Boston Scientific to Cut 500-600 Jobs
NATICK, Mass., Jan. 9, 2006 -- Medical device maker Boston Scientific Corp., based in Natick, Mass., announced yesterday it plans to cut 500 to 600 jobs in the first quarter of 2007 as part of a plan to reallocate its cardiac rythm management (CRM) resources "to increase innovation, productivity and competitiveness, and to enhance the company's ability to deliver new products to physicians and their patients."
Most of the job losses will occur at the Boston Scientific CRM facility in Arden Hills, Minn., the company said. Positions will be eliminated in research and development as well as a number of other functions. Boston Scientific currently employs approximately 29,000 people worldwide.
It said the reinvestment will include new positions in the research and development function, where there are currently shortages of critical skills.
Decisions on which positions will be affected will be made in the coming weeks, and the process is expected to be completed by mid-February, the company said. It added that affected employees will be offered severance packages, outplacement services, counseling and other assistance and support.
Jim Tobin, president and CEO of Boston Scientific, said, "We will treat departing employees with fairness and respect, and we will provide them assistance to ease the transition to another job."
The company said the plan is designed to regain market share and builds on an initiative begun last year "to restore trust and confidence" in its CRM Group. "It is also designed to position the company to grow its share of the CRM market in the future. The plan will focus on a more selective number of research and development projects that best meet the needs of physicians and their patients," it said in a staement.
It said it intends to reinvest the bulk of the savings from the plan into its CRM Group "to create a strong, competitive pipeline that will help grow revenue, which, combined with expense controls, should lead to increased profitability."
The plan is expected to result in after-tax costs of approximately $70 million, which include change-in-control payments related to the company's acquisition last year of CRM business Guidant Corp.
Tobin said, "This plan will shift resources from less productive projects to more productive ones, reinvigorating our product pipeline and driving top-line growth. It is designed to increase the productivity of our research and development so we can deliver more and better products. This is a different approach that will require us to be more selective, more disciplined and more focused."
The company also released preliminary CRM net sales for the fourth quarter of 2006 of approximately $489 million, a 10 percent increase over net sales of $446 million in the third quarter of 2006.
"We were pleased with our sequential quarterly sales increase, and we believe the CRM market is starting to resume its growth," said Tobin. "Fourth quarter sales of implantable cardioverter defibrillators (ICDs) were approximately $356 million -- a 13 percent increase over the third quarter -- which indicates a strengthening of our No. 2 position in the ICD market."
For more information, visit: www.bostonscientific.com
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