In an ever-so-subtle warning this week, Johnson & Johnson has cautioned about potential layoffs ahead.
J&J is looking at an opportunity to “rightsize our infrastructure” as a two-segment company amid the separation of the consumer health business, chief financial officer Joe Wolk said during the company’s third-quarter earnings call on Tuesday.
“Clearly, the macroeconomic pressures that all industries and all companies are facing is something that we have to address as well,” Wolk said of J&J’s profit margin in 2023. “While healthcare is a very, very good business and more resilient than most, it’s not as if we’re immune to some of those dynamics.”
It’s not immediately clear how many jobs or which functions would be affected by the planned rightsizing, but Wolk told The Wall Street Journal that it wouldn’t be a major restructuring.
As of the beginning of 2022, J&J counted 141,700 full-time employees among its global staff, up from 134,500 a year ago. About a third of the company’s workforce is based in North America.
In November 2021, J&J unveiled its plan to spin its consumer health franchise into a separate, publicly traded company, leaving the remaining J&J focused on medical devices and pharmaceuticals. The company has said the separation process will take 18 months to two years. The new standalone firm will bear the name Kenvue, J&J said last month.
In the third quarter, the J&J consumer health unit ginned up $3.8 billion in sales, up 4.7% excluding the effect of foreign exchange rates. Pharma sales at J&J jumped 9% at constant currencies to $13.2 billion. A strong U.S. dollar and inflation are pressuring J&J, which has nearly half of its sales reported from outside the country. J&J also lowered its full-year 2022 operating margin projection, potentially giving it one more reason to slim down.
Looking into 2023, J&J will prioritize its resources to projects and services that “deliver the most value for patients,” Wolk said on the call.
Big Pharma companies have been cutting headcounts at varying scales lately. As part of a major restructuring, Novartis is targeting 8,000 jobs worldwide for layoffs. AbbVie is laying off nearly 100 people at an Irvine, California facility, and Bristol Myers Squibb has recently disclosed a reduction of 261 employees in California. Pfizer has also eliminated a few hundred U.S. sales positions and trimmed its Indian sales team as part of a digital marketing transformation.