortening, which also urges enterprises to continuously carry out "self-revolution."
At the beginning of May this year, according to foreign media MASS DEVICE reports,Global Electrophysiology Leader MedtronicAcutus Medical Has Been Halted from Trading。
The reason is that it failed to meet the listing requirements.Lowest Bid PriceAndMinimum Shareholders' EquityRequirements, and was subsequently found non-compliant by the exchange.
In response, Acutus stated that it would not appeal, which also means that itsAccepted the delisting decision.
Acutus was founded in 2011 byFormer Medtronic R&D Vice President, Top Industry Expert Randy WernethFound, OwnHighly DifferentiatedThe electrophysiology product portfolio, and provides catheter-based arrhythmiaCompleteSolution.
For years, the company's products have been sold directly in dozens of countries, including the United States, the United Kingdom, France, and Switzerland.
Thanks to the market's confidence and optimism in its advanced product technology, Acutus was officially listed on NASDAQ in 2020, opening at...Surged nearly 60%.
However, Acutus, which had a "high start," failed to rise continuously and instead sold off its core businesses one after another.
Among them is the AcQMap series, which once brought it great fame.Electrophysiology Mapping and Ablation Product Line.
This star medical device company eventually exited the market after only four years of listing, a turnaround that is regrettable.
Even the leading companies in niche fields are no exception,The plight faced by small and medium-sized enterprises is imaginable.
In fact, whether large enterprises or small and medium-sized enterprises, their survival and development are inseparable from the influence of the global economic environment.
The World Economic Outlook released by the International Monetary Fund (IMF) in January 2024 projected that the global economic growth rate for 2023 would be 3.1%, which is a 0.1 percentage point increase from the forecast in October 2023 and a 0.4 percentage point decrease from 2022.
It can be seen that the world economy has not yet warmed up and is still in a difficult climbing period.
In contrast, the wave of layoffs in the technology industry continues to surge.
According to Layoffs.fyi data, 254 companies have cut 60,000 jobs this year.
These include top companies such as Tesla, Amazon, Google, TikTok, Snap, and Microsoft, with Medtronic being just one of them.
Some smaller startups have also experienced a significant number of layoffs, with some even ceasing operations entirely.
These measures indicate that the technology industry has yet to return to the rapid growth state seen during most of the past decade.
Correspondingly, in the midst of turbulent changes, layoffs, spin-offs, and divestitures are not permanent solutions; the challenges faced by medical device companies moving forward will remain severe.
All views in this article do not constitute investment advice. Medical Device Business Review remains neutral on all views in the article and is only for sharing and communication.
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