>>Back
Johnson & Johnson, Merck lay off workers in China as local headwinds take a toll
  • Publisher:Phexcom
  • Publication:2024/11/19

Johnson & Johnson and Merck are laying off workers in China, according to a story from Bloomberg which cites reports from Chinese news outlets and confirmation from industry sources in the country.

The cuts for J&J are part of a restructure of its China business and affect employees “across multiple divisions,” according to a report from Yicai Global. Bloomberg reported that the cuts have primarily affected a division that sells surgical products.

“To continue to meet the needs of patients around the world, Johnson & Johnson must adapt and evolve our businesses in the midst of a complex and rapidly changing external environment,” a company spokesperson said in an emailed statement.

The company entered China in 1985 and employs approximately 10,000 people in the country at more than 90 locations, according to its website.

The cuts are part of “recently implemented organizational changes to optimize our business operations,” J&J's spokesperson added. “We will support employees who are affected by these changes, helping them explore new options and providing access to career services and related support.”  

Meanwhile, Merck’s layoffs have largely affected its diabetes group in China, according to Bloomberg. The company sells diabetes meds Janumet, Januvia and Steglatro in China. Sales of the treatments are declining worldwide as they compete against generic rivals in certain markets.

“We launched a new operating model of the diabetes business to drive customer-centric decisions agilely, maximize the portfolio value, and help more diabetes patients reduce disease burden, and improve their quality of life,” a Merck spokesperson said.

For Merck, the layoffs also come as the company deals with rapidly declining demand for HPV vaccine Gardasil in China, which caused an 11% year-over-year slide in sales of the megablockbuster shot in the third quarter.

As for J&J, last month during its quarterly conference call, the company cited "headwinds” impacting its medtech business in the country, including “volume-based procurement and the anti-corruption campaign in China.”

Volume-based procurement (VBP) refers to China’s system of taking bids from companies to supply drugs and medical equipment to hospitals. An increasing number of local suppliers providing products at cheaper prices has led to drugmakers from the West losing contracts. 

“We have the largest medtech company in China. And given the high leadership positions, we are seeing a disproportionate impact from VBP,” Tim Schmid, J&J’s Medtech chief, said during the conference call. “We do believe that this will be a headwind through the remainder of '24 and into '25.”

Two months ago, as part of its broader restructuring push, J&J laid off 231 employees at its corporate headquarters in New Brunswick N.J. Those cuts are effective on Dec. 27.