Boston Scientific to eliminate 1,400 jobs in second round since last year
29 Jul 2011
Boston Scientific Corp today said that it would eliminate between 1,200 to 1,400 jobs globally, the second major round of cuts announced by the medical device maker since last year.
The move came a day after the Massachusetts-based company said that revenues for the three months ended 30 June rose to $1.9 billion from $1.8 billion for the same period last year. But revenues surged by $100 million because Boston Scientific devices were sold in countries with currencies stronger than the dollar.
Under its global restructuring program, affecting about 5 per cent of the company's 25,000 workforce, the world's second largest implanted heart devices maker will eliminate administrative positions and automate some production work.
Boston Scientific did not specify which divisions and in which locations the cuts would be made but said that it expects the cuts to save between $225 million and $275 million annually.
Boston Scientific, which was grappling with the aftermath of its $27 billion acquisition of Guidant Corporation, and big legal settlements, had eliminated 1,300 jobs worldwide in February last year as part of a restructuring move unveiled by the then new chief executive Ray Elliott
But the company is increasing its workforce in China from approximately 200 to more than 1,200 and announced an additional five-year, $150 million investment in the world's second largest economy to develop local manufacturing capabilities and building a Boston Scientific training centre.
Boston Scientific prepaid the remaining $750 million of its term loan borrowings, reducing its gross debt to $4.2 billion and said that it would buy back up to $1 billion of its common stock.
"This repurchase program reflects our confidence in the strength of the company's long-term business prospects, earnings growth potential and our ability to generate strong cash flow," said Elliott.
"Having reduced our gross debt to $4.2 billion, which is consistent with our targeted capital structure, we believe this new program provides us with added flexibility in our commitment to delivering value to shareholders," he added.
Sales of the company's cardiovascular instruments, including drug-coated stents have been sluggish for years and have fallen both in the US and the international markets.
The company's sales in stents rose 2 per cent to $841 million during the second quarter, while the worldwide market was $1.9 billion during the same period, down 1 per cent from a year earlier, while US sales plunged 10 per cent to $410 million, said Elliott.
The medical communities have raised questions on the benefit of stents compared to drug therapy. Last month its arch rival Johnson & Johnson said it would abandon the coronary stent business and end development of its next-generation Nevo drug-coated coronary stent as well as wind down production and sale of its older Cypher stent by the end of the year.
J&J's exit would benefit its competitors like Medtronic, Boston Scientific and St. Jude.
Boston Scientific holds a 15-per cent market share of the defibrillator market in the US, while Minneapolis-based Medtronic, the world's largest device maker holds 45 per cent and Minnesota-based St. Jude Medical holds 23 per cent.
