St. Jude to Move CRM Manufacturing; Layoffs Expected

St. Jude Medical Inc. plans to move manufacturing of its cardiac rhythm management (CRM) products from Sweden to Puerto Rico and Malaysia. a move that is expected to result in the elimination of 450 jobs by the end of next year.

The job cuts were prompted by a continued weakness in the domestic CRM market. Current CRM sales in the United States account for 28 percent of overall company sales.

“United States CRM sales fell into a pothole,” said Dan Starks, president and CEO of St. Jude Medical, in a conference call with analysts on Wednesday.
U.S. CRM sales totaled $401 million in the second quarter, down from $440 million in the same quarter last year. Domestic CRM sales were hurt by falling revenue from implanted cardioverter defibrillators (ICDs), which saw a nine percent decline to $300 million compared with the second quarter of 2010. However, global ICD sales increased by one percent compared with second quarter of 2010, to $477 million.

The company reduced its revenue guidance for the CRM division for the second half of 2011. Starks believes that the global CRM market will shrink 2 percent in the second half of the year, and sales will be reduced by $130 million to $135 million as a result.

St. Jude now expects revenue from the CRM division to range from $3.06 billion to $3.12 billion, as opposed to its previous expectation of between $3.16 billion and $3.25 billion.