Boston Scientific will cut 2,300 jobs
The 2,300 positions represent about 13 percent of the company's worldwide workforce. Boston Scientific says any employees whose jobs are eliminated will be offered severance packages, job placement services and other support.
As part of the restructuring plan, several divisions are also being combined. The company's international group will be consolidated from three regions into two. In all, the company expects the actions to save it as much as $525 million next year.
Boston Scientific is also seeking buyers for several of its businesses. Officials have announced it's already entered into an agreement to sell its auditory business. Collectively, they say the businesses are projected to generate $550 million in sales this year.
Twin Cities medical device analyst Tim Nelson praised the consolidation, but says it could be painful in the Twin Cities.
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"Peripheral vascular and coronary vascular are both here and that consolidation makes a lot of sense and so there will be some reduction associated with that that will affect primarily people in the Twin Cities," Nelson says.
A company spokesman refused to say where the axe will fall.
Minnesota has significant operations involving the company's biggest and most troubled products, like drug-eluting stents and cardiac defibrillators.
Both devices have run into questions about their safety and effectiveness. These questions have hurt sales for the company and its competitors. In addition, Boston Scientific is loaded with debt from its $27 billion acquisition of Guidant Corporation.
One current and one former employee of Boston Scientific say they are expecting the lion's share of the layoffs to come from the company's Minnesota divisions.
The current employee, who asked to remain anonymous out of fear of retribution, says workers are bracing for layoffs.
The employee says there is a pervasive atmosphere of instability at all levels and that many workers are already exploring new job opportunities outside the company.
Analyst Tim Nelson says the cuts are tough, but they are necessary. He says they will help reassure investors about the company's finances and help shore up the medical community's confidence in the company's products.
"There are patients out there that aren't getting therapies that I think are needed and they are not getting them because they are not being referred in to see the appropriate physicians that can prescribe them," Nelson says. "And that lack of referral is really about fears of safety and product quality that are probably overblown in the marketplace."
The job cuts come as no surprise. Earlier this week, a Boston Scientific spokesman told a Boston newspaper they were coming. But the extent of the cuts caught at least one Wall Street analyst by surprise.
In a note to clients, Joanne Wensch of BMO Capital Markets said the move left her wondering if the company's internal sales forecast is worse than she had anticipated or the housecleaning more thorough.
Boston Scientific officials say they plan to detail where the job cuts will fall on Friday when it announces its third quarter earnings.
