DOW JONES NEWSWIRES
Hospira Inc. (HSP) said it will cut 10% of its work force, pare
down its product lines operations and evaluate noncore businesses
as the big generic-drug maker moves to create "a streamlined,
focused organization."
The job cuts at the 14,500-person company will occur largely
during the next year and be part of an effort the company hopes
will generate annual cost savings of as much as $140 million.
Chairman and Chief Executive Christopher B. Begley said, "Our
actions, while difficult, are designed to benefit all of our
stakeholders by ensuring a strong foundation for our future."
Only up to $10 million of savings are expected this year, but
the rate is expected to jump to up to $140 million by mid-2011.
Charges of up to $140 million to $160 million will be recorded as
part of the restructuring, about two-thirds being taken this
year.
The announcement comes a month after Hospira posted a 37% rise
in fourth-quarter net income but reported sales well below
expectations. At the time, Begley credited the company's
"streamlined, focused management and optimization initiatives."
Health-product companies such as Hospira usually fared well in
the past despite the economy's ups and downs. But the recession has
proved to be tougher than people expected. In January, JPMorgan cut
2009 expectations for Hospira, citing a concern the
recession-induced hospital-spending drop would curb purchases of
its infusion pumps.
Hospira said Tuesday that with the strength of
specialty-injectible drugs and medication-management systems, it
will look at other parts of the company in determining whether to
keep them. Hospira also will simplify its product line, noting it
sells "multiple presentations of the same drug compound and serve
the same medical need."
Hospira shares, off one-third in the past six months, closed
Monday at $26.33 and were inactive premarket.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com