Johnson & Johnson expects its pharmaceutical employee headcount to remain constant in 2004.

The company said its net headcount will remain the same despite a plan to control costs company-wide. Rather than layoffs, J&J will focus on reshuffling its workforce to find efficiencies.

It appears J&J is not ruling out some workforce cuts, however; the company is understood to have made some layoffs in its pharmaceutical sectors in January.

The company said any layoffs would be modest and used to fund growth opportunities.

In 2003, J&J initiated an early retirement program targeted at employees 55 years or older with at least 10 years of experience (¹ Also see "J&J Patches Together Strong Sales Growth With Ortho EVRA, Duragesic" - Pink Sheet, 20 October, 2003., p. 24).

J&J is not disclosing the number of employees who took advantage of the program, how many may have already been laid off, or the total headcount of its pharmaceutical segments.

Employee reduction plans have been formally announced at other companies; Schering CEO Fred Hassan is implementing a "value enhancement initiative," the latest phase of which involves a 10% payroll reduction for a large segment of its payroll (² Also see "The 10% Solution: Roche Cuts U.S. Sales Force, Schering Reduces Payroll" - Pink Sheet, 8 December, 2003., p. 8). The company expects VEI to save in excess of $200 mil. annually.

Hassan announced the VEI program after reversing sales force cuts initiated by previous CEO Richard Kogan under a company-wide restructuring program (³ Also see "Schering Reinvesting In Sales After Cutbacks; “Selective” Support For Zetia" - Pink Sheet, 28 July, 2003., p. 29).

Unlike Schering, Roche is not sparing its sales force from headcount reductions; the company plans to cut approximately 250 positions from its 2,500-representative U.S. sales force.

Merck is also implementing a headcount reduction program to reduce the number of employees by 4,400 (⁴ Also see "Big Pharma’s “Black Wednesday”: Quarterly Reports Underscore Uncertainty" - Pink Sheet, 27 October, 2003., p. 18).

Lilly CEO Sydney Taurel has suggested that heavy cost structures at drug companies will lead to cost-cutting measures throughout industry (⁵ Also see "Big Pharma “Cost Structure” Needs Attention, Lilly CEO Says" - Pink Sheet, 8 December, 2003., p. 7).

J&J Will Maintain Rx Headcount Through 2004 Under Cost-Cutting Plan

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