Abbott Laboratories said Wednesday that it would cut 1,900 jobs, or 6 percent, of its U.S. workforce in the wake of a series of disappointments in its drug development pipeline, triggering a restructuring of pharmaceutical commercial and manufacturing operations.
Of the cuts, about 1,000 would be in manufacturing operations in Illinois where the largest concentration of Abbott’s estimated 90,000 employees around the world are at its sprawling headquarters in the northern Lake County suburbs of Chicago. The company said about half of the job cuts would take place now with the remainder over the next several years.
The North Chicago-based drug giant said last week, for example, that it would hold off seeking U.S. approval of an experimental psoriasis drug treatment after feedback from the Food and Drug Administration, which has concerns about the drug’s safety. Abbott has not disclosed the issues with the drugs but analysts and studies have indicated potential risks to the heart.
In addition, Abbott has not been able to bring other treatments to market. In December, it decided to stop developing the cholesterol drug Certriad, which combines drugs already on the market.
Abbott cited “the challenging regulatory environment” for the decision to cut jobs. The company said costs of the “cost reduction initiative” would be nearly $300 million over the next several years.
“It’s frankly more difficult to get products approved,” Abbott Chairman and Chief Executive Miles White said Wednesday morning on a conference call with analysts and investors that lasted more than an hour. “There’s an awful lot of pressures on this industry. At the end of the day, you manage all of these things.”
Though the pharmaceutical industry was a critical supporter of U.S. health reform legislation signed into law last year, White complained that the environment in the wake of the overhaul would also contribute to challenges. Such pressures, analysts say, include health plans watching their expenses more closely and being unwilling to approve drugs and medical products that offer patients little benefit yet are priced higher than older cheaper medications.
Company observers say the job cuts were needed because the company is no longer expected to reap new revenue from the cholesterol drug Certriad or the psoriasis drug in 2011. Drugs such as Certriad are criticized by health insurers and consumer groups because they combine older treatments to extend drug company monopolies for brands that are not all that innovative.
Despite drug development problems, Abbott has made aggressive strides to bolster its drug development operation, which had an effect on fourth-quarter profits. White said the company has to continue to make sure its “pipeline is robust.”
Abbott said fourth-quarter 2010 profits dipped 6 percent thanks in part to costs of restructuring and integrating recent acquisitions. The company said earnings fell to $1.4 billion, of 92 cents a share in the fourth quarter last year, compared to $1.5 billion, or 98 cents a year earlier.
Abbott attributed the dip to costs related to a “restructuring of its U.S. pharmaceutical business to streamline commercial and manufacturing operations.” In addition, the company had expenses related to its integration of its acquisition last year of Solvay Pharmaceuticals.
Excluding such items, which the company accounted for as after-tax charges of $346 million, or 23 cents a share, Abbott said profits would have risen nearly 10 percent in the fourth quarter, to $2 billion.
“Despite a very challenging environment, 2010 was another productive year,” White said.
Abbott’s sales were strong overall, rising 13.4 percent, to $9.9 billion, in the fourth quarter. The company’s sales continued to be driven by global pharmaceutical sales and its flagship biotech drug Humira, which is prescribed for a variety of autoimmune disorders such as rheumatoid arthritis and psoriasis.
bjapsen@tribune.com
Gotta keep those shareholders happy! Too bad for the employees who have invested so much of their lives into a greedy company who could care less about them.
This CEO should be gone for failing to lead through innovation, and no golden parachute. With the advancing numbers of baby boomers, the pharmcos should be growing.
Costing so many talented people their jobs should cost him his.
They only care about the stock price not the people. Some of Obama’s first words last night were how well the stock market is doing. Pandering to the market,pitiful.
Scapegoating regulators instead of your own company’s lack of innovation and your own greed is the norm today.
Big pharma’s reaction to these type of things is to trim the rank and file. The smart move would be to have Miles White (CEO) and his overpaid staff of VPs and Directors to take a pay cut! What a novel concept. Maybe I’ll start prescribing generic versions of Abbott products???
I would like to give a special thanks to our governor Pat Qiunn and House Speaker Michael Madigan for rasing taxes on the citizens and corporations in Illinois. It only make the CEO’s job to cut heads easier.
But don’t forget Gov. Quinn brags about bringing in the Ford plant jobs. How many have we lost, for whatever reasons. We are still losing and going to lose even more. And we’ll collect less taxes than anticipated and we’ll need even more tax revenue. A vicious circle.
All physicians should prescribe generic forms of all name brand drugs as applicable. The entire pharmaceutical industry rakes in huge profits in the name of research and then cuts employees when the “stockholders” aren’t satisfied. All Executive level staff should be forced to take a pay cut until quality and performance improves just like the rest of the world.
Yeah, take that regulators! If you try to stop us from putting dangerous drugs on the market, we’ll respond by firing 6% of our workforce. Because that’s what we do.
There’s that tax increase at work!
