A Medical Device Daily
Abbott Laboratories (Abbott Park, Illinois) reported last week that it will lay off about 1,200 workers in California and Ireland to compensate for a contracting drug-coated heart stent market and manufacturing improvements.
The company has cut 700 employees from the payroll at its factory in Temecula, California. It also plans to shut its plant in Galway, Ireland, and lay off the roughly 500 employees there, Abbott spokesman Scott Stoffel said in a statment. The job cuts affect less than 2% of Abbott’s global work force of 65,000.
“The changes are the result of overcapacity due to significant improvements in manufacturing efficiency and current market conditions,” Stoffel said.
The Temecula cuts were effective on Tuesday and reduced the facility’s overall work force by about 16%. Abbott is slated to begin the Galway layoffs in January and wrap them up by 3Q08, Stoffel said.
The news came less than a week after advisers to the FDA voted to recommend approval of Abbott’s new Xience stent despite uncertainty about the long-term risk of blood clots (Medical Device Daily, Dec. 3, 2007).
The FDA usually follows panel recommendations, and Abbott has said it expects to launch Xience in the U.S. in the first half of 2008.
Doctors have been doing fewer angioplasty procedures since the discovery of a rare but serious risk of blood clots developing months, or more than a year, after stents have been placed.
As a result, analysts said the global market for drug-coated stents has shrunk from about $6 billion to around $5 billion annually.
Stoffel said the company’s facilities in Temecula and Clonmel, Ireland, have ample capacity to meet future demand for Xience, which it expects to revive market growth.
Abbott said it will disclose how much of a charge it’s taking for the cuts when it released its fourth-quarter financial results.
In other restructuring news: MedQuist (Mount Laurel, New Jersey) reported a corporate restructuring aimed at realigning expenses with current operational needs. The reorganization has resulted in a reduction of approximately 10 percent of its non-medical transcriptionist workforce, estimated to reduce operating expenses in 2008 by between $10 million and $11 million.
“This is an important step in our corporate rebuilding process to improve our operating margins and profitability,” said MedQuist president/CEO Howard Hoffmann. “To remain a leader in our industry, we will continue to bring award-winning products to market, streamline processes, and look for new and innovative ways to service our customers.”
Hoffmann added the reduction did not affect MedQuist’s medical transcriptionist population, which at about 6,000, is the largest domestic medical transcriptionist workforce in the world.
In October the company reported becoming current in its periodic reporting obligations with the SEC with the filing of its Form 10-Q for 2Q07 (October, 24, 2007). The company now meets the applicable securities law requirements for soliciting proxies in connection with an annual meeting of shareholders for the first time since 2003, the year in which the company last held an annual meeting.