It has been a tough few days for medical device manufacturer Smith & Nephew ($SNN) and particularly for its Memphis, TN-based division.
The company announced Monday that it would pay the U.S. $22.2 million in fines and profit disgorgement to settle claims that it won business in Greece by bribing doctors in that country's public health service. Its U.S. subsidiary, Smith & Nephew Inc., based in Memphis, is shouldering $16.8 million of the settlement with the Justice Department.
The settlement came days after the company announced that it would cut about 800 jobs from its orthopedics unit and place emphasis on emerging markets and research and development.
The bribery charges date to 2007 when an investigation found that the company, with the help of a distributor, paid $9 million in bribes to Greek doctors. The company agreed to maintain an enhanced compliance program to be reviewed by an outside monitor for 18 months.
S&N, Europe's largest artificial knee and hip maker by sales, also will take a $200 million hit related to the job reductions but expects to save $150 million annually. The reduction amounts to 7% of its 11,000 global workforce.
The company announced in November that it would reduce its workforce but only outlined the cuts during a conference call Thursday. The company reported a fourth quarter profit of $279 million--compared with $278 million a year earlier--and said orthopedic sales lagged areas like wound care.
The company has already eliminated 220 of the 800 positions to be cut. Olivier Bohuon (photo), CEO of the London-based medical device company, did not give details, but said much of the restructuring would come from consolidating back office work.
The Daily News has already reported 80 positions were lost in Memphis, TN, where S&N employs about 2,000. The cuts were part of a restructuring when S&N's Memphis-based orthopedic reconstruction and trauma division was merged with its Andover, MA-based endoscopy division to form the advanced surgical devices division.
While Johnson & Johnson ($JNJ) has said it expects spending on orthopedics to grow this year, S&N does not. Bohuon said the company would make acquisitions and invest savings in emerging markets like India, Brazil and Russia. The company on Jan. 30 reported its purchase of Aderma Dermal Pads Products from Focus Product Development to expand its wound-care business.
- read the AP story
- here's The Daily News story
- read Bloomberg's take
- get more from the Financial Times
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