Yet another big drugmaker is contracting its workforce. This time, Abbott Laboratories is cutting about 1,900 positions - or 6 percent of its US workforce - following a series of pipeline setbacks and what the drugmaker called a "challenging regulatory environment," a reference to its inability to win FDA approval for various meds. The move is expected to save $200 million over the next few years (see statement).
Last week, for instance, Abbott disclosed plans to delay seeking FDA approval for a psoriasis med after receiving word from agency staffers about safety concerns. There was also a disappointment last month when the FDA issued a Complete Response Letter for the Certriad cholesterol pill, which would have combined its own TriLipix with AstraZeneca's Crestor. Development was then discontinued.
Meanwhile, Abbott reported that fourth-quarter earnings fell 6 percent thanks in part to costs of restructuring and integrating recent acquisitions. Abbott attributed the drop to costs related to a “restructuring of its US pharmaceutical business to streamline commercial and manufacturing operations.” Then there was the cost of integrating the Solvay Pharmaceuticals acquistion. .
4 Comments
I see a lot more overhead adjustments. It is reflected in the poor performance of the overall drug field. You may note that the industry, as a whole, has not performed well compared to the other sectors. I would suggest to anyone who may be considering share purchases in the drug field, DON'T !
I would add to that: Anyone who may be considering a career in the drug field, DON'T!
Anyone who thinks that these jobs are coming back once the recovery hits is in for a rude awakening. This is industry is undergoing a massive (and permanent) contraction.
Nathan,
I agree,completely.
More and more drug/bio firms have announced they will be switching to outside contractors and some have been using outsourcing for awhile. Apparently, the "do it yourself" attitude is no longer in vogue. The companies are doing everything they can, in order to save money.
With Congress/Medicare/CMS on the backs of the industry to cut, cut, cut, nothing will be overlooked, including duplicate work and unused real estate that is accumulating taxes, etc..
Conclusion: In(about)two years, the benefits of outsourcing should be significant enough to impress the stock buying investor.
It could be worse. Your company could have been purchased and thousands of employees thrown out on the street. That's what happened when Merck bought Schering-Plough. Only Fred Hassan, Carrie Cox and their followers did well in that deal. Most others suffered.