* Seeking efficiencies after closing of Solvay deal
* Closing former U.S. base of Solvay drugs unit
* Abbott shares off 0.5 percent (Adds further details on restructuring, background)
By Lewis Krauskopf
The cuts will take place over the next two years and the vast majority will come from onetime Solvay positions, Abbott spokesman Scott Stoffel said Tuesday. The reductions will involve research and development, commercial, manufacturing and other staff functions, Stoffel said.
Abbott, which has about 93,000 employees, will also close the former U.S. headquarters of Solvay’s pharmaceuticals unit in Marietta, Georgia, by the end of 2011. About 500 positions at a site in Weesp in the Netherlands also will be eliminated, as will 300 jobs in Hannover, Germany. Solvay’s drug unit had more than 10,000 jobs when Abbott bought it.
The job cuts are part of “a series of recent strategic announcements designed to position Abbott’s pharmaceutical business for sustained and future growth,” Stoffel said.
Abbott plans to take pre-tax charges of about $810 million to $970 million over the next two years related to the job cuts, discontinuation of research programs, asset write-downs and other restructuring-related costs.
It also expects one-time costs of about $135 million in the second half of this year and $175 million next year related to integrating Solvay. Abbott closed its $6.2 billion deal for the Solvay drugs unit in February, giving Abbott full control of its Belgian partner’s cholesterol treatments and further exposure to emerging markets.
Abbott expects to treat the various costs as specified items, and therefore they will not affect its 2010 profit forecast, which excludes such items.
Abbott did not specify the savings it expects from the cuts, but said in a securities filing that the savings are expected to be in line with those previously outlined to investors when the company announced the Solvay deal last year.
Abbott previously said savings from the Solvay deal would add 10 cents to earnings per share this year, accelerating to more than 20 cents per share by 2012. Abbott is expected to earn $4.16 per share this year and $4.63 in 2011, according to analysts polled by Thomson Reuters I/B/E/S.
Abbott, which also makes diagnostics and medical devices such as stents, earlier this year boosted its emerging markets presence by buying the branded generics business of India’s Piramal Healthcare Ltd (PIRA.BO) for $3.7 billion.
The maker of the blockbuster Humira rheumatoid arthritis drug in April trimmed its 2010 profit forecast due to the costs of U.S. healthcare reforms, overshadowing better-than-expected quarterly results.
Abbott shares were down 0.5 percent at $51.98 in afternoon trading on the New York Stock Exchange. (Reporting by Lewis Krauskopf; Editing by Derek Caney and Gerald E. McCormick)