Even after Barry’s speech? Naw
Our company just let go another 15% this year. Yet # of onshore contractors keep going up. The work is still there, just more H1B1 visa holders doing the work that local full time employees used to do. No wonder our unemployment still hover at 9-10%
Surprised they didn’t announce they’re moving HQ. Bet they’re evaluating it. The sheer size of the tax increase makes it prudent to do so.
So their profits rise over 13% and they feel it necessary to cry poor and dump their employees. Let’s look at this for what it is — they’re going to move jobs overseas and give the CEO a raise. Guess what, Abbott? Pretty soon there won’t be anyone here that can afford your overpriced, killing drugs. Continue to shoot yourself in the foot.
Why wouldn’t Abbott cut jobs in Illinois? It’s one of the most anti-business states in the union. Gov. Quinn and Mike Madigan treat business like we are the evil scourges of society, so why not cut back?
No worry, Nancy Pelosi promised that Obamacare would create jobs, so I’m sure she’ll hire those 1900 folks asap. Send resume to: Nancy “PDOG” Pelosi, 1 Bloated Govt Way, Wash, DC 99999 , re. Obamarecare JOB BONANZA.
Thanks to Democrat Governor Quinn and Democrat House Member Madigan for driving up the cost of doing business in Illinois. First come the layoffs and next these companies will be moving to another state. The destruction that Quinn and Madigan are doing to Illinois, Obama is doing to the nation. And people wonder why pay and jobs are getting cut (well except for government employees who contribute nothing to the economy and take the money from our wallets to cover their outrageous benefits and pensions.
And those of you blaming Abbott or the shareholders, remember, no one forced these employees to take a job with Abbott. If people don’t like the way a company operates, and you think you can do better, they feel free to start your own company. I can’t wait to see how generous you are in handing out money.
I hope they’re all Packers fans.
“Abbott’s sales were strong overall, rising 13.4 percent, to $9.9 billion, in the fourth quarter” The layoffs are to increase investor returns. It is that simple. Corporate America could care less about their customers. Abbot Industries says “You mean the regulators won’t let us sell drugs that are more dangerous than cocaine? Are you seriously asking us to care more about the quality and safety of our products that we sell, rather than our investors?”
And all you hear is the economy is turning around. I guess it’s turning around for all the politicians and there families. If you are an elected official then you are at fault I don’t care which party you are affiliated with. Why can’t some of them be laid-off?
What a great Recovery we’re having????
What I have seen of Abbott Labs is that they are over blotted with people, especially at the top, they do not know what either hand is doing, waste through out the corporation especially at their HQ. Many times they will tell you one thing, and mean something completely different. Backstabbers. When something is simple to do, they make it difficult. Forget about Abbott as an Employer.
This is typical of what Abbott has been doing over the years. It started back in 2005, don’t be fooled by the double talk of the CEO. Abbott has and continues to layoff people every other year. It has nothing to do with the government. They are playing the game of buying up smaller companies that are actually producing new things, and selling off what does not work. This layoff once again is about greeedy money!
I think that half of all drug company employees are sitting in my doctor’s waiting room. It is not supposed to be legal, but at one practice’s office in Wheaton, IL, they still have free lunch day every single week, thanks to the drug companies. You can smell the food walking down the hall. When I go for my appointment in another Wheaton office, the drug reps are talking to the receptionist or one of the docs about “what they want for their snacks.” Yet the reps give me dirty looks if I jokingly ask for free samples.
To Dr. Sergio and the rest of the ignoramouses writing completely uneducated comments on this board: do some homework before you start bashing Abbott or any other company for planning workforce reducations. These are publicly traded companies that take on an IMMENSE amount of scientific and regulatory risk in trying to bring innovative medical products to market–products that all of you are so quick to take for granted (understanding how these products get from a lab and into your body is beyond the comprehension level of 99.9% of you). And Dr. Sergio, PLEASE get a life. You don’t decide whether a patient gets branded or generic versions of a product–the drug benefit company does, through their formulary. So go back to treating patients and counting all of your dollars that youreadily take from patients and insurance companies–your comments are particularly disgusting since you are supposed to be somewhat educated and aware of how difficult it is to operate–as a manufacturer or provider–in this country dominated by cost and safety concerns.
Having worked out at Abbott Labs in North Chicago I can tell you there is a lot of waste with the vast amount of documentation and regulation from the FDA. In the future they will probably move most of there operations overseas. The comments above about there being too many managers are correct. But that is true of any big company lots of people going to meetings and reading email all day.
Easy there Bridge. Talk a chill pill. It amazes me that we are a pill popping country. Take a pill for this take one for that. It just greed that’s all it is. It makes me laugh when you see a commercial and then at the end it lists all the side affects that might happen to you. Again it’s called GREED.
