Applied Biosystems Group reported a restructuring that includes elimination of about 400 regular positions and 100 contract and temporary positions as part of cost reductions being taken in response to "uncertain economic conditions" and to return the company's R&D investment as a percentage of revenue to what it referred to as "more traditional levels."

It said the effort to boost R&D spending follows "successful completion of the research phase of the Applera Genomics Initiative." Applied Biosystems, of Foster City, Calif., is an Applera Corp. business.

The job cuts represent about 9 percent of Applied Biosystems' total work force, with the positions being eliminated located primarily at its facilities in the U.S. and Europe, and affecting "all functional areas," including research, manufacturing, sales, marketing and administration. The cuts will begin in January.

"[These] cost reduction actions should enable us to better manage through an uncertain environment while maintaining our focus on leading-edge research," said Michael Hunkapiller, company president. While he said Applied Biosystems expects the life sciences research market to continue to grow, Hunkapiller noted that current challenges include "delays in appropriations for the National Institutes of Health for the current federal government fiscal year and uncertainty about funding levels in Japan, parts of Europe and within the pharmaceutical industry."

He added that "these challenges and uncertainties have prompted us to rebalance our expense levels and take a careful look at costs throughout the organization. We believe this is prudent and necessary following a period of rapid growth, particularly in research and development."

Applied Biosystems said it will take a total special charge of approximately $40 million in 2Q03, including severance costs, office closures and asset write-offs and commitments of $14 million related to changes in product launches.

Hunkapiller said that "eliminating certain expenses should allow us to embark on new, higher-value programs designed to fuel Applied Biosystems' growth and technology leadership. These include products and services we expect to announce shortly in resequencing and very-high-throughput genotyping and gene expression, an outgrowth of the Applera Genomics Initiative."

He added that Applied Biosystems' R&D investment "remains among the largest in the life science research field and is critical to our growth."

Applied Biosystems said a portion of the $14 million charge relating to asset write-offs is associated with "uncertainties surrounding the commercial introduction of products based on a collaboration with Illumina [Inc., of San Diego]. In an attempt to resolve the uncertainties, Applied Biosystems has initiated arbitration proceedings. The arbitration has been stayed pending a hearing scheduled for mid-February in a lawsuit brought by Illumina in response to Applied Biosystems' initiation of the arbitration. In addition, prior to initiation of the arbitration, Applied Biosystems had filed a patent infringement suit against Illumina with respect to certain Applied Biosystems technology being used by Illumina."

Applied Biosystems develops instrument-based systems, reagents, software and contract services for the life science industry and research community. Celera Diagnostics, a 50-50 joint venture between Applied Biosystems and Celera Genomics, of Rockville, Md., the other major Applera unit, is focused on discovery, development and commercialization of novel diagnostics products.