Life Sciences Insight

Siemens Healthineers to Overhaul Diagnostics Division

The company said external headwinds are outweighing operational improvements in its diagnostics division. Job cuts expected.

Citing external headwinds that are outweighing operational improvements in its diagnostics business, Siemens Healthineers plan to restructure the division. The overhaul is expected to save around 300 million euros each year by 2025, with one-time costs anticipated.

“At diagnostics we have come to the conclusion that the dramatically changed macroeconomic environment demands immediate and comprehensive measures,” Siemens Healthineers CEO Bernd Montag told investors Wednesday.

Montag said the diagnostics division has been hampered by inflation and elevated procurement and logistics costs; logistical constraints and component shortages; a delayed launch of the company’s Atellica CI 1900 laboratory system; and missing revenues due to local COVID-related lockdowns.

He said the company recently started a controlled rollout of the Atellica CI 1900 analyzer in Europe, and more regions are expected to follow soon before the system is fully launched next year.

“The pandemic has shown that our diagnostics business can quickly adopt to unprecedented circumstances by building up an antigen test business, which delivered 1.5 billion euros of revenues in fiscal year ’22 alone,” Montag said. “Building on these successes, we will take decisive actions to compensate for the adverse external factors I mentioned.”

Following the launch of its Atellica CI 1900 system, Siemens Healthineers plans to simplify the portfolio by taking older systems off the market. That means a reduction of the Erlangen, Germany-based company’s diagnostic platforms by more than 50% over time.

“Our portfolio complexity has been a particular burden in the current supply chain environment,” Montag said, adding that the CI 1900 is “a very important piece of the puzzle.”

Other restructuring efforts in the company’s diagnostics business include a focused commercial execution and service approach; improved supply chain efficiency; and leaner, more clinically focused R&D.

While Siemens Healthineers did not specifically mention a workforce reduction, Reuters reported that the plan would involve job cuts and abandoning some locations, citing sources from within the company.

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