(Adds details on prior cost-cut program, share price, byline)
By Ransdell Pierson
NEW YORK, Aug 21 (Reuters) - Abbott Laboratories Inc (ABT.N) said on Thursday it would eliminate about 1,000 jobs over the next four years as part of a plan to streamline operations and cut costs in its medical diagnostics business.
The suburban Chicago company, which has 68,000 employees worldwide and also makes prescription drugs, said its diagnostics business has been performing very strongly with sales growth of 16 percent in the first half of 2008.
“We’re looking ahead, from a position of strength, to improve profitability and competitiveness of the business,” Abbott spokeswoman Melissa Brotz said. “We want to address excess capacity, improve efficiency and cut costs.”
The streamlining plan includes the closing of a clinical chemistry plant in South Pasadena, California and transferring production of some diagnostic products to plants in Europe that are closer to a big part of the company’s customer base, Brotz said.
Abbott said in a regulatory filing that the streamlining plan, when completed, should provide about $150 million in annual pretax savings. In the meantime, the company plans to take pretax charges of about $370 million for the program over the next several years.
About $150 million of the charges will likely be taken in the second half of 2008, including roughly $140 million in the third quarter, Abbott said. The remaining charges will be taken through 2011, as the plan progresses.
Abbott’s last significant restructuring initiative was in 2005, when the company announced manufacturing cost cuts across many of its businesses to achieve annual pretax savings of more than $200 million.
The company is one of the best-performing U.S. health-care companies, thanks to growing demand for its array of medicines, diagnostics used to confirm or predict diseases and medical devices such as its new Xience heart stent. Abbott’s second-quarter profit jumped 34 percent to $1.32 billion.
Its shares have risen 3 percent so far this year, compared with a 9 percent decline for the American Stock Exchange Pharmaceutical Index .DRG of large U.S. and European drugmakers.
Shares of Abbott fell 59 cents, or 1 percent, to $57.75, at mid-afternoon on the New York Stock Exchange.