Johnson & Johnson said on Tuesday it planned to eliminate 3 percent to 4 percent of its global work force of about 120,500 people as part of a plan to improve its cost structure.
The cost-cutting plan is expected to generate pretax cost savings of $1.3 billion to $1.6 billion in 2008, the diversified health care company said.
The company is targeting savings in its pharmaceuticals division, where it will consolidate certain operations. The company noted that it faces major patent expirations over the next few years to several drugs.
The maker of consumer health products, pharmaceuticals and medical devices is also primarily seeking savings from its Cordis franchise, which competes in the market for drug-coated stents. Such stents have been hit with safety concerns after being initially hailed as revolutionary.
J&J is the latest large health-care company to announce a major restructuring, following companies such as Pfizer Inc. (PFE.N: Quote, Profile, Research) and Merck & Co. (MRK.N: Quote, Profile, Research)
These actions we are taking to improve our cost structure will enable us to continue investing for future growth and profitability, CEO William Weldon said in a statement.
J&J expects to take associated pre-tax restructuring charges in the range of $550 million to $750 million in the second half of the year. It confirmed its prior 2007 earnings outlook of between $4.02 and $4.07 per share, which excludes such charges.