The Minnesota-based company first said it was considering “strategic alternatives” back in December after a disappointing first quarter, with an operating loss of $700,000 (€ 484,000).
Part of the new strategy included plans to sell the pharmaceutical arm of its business to concentrate solely on the more profitable diagnostics side – something which is still under strategic review.
Now, in what it says is a bid to cut costs, SurModics will eliminate around 20 jobs out of the 215 recorded December 1 2010.
Included in those leaving the company are senior VP and chief financial officer Philip Ankeny, and VP of human resources Jan Webster.
The firm hopes that its reorganisation will save between $1.7m to $2m a year.Gary Maharaj, SurModics president and CEO, said: “This is a critical transition for SurModics to implement the components of our strategic plan that focus and position our business for maximum long-term success.
“Importantly, we expect to maintain our commitment to R&D investment to drive growth opportunities in our core Medical Device and IVD businesses.
“While a workforce reduction is always a very difficult decision, it was necessary to enable us to achieve our objectives. We thank our affected employees for their contributions and wish them well in their future endeavors.”
Troubled waters
The new move is the result of an uphill struggle for SurModics in recent years.
In October 2010, the company laid off 30 staff members to focus more on the diagnostics side of the business.
And plans to sell the underperforming pharmaceutical side of the company came after forming just four years previous in July 2007, following the acquisition of Brookwood Pharmaceuticals.
But although the company says the cuts will mean savings up to $1.1m to $1.4m in the fourth quarter, Feltl research analyst Ernie Andberg did not expect the latest course of action.
Andberg told in-PharmaTechnologist: “I’m a little surprised that it’s happened right now, because I believe if they were successful in selling their SurModics pharma business they would have been profitable.
“But Maharaj is a relatively new CEO, and I would guess he wants to put his own appointments in key management positions. I think that’s what is going on here.”
When in-PharmaTechnologist asked Andberg what he predicts for the future of the company after this move, he said it was still too uncertain to tell.
He added: “It’s a little difficult to peer into the future here because they still haven’t sold their SurModics pharma business.
“It’s still under strategic review, and they have had productive conversations with parties who are interested.
“It’s a different company if they are able to sell SurModics pharma. It would be much more about their core business of diagnostics, which is nicely profitable.
“Until they are successful in the sale of it, it’s difficult to see what the company will look like.”