The 10 Largest Medical Device Layoffs of 2012

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For years, the medical device industry was billed as source of unfettered growth--new technologies treating an aging population with enough profits to keep everyone happy. But cost pressures, slumping sales and the impending 2.3% excise tax have forced devicemakers into a murky environment, and the industry's titans have responded by slashing spending and, of course, jobs.

All of that came to a head this year, as the markets for once-reliable devices like pacemakers matured, flattened and ceased to stir the imaginations of investors. Then came austerity measures in Europe, eating into margins for companies grappling with lower prices for the same techs.

And then there's the device tax, costing about $30 billion over a decade and billed as a long-term boon to the industry in the form of millions more insured patients. Devicemakers, of course, disagree, saying the charge forces them to trim payrolls, relocate operations and short-change R&D spending. Pundits are split on the issue, with some arguing that the tax provides an ideal scapegoat for companies looking to excuse planned cuts, and others claiming the measure is a raid on a dutiful, job-creating industry.

The truth is probably somewhere in the middle, but that likely provides little comfort to the thousands of employees facing down pink slips as a result of the ongoing layoffs announced this year. For some companies, like Kinetic Concepts, the job cuts are the result of divestures and shuffling priorities. Others, like Welch Allyn, say the layoffs are solely to offset the cost of the tax. Either way, the medical device industry has hit a transitional period, and its workforce is feeling the pinch of the resulting uncertainty. -- Damian Garde (Twitter | email)

Company: Stryker ($SYK)
Layoffs: 1,050
Reason: Stryker cited "markets [that] continue to evolve" and the impending device tax in its announcement that it will layoff 5% of its roughly 21,000 employees by 2013 to save $100 million a year.

Company: Medtronic ($MDT)
Layoffs: 1,000
Reason: Medtronic is looking to save $100 million with the job cuts, which it plans to complete by the end of fiscal 2013. Despite the U.S. layoffs, Medtronic is actually pursuing a net increase in jobs, hiring mostly in emerging markets.

   

Company: Smith & Nephew ($SNN)
Layoffs: 770
Reason: The European orthopedics giant cited a slumping market in its plan to cut 11% of its 11,000-person workforce, looking to become "sleek and effective for the future," its CEO said..

 

Company: Abbott Laboratories ($ABT)
Layoffs: 700
Reason: As sales of Abbott's Promus stent continue to decline, the company decided to trim its devicemaking ranks, focusing instead on its dissolvable Absorb stent.

 

Company: Covidien ($COV)
Layoffs: 595
Reason: Covidien said it was looking to make its vascular division more efficient when it shuttered a South Carolina manufacturing plant, accounting for all 595 of the lost jobs.

 

Company: Zimmer ($ZMH)
Layoffs: 450
Reason: Zimmer blames the device tax for its in-progress staff slashing, looking to offset what the company says will be a $60 million annual charge.

Company: Kinetic Concepts
Layoffs: 427
Reason: KCI is in the midst of a transition, selling off its therapeutic support business and planning to become "more responsive and nimble." In the short term, that means cutting 427 jobs in two rounds of layoffs.

 

Company: St. Jude Medical ($STJ)
Layoffs: 300
Reason: The device giant aims to save about $60 million with the cuts, and the company said the device tax is just one of the cost pressures driving its decision.

 

Company: Welch Allyn
Layoffs: 275
Reason: The privately held devicemaker cites the "onerous" device tax in its move to reduce its workforce by 10%, a plan coupled with moving some of its units overseas.

 

Company: Hill-Rom
Layoffs: 200
Reason: Hill-Rom is cutting 3% of its workforce, placing the blame on "ongoing economic conditions" and the impending 2.3% tax.