Stryker Announces Restructuring Plan
BY LAUREN UZDIENSKI, NOVEMBER 14, 2011
Stryker announced late last week that the company was implementing a restructuring program that included, among other activities, a 5% reduction in its workforce. The program is expected to be mostly complete by the end of 2012 and reduce annual pre-tax operating costs by over $100 million beginning in 2013.
Notable were the reasons Stryker gave for initiating the restructuring. The company said the program would "provide efficiencies and realign resources in advance of" the looming device tax. The contentious 2.3% excise tax has been vocally opposed by the device industry and its supporters as a threat to jobs and innovation, and a bill has been introduced in the House to repeal it. Though the bill, sponsored by Minnesota Rep Erik Paulsen, recently secured the minimum number of votes it would need to pass the House, repealing the tax is still generally perceived as an uphill battle by both political and industry observers.
In addition to offsetting the burden of the device tax, Stryker said the restructuring would allow for "continued investment in strategic areas and drive growth" in spite of macroeconomic conditions that have recently suppressed procedure volumes. Over the past year, Stryker acquired Orthovita in the largest single upfront payment to date for an orthobiologics company and Memometal Technologies, a manufacturer of shape-memory extremity devices. Biologics and extremity have represented two of the faster-growing segments of orthopedics.
