J&J To Cut 7 Percent Of Jobs In Restructuring
22 CommentsBy Ed Silverman // November 3rd, 2009 // 8:10 am
Another day, another reorganization. This time, the venerable health care giant expects to save anywhere from $1.4 billion to $1.7 billion by 2011 as it cuts 7 percent of its workforce, which numbers about 118,700 employees. Most of the savings are expected to come next year, when Johnson & Johnson hopes to pocket up to $900 million.
How? The official statement contains mostly generalities, as to be expected. There are references to reducing layers of management, increasing “individual spans of control,” and simplifying business structures and processes across global operations. But J&J insists layoffs are only part of the plan.
“These types of changes are difficult under any circumstances, and will have a very personal impact on people who have been dedicated to the mission of Johnson & Johnson,” says J&J chief executive Bill Weldon, in the statement.
J&J has done this before, you may recall. In July 2007, the company announced it would axe 4 percent of its jobs, which numbered about 120,500 at the time (background here).
From a teleconference: “We were reducing the overall level of R&D expense, particularly in the pharma business, consistent with industry trends. We would expect that to continue in 2010,” says chief financial officer Dominic Caruso. Weldon says J&J isn’t centralizing its operations, spin-offs are always being considered and more partnerships with other drugmakers is the way to go.
Jeffrey Clark, CEO of Beaker.com
This will be the story of the week across the industry as J&J eliminates 1 out of every 12 employees around the globe. I find the news not surprising as its been forecast for weeks from those connected to New Brunswick.
I can share that employees within all J&J businesses are ‘nervous’ and scrambling for information about how the cuts will be announced and which parts of the business will be most affected.
As painful as this day is, it positions J&J very well for the next 2-3 years compared to Abbott, Roche, Novartis and the other giants of the industry. Imagine how many other CEO’s are asking their Board whether they should be following J&J’s move toward efficiency in terms of their own global workforce.
pharmagossip
http://pharmagossip.blogspot.com/2009/11/i-missed-j-bill-weldon-on-halloween.html
Anonymous Patient
O.k. so let’s see what fierce pharma has to report to us….
Executive Compensation
According to Fierce Pharma, Johnson & Johnson’s CEO, Bill Weldon, was the third top wage earner in 2007 among pharmaceutical CEOs.
* Total Compensation: $25.1M
* 2007 Revenue: $61.1B
* 2006 Revenue: $53.3B
* Change: 14.6%
“Between base salary of $1.73 million, incentive pay of $9.19 million, plus stock awards and options and various miscellaneous perks, Johnson & Johnson’s Bill Wledon raked in $25.1 million in compensation–almost $5 million more than in 2006. Other job perks added up to $179,231, including personal aircraft use ($118,653), and a car and driver and other personal transportation expenses ($29,753). Executive dining room meals, home security system monitoring fees, and financial planning totaled an additional $5,000.”[14]
Daniel Vasella- Novartis
Total Compensation: $15.5M
2006 Revenue: $38.1B
2007 Revenue: $39.8B
Change: 4.46%
Details: Vasella earned 17 million Swiss francs, or about $15.5M in 2007. That’s down from 21 million francs in 2006, or $17.5 million — a figure that some say places him among the highest-paid executives in Europe.
Read more: http://www.fiercepharma.com/special-reports/novartis-daniel-vasella-ceo-pay#ixzz0VoOw1e1D
The executive pay parade continues. Today’s entry: Abbott Laboratories CEO Miles White (photo). The amount: $28.3 million. That’s down $5 million from his 2007 pay of $33.4 million, but includes a tad bit more cash this time around.
Here are the specifics. White’s base salary was $1.795 million for 2008, up from $1.727 million in 2007; his incentive cash ran to $4.2 million this year versus $4.05 million the year before. So White took in almost $6 million cash in 2008, with the rest in stocks, options, pension and other compensation, compared with $5.73 million in cash for 2007. His 2007 stock and option awards were lots bigger, though: $8.75 million in stock for 2007 versus $7.58 million for 2008, and $14.77 million in options versus $10.76 million.
How did Abbott do in 2008? In the company’s proxy statement, there’s a chart showing ABT outperforming both the S&P 500 and S&P 500 Health Care Index in 2008–by about a one-third margin. That chart immediately precedes the executive compensation table, presumably to put shareholders in a good mood before they take a look at White’s paycheck. We feel obligated to note, however, that Abbott’s stock did close 2008 slightly down from 2007, and, according to Bloomberg, is down 10 percent so far this year.
