J&J retrenches to better rebuild its medtech business


The year has gotten off to a busy start from a business perspective for the medical technology industry. Yesterday, PlasticsToday reported on a flurry of mergers and acquisitions so far this year, "Medtech sector remains in deal-making mood." The mood was more somber at Johnson & Johnson, which began 2016 by announcing that it would lay off 4 to 6% of its workforce, approximately 3000 people, in its struggling device division over the next two years. The cuts will affect the company's orthopedics, surgery and cardiovascular divisions, and are expected to generate annual cost savings of up to $1 billion. The question then becomes, what will J&J, the world's largest medical device company, do with this money? The Motley Fool has sketched out some possibilities.

Like the medical technology industry at large, J&J is adapting to a changing business model, in which healthcare groups increasingly are the decision makers, not the physicians, when it comes to purchase planning. The emphasis is on value-based innovation, and behemoths such as J&J are not as nimble as they should be: "As competition has grown and the innovation processes used by medical device makers has shortened, it's placed downward pressure on industry giants like Johnson & Johnson," writes the Motley Fool.
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