BRISTOL-MYERS SQUIBB WILL TAKE ESTIMATED $855 MIL. CHARGE
BRISTOL-MYERS SQUIBB WILL TAKE ESTIMATED $855 MIL. CHARGE in the fourth quarter "as a result of its plans to integrate the operations of Bristol-Myers and Squibb and to organize" its businesses "on a global basis," the company announced Jan. 9. The one-time charge against earnings includes an estimated $740 mil. before taxes to cover "the costs of reducing the number of production facilities and employment levels worldwide, employee relocations and other related items," Bristol-Myers Squibb said. The charge is related "predominantly to costs that will be incurred to achieve savings in administrative and manufacturing areas of the company as a result of the merger itself and the decision to move to a global line-of-business organization," the company said. An additional charge of $115 mil. will be included in the fourth quarter earnings statement to reflect the costs associated with the merger. That figure includes $67.5 mil. for the "costs of services provided by investment bankers, outside attorneys and accountants." Another $47.5 mil. is accounted for as "other expenses" and includes "printing costs, related taxes and related SEC expenditures, among others," Bristol-Myers Squibb said. "The after-tax effect of both these charges is estimated to be $690 mil.," the company noted. The company would not elaborate on its plans for consolidation and employee reductions. "The best means of integrating the two companies are still being explored," the company said. "It is premature to project specific areas of implementation...[or] to speculate about the number of facilities [that will be phased out] at this point." Bristol-Myers Squibb said it arrived at the $740 mil. estimate for the consolidation charge "by evaluating redundancies and opportunities for efficiencies." The company added that "specific decisions -- such as which of two similar operations would be a candidate for elimination -- have not been finalized." One likely area for consolidation in the pharmaceutical area is antibiotic manufacturing: Squibb has a plant devoted to antibiotics in Kenley, N.C., and also manufactures antibiotics, as well as other drugs, in its Humacao, Puerto Rico and New Brunswick, N.J. plants; Bristol-Myers has a "main bulk fermentation plant" in Syracuse, N.Y., and a "finishing plant" in Barceloneta, Puerto Rico. On employee cuts, the company said that a "small percentage of the workforce will be reduced" both in the U.S. and overseas in order to realize "efficiencies in certain functions of all of our various businesses," Bristol-Myers Squibb said. The company has had an employee hiring freeze in effect since the merger was announced last July. Currently, the company's combined workforce is approximately 53,000. Bristol-Myers Squibb said that decisions on workforce layoffs and consolidations "will be made final shortly and announced promptly thereafter." Upper management shifts have already begun. Squibb Managed Health Care Group President William Weathersby recently announced his resignation from the company, effective Jan. 1. He has joined American Safety Razor Co. in Verona, Virginia as president and CEO. SquibbMark President Thomas Ludlam is replacing Weathersby as president of the Managed Health Care Group, which oversees SquibbMark operations. Reportedly, the company has no current plans to fill the SquibbMark top position. In addition, Kenneth Weg assumed the new position of president of Squibb U.S. and Bristol-Myers Squibb International Pharmaceutical Group in mid-November. Formerly president of the Squibb Pharmaceutical Group, which marketed Squibb pharmaceuticals in the U.S. and abroad, Weg is retaining those responsibilities in addition to handling Bristol-Myers Squibb international pharmaceutical operations. * Bristol-Myers Squibb indicated that the merged company's drug businesses will continue to be run from both Princeton, New Jersey, and Evansville, Indiana. The company stated that "for the foreseeable future, the entire U.S. Pharmaceutical business will not be consolidated in a single location." In its announcement, Bristol-Myers Squibb downplayed the opportunities to cut manufacturing and administrative costs and highlighted the combined marketing and R&D. The company noted that it has kicked-off co-marketing efforts with Squibb's beta blocker Corgard.
You may also be interested in...
Newly released Medicare Part D data sheds light on the sales hit that branded pharmaceutical manufacturers will face when the coverage gap discount program gets under way in 2011
FDA appears headed for a showdown with clinicians and the pharmaceutical industry over the proposed new clinical trial endpoints for acute bacterial skin and skin structure infections, the guidance's approach for justifying a non-inferiority margin and proposed changes in the types of patients that should be enrolled in trials
Specialty drug maker Shire has quietly begun scouting deals with a brand-new $50 million venture fund, the latest of several in-house investment arms to launch with their parent company's pipelines, not profits, as the measure of their worth