Read more: http://www.fiercepharma.com/story/abbott-chiefs-pay-drops-15-28-3m/2009-03-17#ixzz0VoPL3fNu
Severin Schwan - Roche
Total Compensation: $4.5M
Details: Schwan’s salary for 2008 was just $4.5 million–nothing close to some of the other CEOs on this list. But he wins the award for the biggest overall percentage increase in pay from 2007 to 2008. The CEO of the Swiss-based company got a pay boost of almost 50 percent, despite seeing sales and net income decline–and its stock drop by about one-third–in 2008.
Read more: http://www.fiercepharma.com/special-reports/roches-severin-schwan-ceo-pay#ixzz0VoPrgtAu
So, when is enough actually ENOUGH?
Jackson Roe
This is a great arguement for why CEOs should be held accountable in the numerous indictments and resulting settlements with the government. How can they possibly justify this type of compensation and then say they had no idea what was going on in their own organization? Either decrease your compensation package or accept the consequences of the the criminal actions that are occurring in the organization. It would be devastating if a CEO was found guilty and then debarred from the FDA.
Anonymous Patient
Sales Reps Salary:
Total Annual Salary
$84,311 Broken down as follows:
Salary $68,167, Bonuses, $9,900, Cash Bonus, $17,667, Stock Bonus, $2,329
Profit Sharing, n/a……
Bob
So, everyone thinks this is a good thing, eh? Calculate the salaries of what has now reached close to 50,000 employees and deduct the taxes that they pay. Guess who’s going to pay those taxes? Don’t think these pharmaceutical companies are going out of business - they’re going overseas to emerging countries - with their good paying jobs - and taxes revenues.
These companies do good things for minorities, women, the poor, the helpless, your family and mine.
What other industry gives back to the government ($80 billion)? Not auto manufacturers, not the airline industry, not any one of them! What industry gives back to those not able to afford drugs - free?
Watch what you wish for… you just might get it.
annonyed
Yes, think about all the taxes that have been evaded er I mean avoided by the CEO salaries, and think of all the taxes those employees will not be able to pay. Think of the loss income and the toll this takes on any dispensable income per household. Think of the ones who will not be able to find a job because there are already too many people unemployed….
Think that the CEO’s should not be compensated for saving money by cutting jobs….Think that shareholders and consumers a like should send a message. Think that CEO’s should stop stuffing their pockets and keep honest taxpayers in the system. Or is this some very good ploy to covertly show that the system as it is is inefficient. I wish Obama et al would tell the Pharma to stuff their 80 billion……It isn’t there money to play with anyway….
There is more of us then there is them, maybe we should all just try “job squatting”……
annonyed
Yes, think about all the taxes that have been evaded er I mean avoided by the CEO salaries, and think of all the taxes those employees will not be able to pay. Think of the loss income and the toll this takes on any dispensable income per household. Think of the ones who will not be able to find a job because there are already too many people unemployed….
Think that the CEO’s should not be compensated for saving money by cutting jobs….Think that shareholders and consumers a like should send a message. Think that CEO’s should stop stuffing their pockets and keep honest taxpayers in the system. Or is this some very good ploy to covertly show that the system as it is is inefficient. I wish Obama et al would tell the Pharma to stuff their 80 billion……It isn’t there money to play with anyway….
There is more of us then there is them, maybe we should all just try “job squatting”……
P.S. - Sorry, forgot to tell you great post!
Nathan
Jeffery Clark writes: “Imagine how many other CEO’s are asking their Board whether they should be following J&J’s move toward efficiency in terms of their own global workforce.”
You’ve got to be kidding, right? J&J is BEHIND the curve, not ahead of it! Here’s the layoff announcements over the previous year:
Pfizer/Wyeth: 10%
Lily: 14%
Merck/Schering: 15%
GSK: 6-10%
BMS: 10%
Abbott and Roche have laid off 1000+ over the past year
I would challenge you to name a SINGLE big pharma that has NOT had or announced major layoffs over the past year! Maybe Novartis.
This industry is in a state of free-fall right now. Many or even most of those laid of in this round of layoffs are not likely to find future employment in the pharma industry. Most of us at my company are quickly trying to come up with a “plan B” in case we are unable to continue in pharma.
No industry has it easy right now — but I’m sick and tired of people painting this industry like we are making money hand-over-fist. That may be true for a few CEO’s, but those of us in the trenches of pharma are falling like flies!!!
Nathan
Ed, do you think you could do a “layoff tally” like you used to do?
