NEW YORK (GenomeWeb News) – Qiagen reported after the close of the market Monday that it will cut between 8 percent and 10 percent of its global workforce in a reorganization intended to improve efficiency and resource allocation.
The sample preparation tools and molecular diagnostics firm said that the effort "aims to eliminate organizational layers and overlapping structures, actions that will enhance Qiagen's processes, speed, and productivity."
As part of the restructuring, organizational structures in the firm will be streamlined and Qiagen will eliminate duplications between global, regional, and local activities. The firm also intends to focus its R&D activities on high-growth areas in all customer classes, and some R&D programs will be discontinued. Part of this effort includes expanding the company's menu of regulatory-approved tests that run on Qiagen's automation platforms.
The firm also said that it will optimize capacity utilization at selected locations to increase production efficiency and outsource certain non-core support activities.
"Against a background of short-term challenges in both our business and the industry, we have initiated this project to work more efficiently and reallocate additional resources to these initiatives and prepare for future growth," Qiagen CEO Peer Schatz said in a statement. "The emerging opportunities and the speed at which the environment has changed led us to accelerate these plans and take action."
Qiagen expects the reorganization will generate annual pre-tax cost savings of approximately $50 million starting in 2012. It said that it will reinvest the savings into strategic initiatives focused on the firm's automation platforms, expansion of its test menu, and expansion in certain geographies, particularly high-growth emerging markets.
Qiagen will take a pre-tax restructuring charge of around $70 million in the fourth quarter of 2011, of which around 30 percent will involve cash-related charge components. It expects to report a further pre-tax restructuring charge of roughly $20 million in 2012. Qiagen also said that the charges would not have an impact on its outlook for adjusted earnings per share for the fourth quarter or second half of 2011.
The firm currently employs around 3,800 employees worldwide.
"The restructuring is not surprising, and we believe is at least partially a consolidation of the at least nine acquisitions Qiagen has done over the past three years," Mizuho Securities analyst Peter Lawson said in a research note published last night.
Despite the price tags of those deals, earlier this year a Qiagen spokesman told GenomeWeb Daily News that the firm was likely to focus on smaller acquisitions.
Qiagen recently reported third-quarter revenue growth of 5 percent, but only 1 percent at constant exchange rates.
In early Tuesday trade on the Nasdaq shares of Qiagen were up 2 percent at $14.02.