DePuy Synthes continues its cost-cutting measures.
DePuy Synthes Continues Cost-Cutting
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According to a July 17, 2014, Wall Street Journal Pharmalot blog, the company is eliminating all travel for the rest of the year. The sales force is exempt.
It was also reported that all consulting contracts valued at more than $50, 000 must now obtain top-level approval.
The Journal obtained an internal memo written by Pete Batesko III, the unit’s vice president of finance and CFO. The memo reportedly stated that, “Despite our progress in so many areas, DePuy Synthes faces short-term challenges to deliver on our 2014 financial commitments and to position us well for 2015. In particular, our travel and meeting expenses are growing at an unacceptable and unsustainable rate relative to our revenue growth.”
A company spokeswoman told the Journal that, “Careful control of expenses is good business management. DePuy Synthes employees were reminded that they should manage spending with the approval of their supervisors.”
This isn’t the first recent cost-cutting measure by the company. In early July the company announced that it was reorganizing and cutting 400 jobs from its 23, 000 global workforce. It was also announced at the time that more than 80 new positions have been created as the reorganization gets under way.
Michael Orsinger, the head of DePuy Synthes, said at the time that “seismic shifts” in the healthcare environment was the reason for the company’s reorganization efforts. During a recent call with Wall Street analysts, management noted that increasing pricing pressure and market softness was weighing on growth.
The company has also acknowledged challenges in integrating DePuy and Synthes after DePuy’s parent; Johnson & Johnson bought Synthes for $21.3 billion in 2012. Recent quarterly reports indicate the integration is beginning to work out the kinks as trauma sales grew 7% in the second quarter and spine sales grew 1% after a series of quarterly declines. The unit generated nearly $2.5 billion in sales in the second quarter, beating consensus.
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This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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