It would be interesting to plot CEO salaries vrs announced layoffs. I’m sure that you’ll see a direct correlation…
Christopher
Nathan is correct - no industry has it easy just now, but even in the good day some have it worse than others. In general companies in the pharma industry have looked after employees very well compared to other industries. This was possible because of high margins, a relatively stable business outlook, and a desire to retain skilled and educated staff. Of course the business climate has deteriorated and changes - ugly ones - are well-known. I have a great deal of sympathy for those losing their jobs in pharma, but with the perspective of one who knows pharma very well, but not an employee, I can say that people in other industies have had it much worse for a long time.
Good luck to all.
harry
pharma created a false economy based on off-label marketing of pharma defined blockbuster drugs and like the false housing economy has disappeared for a while, because of patents, regulatory enviornment, and no pipelines.
pharma has stifled true research in the past decade, and created pseudo research just for commercial gain. this may change, as the concentration of power/money dilutes- the investment companies trying to make a quick buck may rush else where (green economy?)to let an evidence based industry emerge.
Former Pharma Marketing Director
Nathan,
I think that is the point being made here. The folks like you and others in the trenches are being served a raw deal…you are in the same boat as the patients you are supposed to serve - you and they are the proletariat. The big cheeses are the bourgeoisie who play us all like pawns on a chess board.
Harry, you sound like an “insider”…..
Pretty nasty business, when you consider the government handed them the “gift” of H1N1….What a windfall…..
Christopher
FPME - govt handed whom the ‘gift’ of H1N1?
Fascinated to understand more.
C
Former Pharma Marketing Director
Christopher,
read the article
Nathan
FPME,
Whether or not the flu vaccine saves lives is an interesting argument. But whether or not the flu vaccine prevents the flu is nearly incontestable. I’m happily getting my h1n1 vaccine this afternoon.
I suggest you do a little digging on the number of deaths among infants attributed to things like meningitis, measles, and chicken pox. “Post-modern” enlightened westerners argue that these vaccines cause no social benefit and result in autism. The epidemiological evidence simply does not support this what-so-ever. Vaccines have a great societal benefit and have nearly eradicated a number of deadly diseases. I suspect that if the death rate for H1N1 were closer to the bird-flu panic from a couple of years ago, you would be scrambling to get the vaccine regardless of what the evidence had to say!
Vaccinations are an interesting study in social medicine because they benifit both the reciever of the vaccine as well as society. By getting the H1N1 vaccine, I am reducing the likelyhood that I’ll get the disease — but I’m also reducing the likelyhood that my neighbors, family, and friends will get it (ie, there is one less person they come in contact with that can spread it)
Former Pharma Marketing Director
Nathan,
Read the article first, no sense debating unless you’ve read the article….
There is no proof, that the flu vaccines work. I am not talking about other vaccines, which I have had and which we made sure our children had.
So, since you didn’t read the article you have construed an argument here that has no basis what so ever.
We must save society, that’s a good argument. We can do that better with health care reform. 44 million Americans do not enjoy the right to affordable health care. If we could do better with prevention education for everyone, just like the benefits you claim of H1N1, prevention, then we would all be better off no?
Enjoy your shot, not surprised you would be on the side that wishes to keep the propaganda machine going…
Nathan
Oh yes, the Shannon Brownlee article. I actually read most of it a couple weeks ago. Interestingly this is the same woman who wrote a few other interesting books/articles:
“Cancer Screening: Doing More Harm than Good?”
“Suicide-Linked Cymbalta Promoted for Minor Conditions”
“High Cost of Unnecessary Treatment”
“Why Too Much Medicine Is Making Us Sicker and Poorer”
This woman obviously has an opinion that she is trying to get out.
That said, I completely agree with what she wrote in a recent Q&A for the Atlantic:
Q: Isn’t vaccination helpful for “herd immunity”—to protect the elderly and those with immune deficiency—from exposure to flu?
A: One of the most compelling arguments for flu vaccination is to provide herd immunity. In other words, by keeping young healthy people from getting sick it is believed that we can slow the spread of the disease to others. That could help to protect those who can’t benefit from a vaccine due to a weak immune system. Studies in nursing homes suggest that there is benefit to the elderly when caretakers are immunized along with residents. The current recommendation to give annual flu shots to infants and children, however, has not been tested to ensure that the strategy is safe in the long term for children and that it actually confers benefit to the elderly. Focused strategies of immunizing those in close contact with the elderly and those who are immune compromised are fairly widely endorsed and may be helpful.
Former Pharma Marketing Director
Nathan,
Good points, and much to be considered. Too bad you didn’t read the entire article though…
You should focus on what the Cochran institute said, that is the important part. You know the part about the studies were not well formed.
