Abbott To Cut 3,000 Jobs After Solvay Unit Acquisition

Abbott to Cut 3,000 Jobs After Solvay Unit Acquisition
Abbott Laboratories will cut 3,000 jobs as part of a restructuring plan. Photographer: Tim Boyle/Bloomberg

Sept. 21 (Bloomberg) -- Abbott Laboratories will cut 3,000 jobs, about 3.2 percent of its global workforce, and take up to $1.3 billion in charges as part of a restructuring plan related to its acquisition of Solvay SA’s pharmaceuticals business.

Most of the reductions will be in Europe and concentrated in sales, manufacturing, research and corporate staff, Kelly Morrison, an Abbott spokeswoman, said today. Restructuring will result in pretax charges of $810 million to $970 million over the next two years, the company said today in a filing. The company also expects one-time integration costs of $135 million this year and $175 million in 2011, Abbott said in the filing.

Abbott, based in Abbott Park, Illinois, agreed in September 2009 to pay about $7.1 billion for the Brussels-based Solvay unit, gaining full control of the cholesterol drug TriCor and a bigger presence in emerging markets. Abbott projected at the time Solvay would add more than $3 billion to annual sales.

“You know there are excess costs,” Tony Butler, an analyst at Barclays Capital Inc. in New York, said today in a telephone interview. “Solvay people are marketing products in spaces where Abbott already has marketed products. Plus, you have overlap in R&D and manufacturing.”

Abbott shares fell 11 cents, or less than 1 percent, to $52.15 at 4 p.m. in New York Stock Exchange composite trading.

‘Strategic Actions’

“Today’s announcement is one of a series of recent strategic actions designed to best position Abbott’s global pharmaceutical business for sustained and future growth,” Abbott’s Morrison said in a telephone interview.

Before making the job reductions announced today, Abbott had about 93,000 employees worldwide, said Scott Stoffel, a company spokesman, in an e-mail. Solvay’s former U.S. headquarters in Marietta, Georgia, will be closed by the end of 2011, he said.

The Solvay deal gave Abbott worldwide sales rights to TriCor and an extended-release version called TriLipix, which generated a combined $1.3 billion for the U.S. company last year. Previously, Abbott had paid royalties to Solvay for rights to sell the drug in the U.S. Abbott also gained Androgel, a testosterone gel, and Creon, a pancreatic enzyme to treat cystic fibrosis, from Solvay.

To contact the reporters on this story: Ellen Gibson in New York at egibson9@bloomberg.net;

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.