Dive Brief:
- Siemens Healthineers is laying off 67 employees at a site in New Jersey as it pushes to reduce its costs by €300 million ($327 million) a year.
- The Germany-based medtech company used a regulatory filing to tell state officials it will lay off 67 people at its site in Flanders by September.
- Healthineers’ action comes months after CEO Bernd Montag said “the dramatically changed macroeconomic environment” for diagnostics “demands immediate and comprehensive measures.”
Dive Insight:
Healthineers provided a broad overview of its strategy for cutting costs late last year, revealing plans to “create a much leaner organization and footprint with a significant reduction in its internal complexity.” Montag also discussed the need to streamline the “supply chain and service setup and run a leaner and more clinically focused R&D operation.”
However, the initial notice about the changes lacked details of exactly how Healthineers would reduce its costs and streamline its business, with information limited to a Reuters report that the “plan involves cutting jobs and abandoning certain locations.”
Now, Healthineers has provided more information by enacting a piece of the plan. Healthineers has grown the Flanders site over the past decade, consolidating diagnostic instrument manufacturing at the plant when it closed another facility and expanding its footprint in 2015 with a view to increasing its headcount from 450 to 950 over a 10-year period.
The Flanders site makes modules for a range of instruments, including the Atellica immunoassay that is a focal point of Healthineers’ push to simplify its portfolio. Last month, Montag told investors the changes to the diagnostics business are about “radically simplifying the portfolio” and “migrating faster” to the new Atellica platform.
Simplifying the portfolio will enable Healthineers to “get rid of certain legacy platforms” and associated infrastructure, allowing it to close “certain locations where the instruments and the reagents are getting produced.” Healthineers currently makes Atellica modules at multiple sites, with its facility near Dublin, Ireland, a key production plant.