Where will J&J's layoffs hit hardest?

Pharma has its share of industry-specific problems, such as blockbuster patent expirations and healthcare pricing pressures. But don't underestimate the sluggish economy's effects. In fact, listening to Johnson & Johnson chief Bill Weldon (photo [1]) talk about his company's global restructuring plans, it's clear that economic weakness played a big role in J&J's decision to lay off up to 7 percent of its workforce [2].

During the company's call with analysts and the press yesterday, Weldon lamented the economic environment repeatedly, saying that tight-fisted consumers are hitting his top line. As long as unemployment stays high, he said, healthcare will suffer. And the economy has hit governments hard, too, intensifying their desire to save on drugs and other healthcare products.

Hence the 8,000-plus jobs on the line. Weldon hinted that markets outside the U.S. might suffer a greater proportion of the layoffs. Cuts will be made in all the company's business units, and at its corporate HQ. Laid-off employees are being notified as we speak, Weldon and his executives said.

Not satisfied with those details, Jim Edwards at BNet Pharma ran some numbers on the sales growth within various J&J divisions, thinking that the shrinking units are more likely to suffer big job cuts than the fast-growing ones are. That would mean that J&J staffers who deal with the rheumatology drugs Remicade and Simponi (5 percent growth) and blood-cancer treatment Velcade (21.6 percent growth) might be safer than the teams pushing newly off-patent Risperdal and Topamax, which suffered sales shrinkage of 40 percent and 76 percent respectively. Which goes to show that pharma's very own problems count plenty when it comes to choosing which jobs to ax.

- get the Wall Street Journal's live blog [3] of the call
- see the BNet Pharma post [4]
- read the Dow Jones news [5]
- find an analysis [6] at the New York Times DealBook
- check out The Deal's take [7]

Related Articles:
J&J restructuring claims up to 8,000 jobs [2]
Johnson & Johnson Q3 Results [8]
Abbott, J&J numbers warn pharma to diversify [9]
Generic rivals push J&J drug sales down 19% [10]
J&J cuts one of its four business units [11]