Johnson & Johnson's DePuy Synthes Announces Plant Closures and Layoffs Amid Orthopedics Restructuring

Nov 14, 2023 13:30 CST Updated 13:30

DePuy Spine

Medical Device Developer

Johnson & Johnson

Healthcare Product Manufacturers, Health Service Providers

Source: Siyu MedTech

DePuy Spine, a subsidiary of Johnson & Johnson (J&J) and part of DePuy Synthes, recently announced that it will lay off 67 employees at its facility in Monument, Colorado, USA. The layoffs come as J&J continues its two-year restructuring of its orthopedic business to enhance profitability.The 67 employees affected by the layoffs are from operations, processes, process engineering, production maintenance, quality control/assurance, and warehousing, among others. They will officially leave between December 29, 2023, and January 11, 2024.

After evaluating the supply chain operations, DePuy Spine began transferring its supply from the Colorado plant to the distribution center in Mooresville, Indiana in 2020.This round of layoffs is the company's third since July.（According to the notification database of the Colorado Early Warning Act, the company laid off 15 people in July and 10 people in August.A total of 92 positions were eliminated, and production at the Colorado plant has also been halted.

Economic Downturn, Orthopedic Restructuring

This round of layoffs is closely related to the company's previously announced orthopedics restructuring.October 17, 2023During the company's third-quarter earnings call,Johnson & Johnson executive says it is restructuring its DePuy Synthes orthopedics business.

Joe Wolk said on the conference call that the company had taken steps this quarter to improve the future profit outlook of its medical technology (MedTech) business, implementing a restructuring plan aimed at simplifying and centralizing the operations of its orthopedics business.The reorganization is expected to be completed by the end of 2025 at a cost of $700 million to $800 million, but it will enhance the division's ability to meet product demand.

A two-year restructuring plan will remove the company's orthopedics division from "lower-profit markets and product lines" to enhance the division's profitability, following a 2.6% sales growth reported in the third quarter.

▲Johnson & Johnson Chief Financial Officer Joe Work

Over the next two years, department revenue will be impacted to a certain extent (estimated revenue impact is approximately US$250 million), but the company believes these initiatives will not only accelerate future growth but also enhance profitability.

The Future Development of Johnson & Johnson Orthopaedics

Johnson & Johnson CEO Joaquin Duato expressed optimism about DePuy Synthes and firmly believes that the company will achieve significant growth in the coming years. The company is on a path to improving its orthopedics business, aiming to be a leader in every competitive market segment. Although this goal has not yet been reached, the company will continue to make progress through investments and expansion in the fastest-growing areas.

Duato also mentioned improvements in the product portfolio, particularly in the orthopedic knee sector. The orthopedics division has a "more complete product portfolio" in revision products and non-cemented products.The company is launching the Velys orthopedic robot in Europe for total knee replacement surgeries. The surgical robot has been used in up to 30,000 procedures.

▲Image SourceOfficial CompanyNet (the same below)

In the orthopedics field, Johnson & Johnson is determined to continue its journey of improvement, focusing on the right portfolio and striving to build a strong team in this area.

In March 2023, Johnson & Johnson first announced the restructuring plan involving its orthopedics business, aiming to achieve "cost reduction and efficiency improvement" in the orthopedics department.Rajit Kamal, the outgoing global president of sports medicine and shoulder reconstruction, said that the restructuring plan at that time included merging the company's Mitek sports medicine business into another business.

Last week, Johnson & Johnson just announced that its TriALTIS™ Spinal System and navigation instruments, as well as the TriLeap Plate System for foot and ankle surgeries, received FDA 510(k) clearance.

The DePuy Synthes business is not as busy as some of Johnson & Johnson's other operations. For instance, Biosense Webster, the cardiac division of Johnson & Johnson, placed a strong emphasis on innovation last year.

Joe Wolk said on the earnings call that the company routinely discusses new development opportunities almost every week, which may complement the existing portfolio or future product lines in the medical technology and innovative pharmaceuticals fields.

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