This is the part I like:
“Yet while other flu researchers may not like what Jefferson has to say, they cannot ignore the fact that he knows the flu-vaccine literature better than anyone else on the planet. He leads an international team of researchers who have combed through hundreds of flu-vaccine studies. The vast majority of the studies were deeply flawed, says Jefferson. “Rubbish is not a scientific term, but I think it’s the term that applies.” Only four studies were properly designed to pin down the effectiveness of flu vaccine, he says, and two of those showed that it might be effective in certain groups of patients, such as school-age children with no underlying health issues like asthma. The other two showed equivocal results or no benefit.”
And the other part I liked was:
“There’s some merit to this reasoning. Unfortunately, the very people who most need protection from the flu also have immune systems that are least likely to respond to vaccine. Studies show that young, healthy people mount a glorious immune response to seasonal flu vaccine, and their response reduces their chances of getting the flu and may lessen the severity of symptoms if they do get it. But they aren’t the people who die from seasonal flu. By contrast, the elderly, particularly those over age70, don’t have a good immune response to vaccine—and they’re the ones who account for most flu deaths. (Infants with severe disabilities, such as leukemia and congenital lung disease, and people who are immune-compromised—from AIDS, or diabetes, or cancer treatment—make up the rest. As of August8, only 36 deaths from swine flu had been confirmed among children in the U.S., and the overwhelming majority of those children had multiple, severe health disorders.)”
Or how about this part….
“The annals of medicine are littered with treatments and tests that became medical doctrine on the slimmest of evidence, and were then declared sacrosanct and beyond scientific investigation. In the 1980s and ’90s, for example, cancer specialists were convinced that high-dose chemotherapy followed by a bone-marrow transplant was the best hope for women with advanced breast cancer, and many refused to enroll their patients in randomized clinical trials that were designed to test transplants against the standard—and far less toxic—therapy. The trials, they said, were unethical, because they knew transplants worked. When the studies were concluded, in 1999 and 2000, it turned out that bone-marrow transplants were killing patients. Another recent example involves drugs related to the analgesic lidocaine. In the 1970s, doctors noticed that the drugs seemed to make the heart beat rhythmically, and they began prescribing them to patients suffering from irregular heartbeats, assuming that restoring a proper rhythm would reduce the patient’s risk of dying. Prominent cardiologists for years opposed clinical trials of the drugs, saying it would be medical malpractice to withhold them from patients in a control group. The drugs were widely used for two decades, until a government-sponsored study showed in 1989 that patients who were prescribed the medicine were three and a half times as likely to die as those given a placebo.”
But the most serious part:
““Vaccines give us a false sense of security,” says Sumit Majumdar. “When you have a strategy that [everybody thinks] reduces death by 50 percent, it’s pretty hard to invest resources to come up with better remedies.” For instance, health departments in every state are responsible for submitting plans to the CDC for educating the public, in the event of a serious pandemic, about hand-washing and “social distancing” (voluntary quarantines, school closings, and even enforcement of mandatory quarantines to keep infected people in their homes). Putting these plans into action will require considerable coordination among government officials, the media, and health-care workers—and widespread buy-in from the public. Yet little discussion has appeared in the press to help people understand the measures they can take to best protect themselves during a flu outbreak—other than vaccination and antivirals.”
Nathan
Thanks FPME. I’ll respond primarily to your second quote, which is interesting and makes some sense. However, that quote is EXACTLY why vaccination of healthy people is so important! We need the “herd immunity” that can likely only be obtained by healthy individuals becoming vaccinated and incapable of spreading the disease. Vaccination provides as more (or more) societal benefit than individual benefit.
Former Pharma Marketing Director
Nathan,
Sorry, but I disagree. Health care workers should protect themselves because their job puts them in direct contact. Nothing is being done to take the opportunity to teach people how to stay healthy in the first place. We are fostering fear and a climate of dependency on drugs/vaccines that have not been proven.
The same goes for antivirals.
People are running out and getting inoculated with out the proper information. People think this reduces death by up to 50% but it does not…That is the point….The entire population of the US are not going to get vaccinated. But that seems to be o.k. with everybody, because apparently some people are more equal than others.
If everyone who should get inoculated do not, then what effectiveness does this have?
Herd mentality…..not herd immunity…
At the end of the day, no more lives were spared in places in the world where winter season is winding down…
Former Pharma Marketing Director
Furthermore,
My plan is to take vitamin C and Zinc along with vitamin D (I live in the Northeast). I plan to continue to eat healthy fresh fruits and vegetables, get out into the cold fresh air and exercise. And as a contingency plan we are stocking up on home made chicken soup. We will ask those around us who find it necessary to go out in the public when they are sick to stay away…If we get sick we will isolate ourselves. And we will do things that alleviate stress.. and watch a few good funny movies…..
And significantly cut out any sugar in our diets…