Boston Scientific Corporation (NYSE: BSX) today announced a series of management changes and restructuring initiatives designed to strengthen the Company and position it for long-term success.
"The actions we are announcing today will provide the organizational structure and leadership needed to execute our strategic plan and fulfill the enormous promise of this company," said Ray Elliott, President and Chief Executive Officer of Boston Scientific. "They are aimed at driving innovation, accelerating profitable growth and increasing both accountability and shareholder value. Above all else, they will help us better serve our customers and their patients."
Key components of the management changes and restructuring initiatives include:
- The Cardiovascular Group and Cardiac Rhythm Management Group (formerly Guidant) will be combined into one, stronger and more competitive organization that will deliver better value to hospitals, better solutions to physicians and better outcomes to patients. This combined organization will also position the Company to respond more efficiently and effectively to rapidly accelerating changes in the procurement, reimbursement and regulatory environments, and to other changes in the delivery of health care globally. The new organization will be led by Hank Kucheman, who has been promoted to Executive Vice President and President of the new Cardiology, Rhythm and Vascular Group. Mr. Kucheman most recently served as President of the Cardiovascular Group. The Group will increase its focus on structural heart, disruptive, primary prevention ICDs, atrial fibrillation and hypertension. The Endovascular Unit, including Peripheral Solutions, Neurovascular, Imaging, Electrophysiology and the Canadian business unit, will report to new Senior Vice President and Executive Committee member, Joe Fitzgerald.
- Fred Colen has been promoted to the new role of Executive Vice President and Chief Technology Officer (CTO). As CTO, Mr. Colen will oversee a centralized corporate research and development group that will refocus and strengthen the Company's innovation efforts. Under Mr. Colen's leadership, the Company will change its allocation of R&D resources to incorporate its newly established growth priorities, create technology Centers of Excellence, drive improved product development timing and efficiency, and expand the spectrum of new product opportunities. Mr. Colen most recently served as President of the Cardiac Rhythm Management Group.
- The Company's International Headquarters will be eliminated. The Presidents of Japan, Europe (including a consolidated Shared Services team) and the newly formed Emerging Markets Group will report directly to the CEO. The Emerging Markets Group, composed primarily of India, China, Brazil, Russia, Eastern Europe and parts of the Middle East, Asia and Latin America, will attract greater investment and infrastructure, including the pursuit of selective offshore manufacturing, research, a variety of support services and individual country growth vehicles. Leadership for the Emerging Markets Group will be announced at a later date.
- The Endoscopy division and new Urology and Women's Health division will each report directly to the CEO, and the Endosurgery Group structure, which currently oversees the Endoscopy and Urology/Gynecology divisions, will no longer exist. The newly named Urology and Women's Health division, led by new Senior Vice President and Executive Committee member, John Pedersen, will significantly increase investment in its franchise in order to more aggressively pursue the substantial opportunities for device-related solutions for unmet women's health needs. The Endoscopy division, led by new Senior Vice President and Executive Committee member, Michael Phalen, will pursue incremental growth through devices for endoluminal surgery, obesity/diabetes solutions and pulmonary asthma.
- Steve Moreci, currently the Endosurgery Group President, will lead a newly created team devoted to Global Sales Focus. This team will drive targeted sales force expansions and deliver best practice capabilities in training, management, forecasting and planning. In particular, the team will focus on reaching the economic customer on a global basis and as a result the Company's Corporate Sales group will become part of this team.
- The Company plans to further rationalize and refocus its business portfolio through both select divestitures and acquisitions in direct support of our new strategic priorities.
- The Company will immediately begin to execute a new set of restructuring initiatives designed to improve its effectiveness and efficiency. Gross expenses are expected to be reduced by a range of $200 million to $250 million from the 2009 base during the next two years, representing a reduction of 5.5 to 7 percent. These initiatives will also result in a gross head count reduction of 1,000 to 1,300, or 8 to 10 percent, from our non direct labor base. These reductions will be partially offset by the inflationary impact of our base expenses and selective redeployment of expenses and head count into important sales and research initiatives. Eligible employees affected by these head count reductions will be offered severance packages and other assistance and support. The restructuring plan excludes manufacturing direct labor positions, which are production dependent.
- The action plans related to these reductions are expected to result in pre-tax charges of approximately $180 million to $200 million. The vast majority of the restructuring costs will be cash charges.
In addition, the Company announced the following management changes: