J&J Cutting Jobs in Division that Manufactures Heart Stent

Johnson & Johnson executives are calling it a “total-account approach” to purchasing decisions. But industry analysts believe the sales force shakeup within J&J’s Cordis division is really an attempt by the healthcare giant to reverse sliding sales and regain market share.

The New Brunswick, N.J.-based company announced layoffs last week to an unspecified number of salespeople and said it is merging two separate sales forces within the Cordis division, which perhaps is best known for its cardiology products (the Cypher heart stent is one of its most prominent devices). The unit also sells diagnostic devices as well as a variety of endovascular products used in minimally invasive surgery, such as catheters, guidewires and related accessories.

“The change resulted in the elimination of some positions in our U.S. field sales organization, but we are continuing to call on all current accounts,” J&J spokeswoman Sandra Pound told Reuters. She declined to disclose the precise number of layoffs.

On Feb. 10, the company merged separate cardiology and endovascular sales teams into a single Cordis Vascular sales force, Pound said. The news sales force, she added, will be better equipped to offer a wide range of products to doctors, hospitals, purchasing managers and administrators of catheter labs that implant stents in patients suffering from heart disease. “This reflects the changing nature of the marketplace…to a total-account approach,” Pound told Reuters, noting that such a move enables the company to approach various parties involved in purchasing decisions.

However, Gabelli & Co. analyst Jeff Jonas believes the sales force merger is little more than an attempt by J&J to boost sales and regain market share lost in recent years to Abbott Laboratories Inc. as that firm’s newer Xience heart stent became more popular with doctors and patients. Sales within the Cordis unit fell nearly 10 percent in the fourth quarter of 2010 to $629 million, according to the company’s latest financial results. The unit was J&J’s worst-performing division in the quarter, with international sales plummeting 16.2 percent to $383 million.

J&J has developed a new heart stent, called NEVO, but the device has had numerous setbacks and may not get to the market for another two to three years. “By then,” Jonas said, “it will be difficult for J&J to break back in (to the stent market).”

Compounding J&J’s troubles in the Cordis division is its repeated recalls of Tylenol and other over-the-counter medicines that suffered from quality control issues. The recalls helped lead to overall sales declines last year and in 2009.