This article has been updated from a previous version to correct the amount of GE's offer for Abbott.
NEW YORK (GenomeWeb News) – Abbott Laboratories disclosed in a filing with the US Securities and Exchange Commission today that it would cut costs in its global diagnostics business through a plan expected to yield annual pre-tax savings of more than $150 million.
The firm said that it would “streamline global manufacturing operations, reduce overall costs, and improve efficiencies” in its core diagnostics business. An Abbott spokesperson told GenomeWeb Daily News that the firm intends to cut around 1,000 jobs over the next three and a half years as part of the plan.
The spokesperson said that the reductions will primarily impact jobs in its manufacturing operations.
"The announcement pertains only to our core laboratory business and has no impact on our molecular or point of care businesses -- and has no bearing on our investment in Ibis Biosciences," she told GWDN via e-mail.
Abbott currently holds a nearly 20 percent stake in Ibis, which is a molecular diagnostics instrument manufacturer currently owned by Isis Pharmaceuticals, with an option to buy the firm for an additional $175 million to $190 million at the end of this year. An Abbott official recently told GWDN at the American Association for Clinical Chemistry meeting in Washington, DC, that the company would likely exercise that option.
Abbott expects the streamlining to result in pre-tax charges of roughly $370 million over the next several years. The charges include employee-related costs of around $110 million, accelerated depreciation of approximately $75 million, and other related exit costs of around $185 million related to product transfers. The firm expects to record approximately $150 million of the charges in the second half of 2008, of which around $140 million will take place in the third quarter.
Abbott’s plan to sell two of its diagnostic divisions to General Electric for $8.1 billion fell apart a little more than a year ago, and since then the business has shown great improvement in sales and profitability, company officials said at the AACC meeting last month .
The firm’s diagnostics business brought in revenues of around $3.1 billion in 2007, with around $250 million coming from the molecular diagnostics unit, which was not part of the GE pact.