A Medical Device Daily

Royal Philips Electronics (Amsterdam, the Netherlands) reported that it will lay off 5% of its workforce at its Philips Healthcare division (Best, the Netherlands/Andover, Massachusetts) as part of an accelerated cost savings push sparked by the global economic slowdown.

Company spokesman Arent Jan Hesselink said in a statement that some 32,000 workers are employed at Philips' healthcare division, which is one of the world's top three hospital equipment makers, giving a total number of 1,600 job cuts.

When it reported its third-quarter results last month, Philips said it would take measures to maintain profitability across all three business lines and the restructuring at the healthcare unit represents the first specific steps to have been revealed.

Philips aims to improve its healthcare margins and streamline operations, particularly in its imaging systems business.

"The 5% reduction in the workforce is one of the borders of the programs we are working on," Hesselink said.

Philips said last month it would take about a 150 million ($63 million) charge for the healthcare restructuring in the fourth quarter, but Hesselink declined to indicate how much of that charge will be linked to the layoffs.

Philips in October posted sharply lower core profit for the third quarter that missed estimates, partly hurt by its healthcare unit, which saw an order slowdown due to the credit crisis.

Hesselink said Philips expects to provide further details about the restructuring measures in reporting its fourth-quarter results in January.

The Boston Globe reported that fewer than 100 jobs in Andover were affected by the cuts. Philips has about 4,300 workers in Massachusetts, with nearly 3,000 in the healthcare unit, making it one of the state's larger employers.

XDx (Brisbane, California), a molecular diagnostic company, reported that it is restructuring its business. In response to current market conditions, XDx said it is reprioritizing its efforts and will increase its research, development and commercial activities in support of AlloMap in the heart transplant market, while continuing selected activities in autoimmunity.

The company will focus on maximizing the current market opportunity for the FDA-cleared AlloMap product, restructure its internal development program and pursue external research collaborations in lupus, as well as suspend development activities in lung transplant.

As a result of the strategic restructuring, the company will realign the organization in support of these priorities, resulting in a reduction of 25 positions. XDx also is undertaking other cost-saving measures in response to the tightening economic situation. All of these measures together are expected to accelerate achievement of profitability.

CEO Pierre Cassigneul said, "The decision to restructure XDx is a difficult but necessary step given the current economic environment in which we are operating. We believe the steps we are taking to reprioritize our efforts and realign the organization will strengthen the company in the short run and position us for long-term success."

AlloMap, XDx's first commercial product, was launched through the company's CLIA-certified laboratory in 2005 and received clearance from the FDA as the first real-time PCR-based IVDMIA in August 2008. AlloMap Molecular Expression Testing is a non-invasive test that uses genomic technologies to help physicians in their overall management of heart transplant patients.

In other restructuring news, Henry Schein (Melville, New York), a provider of healthcare products and services to office-based practitioners in the combined North American and European markets, reported that as of Nov. 18, it has exited the wholesale ultrasound business and will dispose of such operations in 4Q08. This business represented sales for the company's Medical Group of about $13 million during 2008, and Henry Schein will record a loss from discontinued operations of about $6.5 million (or 7 cents per diluted share) primarily related to the write-down of intangible assets during 4Q08. The operating results of the discontinued operation will be reported separately for all prior periods.

"We take pride in providing our physician customers with a wide array of value-added products and services for operating more efficient practices and delivering quality healthcare to patients. We will continue to sell ultrasound products to physicians, yet we have made the strategic decision no longer to sell ultrasound equipment for the wholesale channel, as it falls outside of our core business," said Chairman/CEO Stanley Bergman.