Sulzer Medica is to shift production from its Orthopedics plant in Baar to Winterthur, with the loss of 120 jobs.
The company said the restructuring programme, which is expected to be completed by early 2003, would generate savings of SFr15 million a year, including SFr8-10 million in 2002.
"We want to enhance our earnings potential, increasing investments in our products, our markets and in our customers," said Sulzer Medica chief executive Stephan Rietiker.
Sulzer Medica said it could not rule out the prospect of redundancies and a social plan was being drawn up to make any job losses "as painless and socially acceptable as possible".
Richard Fritschi, president of Sulzer Orthopedics Europe, stressed that the company needed to reduce costs and operate with greater efficiency.
A United States district court in Ohio is set to hold a final hearing on Wednesday on a $1 billion (SFr1.61 billion) settlement plan for thousands of patients who received faulty hip and knee implants made by the Zurich-based medical devices company.
Sulzer Medica reported a loss of SFr1.19 billion in 2001, mainly because of the litigation in the US.
swissinfo with agencies