Abbott to cut 700 jobs, most in Chicago area
BY ASSOCIATED PRESS January 25, 2012 8:40AM
Updated: January 25, 2012 6:12PM
Medical device and drugmaker Abbott Laboratories says it will lay off 700 employees, most in the Chicago area, as part of ongoing restructuring efforts in its medical device and diagnostic businesses.
A company spokeswoman says most of the layoffs involve employees who manufacture the company’s heart stents and diagnostic tests. Abbott expects a decline in orders for stents later this year after the expiration of a supply agreement with medical device maker Boston Scientific Corp. Abbott currently sells a version of its Xience stent to Boston Scientific, which pays a 40 percent royalty on sales. Boston Scientific recently replaced that device with its own in-house stent, Promus Element.
About 500 of the eliminated positions are related to stents, with the remaining 200 from the company’s diagnostic business.
The company also reported a 12 percent increase in fourth-quarter profit Wednesday, as the blockbuster anti-inflammatory drug Humira continued to dominate the North Chicago-based company’s performance with double-digit sales growth.
In October, Abbott surprised investors and analysts with the announcement that it would spin off its branded drug business, including Humira. Company executives said the split would allow investors to separately value Abbott’s businesses, which also include baby formula, generic drugs and medical implants.
Wednesday’s results highlighted the rationale for the split, with top-selling drug Humira dominating the company’s results, contributing $2.18 billion, or over 20 percent, of sales.
While Humira has been the key to Abbott’s growth, it has also a weighed on the company’s stock, overshadowing performance of its other businesses. The drug, which is used to treat psoriasis and rheumatoid arthritis, loses patent protection in 2016, and no obvious successor has appeared in the company’s pipeline. The split-up frees Abbott from the risks and obligations of developing innovative pharmaceutical drugs, leaving the company with a more predictable business built around nutritional formula, generic drugs and heart stents.
Abbott earned $1.62 billion, or $1.02 per share, up from $1.44 billion, or 92 cents per share, in the prior-year period. Excluding one-time items the company earned $1.45 per share, up from $1.30 in the same period a year earlier. Total company sales grew 4.1 percent to $10.38 billion.
Analysts polled by FactSet expect fourth-quarter earnings per share of $1.44 on revenue of $10.59 billion.
For 2012, Abbott expects to earn $4.95 to $5.05 per share, compared with the average analyst estimate of $5.02 per share.