While Johnson & Johnson has been putting out quality-control fires at its McNeil consumer health unit, it's had a smoldering problem in another segment of its business: cardiac stents. The company has been losing market share on a fairly steady basis over the last several years as competitors developed cutting-edge rivals to J&J's Cypher stents and stent placement in general waned.
J&J is now saying sayonara to the stent biz. Its Cordis unit will stop making the Cypher and Cypher Select drug-coated stents by year's end in a move that will slash as many as 1,000 jobs and shutter two factories, according to a release.
The cuts will result in a $500 million to $600 million charge against earnings, and they'll leave Cordis with a new focus on diagnostics and non-cardiac stents. Meanwhile, they'll be a boon to stent rivals Boston Scientific and Abbott Laboratories, which are expected to pick up most of J&J's share, the WSJ notes.
Analysts generally praised the shift, given that Cypher had fallen from a 51% share of the market in 2006 to a measly 16% in 2010. "This is the right decision, to take resources out of an area where they've lost a lot of market share and put it into an area where they can be more competitive," Edward Jones analyst Linda Bannister told the Associated Press. Agreed, says Gabelli analyst Jeff Jonas, who told Reuters, "The stents were kind of an albatross."