A Medical Device Daily

In an effort to improve its cost structure and maximize its growth potential Kinetic Concepts (KCI; San Antonio) said it expects to reduce its global workforce by about 4%, or 300 employees. KCI also said it has created a Global Shared Services Team (GSST) designed to improve the company's overall productivity and performance. According to KCI, the GSST will help optimize KCI's resources through improved process design and organizational structure.

KCI said the cost reduction initiatives would enhance the company's potential to increase shareholder value and improve operational efficiency and effectiveness by streamlining its organizational structure and workforce and evaluating expenditures.

"During this global economic downturn, we believe it is prudent to further streamline our organization and reduce expenses to enable our vision of continued global expansion and investment in research and development," said Catherine Burzik, KCI's president/CEO.

The workforce reduction is a result of an evaluation the company has done across all levels of its workforce, KCI noted. The company said it anticipates a first quarter 2009 charge of roughly $7 million to $10 million before income taxes.

"This decision was not made lightly and we view this as an essential step to ensure our future success," said Burzik. "We are confident that our decision will result in a global workforce that will leave us well-positioned with the appropriate expertise and initiative to achieve our vision for all stakeholders now and in the future."

KCI estimates the GSST initiatives will yield about $100 million in annualized savings by the end of 2011. The company makes products and therapies for wound care, tissue regeneration and therapeutic support system markets. It employs about 7,000 people.

Cardinal Health (Dublin, Ohio) reported that its Clinical and Medical Products businesses, that are expected to be spun off later this year as CareFusion, will reduce its global workforce by about 800 over six months and eliminate an additional 500 positions through normal attrition and not filling open roles.

In addition, Cardinal said it would implement cost control measures and additional reductions in discretionary spending across all of its businesses, primarily in response to a delay in hospital capital spending and the overall decline in the global economy.

"While many companies have taken similar actions to respond to the current economic realities, these are very difficult decisions because of their effect on our employees and their families," said R. Kerry Clark, Cardinal Health CEO/chairman. "However, these measures are necessary to help offset current economic conditions and will ultimately strengthen our businesses for the longer-term."

As part of the workforce reduction, Cardinal said it expects to record a restructuring charge of about $33 million for the remainder of fiscal 2009 and an additional charge of roughly $24 million in fiscal 2010. The company estimates this action will deliver annual savings of $110 million to $130 million within two years.

In other restructuring activity, Quidel (San Diego) reported a strategic restructuring and work force reduction in order to gain operational efficiencies and reduce costs. The reduction in force involves roughly 10% of the work force, or 31 employees from all areas of the business.

In connection with the restructuring, the company said it is refining its approach to business development activities and, among other changes, has therefore eliminated two related senior level positions. Quidel said it expects to incur a restructuring charge in 1Q09 for both personnel and non-personnel related costs and will provide the details of the restructuring charge when the company releases 1Q09 results.

Among other cost cutting measures, Quidel has eliminated its annual cash incentive program for 2009 and taken action to reduce certain discretionary spending for the remainder of the year.

Unrelated to the restructuring, Thomas Foley, PhD, will retire as chief technology officer effective May 31, after overseeing technology development for five years, Quidel reported. Foley will continue as an employee through Dec. 31, and will serve as a special advisor to the company during this time and in support of Quidel's product development initiatives.

Marketed under the brand name QuickVue, Quidel's portfolio of products currently includes tests that aid in the diagnosis of several disease or condition states, including influenza, respiratory syncytial virus, Fecal Occult Blood, Strep A, pregnancy, bacterial vaginosis, H. pylori and Chlamydia.

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