A corporation has a legal duty to act in the best interest of shareholders. This talk about how the company does not care about this that and the other thing may be valid, but it is not the point at all. It is great that a corporation is even allowed to do this – in the public sector you get an army of useless employees that produce very little and drag the whole system down.
http://www.illinoishardatwork.com
Come in Europe, in Bulgaria and Romania to see what is unemployment. People work for 130 dollars a month and enjoy. This crisis will be with you, in the U.S.. See here>>> 7plus7.net
Ryan torrible. Yup your right .. Problem is they dont specify “what” shareholder. Its only the shareholder in corner offices. The rest.. ?
Bridget and John (at 4:53 PM) : Right on. Abbott has been around in the Chicago area for 120+ years wouldn’t lay people off unless they have to. When business is better, they’ll hire again.
When business is better? Sales were up 13% for the quarter! Doesn’t get much ‘better’ than that. Those jobs are gone, and never coming back. Off to a lower-tax state, or more likely, overseas.
the people being fired are extra baggage. any decent company who wants to survive would do the same…(lets not forget the other end of the scale, like the auto industry who ASKS for more union fleas and ticks to suck them dry till they collapse). i wonder if all those crying about job losses here also think we should have terrible gas mileage on our cars, cause all those poor oil industry workers will be out of jobs if we get too efficient. use your heads.
All of you who want to throw stones at Miles White should take a second and ask yourself this question…. What if tomorrow, Miles White and all of the executives at Abbott just didn’t show up for work, ever again? They just woke up and decided that they didn’t want to bother with running a multi-billion dollar drug copmpay whose overall purpose is “a promise for life”, creating life saving drugs and technology. First of all, the employees left behind certainly wouldn’t have jobs for long. Second, the “innovation” and “life saving drugs” would no longer be available to those in need. It’s not possible to operate a company in the red, plain and simple. At least it shouldn’t be, but these days you can just ask the government for a bailout…. On another note, if you think that the drugs Abbott provides are not safe, don’t take them… just be sick. Stop blaming a company for your decisions.
Abbott is an outstanding company that I am proud to work for. More jobs will be avaliable in the future to individuals in Lake County. Lives are saved every day by Abbott Laboratories. Oh, and these drugs you say that kill people and are deadly, why do you take them? You have a choice to take a prescription. HIV drugs, arthritis medication, drugs to help premmature babies…they do no good for anyone huh? Ask someone that had to take these drugs to survive or their baby had them and is now a thriving happy child. Don’t be so quick to judge this company or the people who run it..one day you may be counting on Abbott to save your life.
Do people out there really believe that it’s in Abbott’s best interest to kill/hurt their customers? It’s really hard for a company to make money if they kill all their customers….. isn’t that basic common sense?
The company has been around since 1888 so if the execs decided not to show I”m sure they’d still be in business. When an employee complains to me about not wanting to show up my usual response is the company has been in business for 75 years it will still be in business if you show up or not. I’ve been in the Hotel business for 28 years now. The company will still be going don’t worry.
Abbott’s workers are like pawns . . . . used by Abbott solely for the benefit of Abbott. Not only that, these large companies control the health of the nation. If they cannot make money selling one of their medicines, they won’t make it and sell it, even though there is a need among the populace.
rmk/akron
I would like to invite any Abbott employees who are either being downsized or looking to create a new opportunity to contact me. I am building a Chicago area team to represent new dermatology at home products created by world renowned dermatologists. YOu will NOT be downsized here. Interviews and presentations locally in January and February. Please email recruitskincare@gmail.com your cover letter and resume.
To rmk/akron
If they work solely for the benefit of Abbott, then I guess Abbott is doing them a favor by letting them go….
There are many factors here: Abbott, Baxter, Hospira and just about every other pharma/device company in Illinois, and other states, have been sending American jobs overseas for some time now. Now, Quinn is making it easier for these companies to leave Illinois, along with the brain trust of people who understand the complexity of the Regulatory world.
One of the interesting things to see will be how the FDA will deal with the problems that will only escalate: Re-engineering of Heparin in China beina one fine example, outsourcing complaint handling to the Phillipines being another.
A bit of humor here, but I assume the pairing down of American jobs is to allow for more funds to be available for the FDA fines they will continue to amass due to poor manufacturing and quality control.
Companies will do what ever they can to protect shares before people. The very shares all of these directors, board members, executives use for big payouts. Invite your friends and co workers to see what a public comany must disclose to everyone but you dont hear about in the office
If you really want to know the truth of any public company i suggest you inquire yahoo finiance and see the amount of money( millions of dollars) these guys make exercising stock options mutipul times of the year. Here you can really get a sense of a companies health good or bad. just look up insider transactions for abbotts ticket symbol ABT and see where the “real money” is made.
One must ask themselves what did these Abbott insiders know !! lots of selling !!!
They get rich and u get fired
http://finance.yahoo.com/q/it?s=ABT+Insider+Transactions
Net Share Purchase Activity
Insider Purchases – Last 6 Months
Shares Trans
Purchases 3,000 1
Sales 492,835 40
Net Shares Purchased
(Sold) (489,835) 41
Total Insider Shares Held 2.69M N/A
% Net Shares Purchased
(Sold) (15.4%) N/A