Biotech Values

[DewDiligence]

Abbott to Cut 1,200 Jobs Related to Vascular Products

[You know a market (drug-eluting stents in this case) is in bad shape when a company announces a manpower reduction right before a product launch.]

http://online.wsj.com/article/SB119680258748813475.html

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By JON KAMP
December 4, 2007 4:56 p.m.

Abbott Laboratories Inc. is cutting about 1,200 jobs at two plants where the company makes vascular products, including drug-coated stent heart devices, amid a squeeze on the overall stent market.

The announcement comes days after the Abbott Park, Ill., pharmaceuticals and medical-products giant won a favorable recommendation, from an outside panel of experts at the U.S. Food and Drug Administration, for approval of the company's Xience stent. But the U.S. market Abbott is aiming to enter has shrunk considerably due to a reduction in overall angioplasty procedures and a shift away from coated stents due to safety concerns.

Abbott will close a plant in Galway, Ireland, that employs about 500, and will also cut about 700 jobs from its plant in Temecula, Calif., company spokesman Scott Stoffel said.

"The changes are the result of overcapacity due to significant improvements in manufacturing efficiency and current market conditions," he said.

He noted that, despite the cuts, the company's forecasts for Xience's potential in the coated-stent market remain unchanged, and that the company continues to expect that next-generation stents like Xience will boost the lagging market. Xience is currently sold overseas and could launch in the U.S. soon - Abbott has projected the first half of 2008 - if the FDA backs the device.

Abbott still has "ample capacity" at its plants "to meet global demand for Xience," Mr. Stoffel said.

If approved, Xience could be the fourth coated stent available in the U.S. The market currently includes devices from Boston Scientific Corp. and Johnson & Johnson – which have already downsized their stent operations amid plummeting sales -- and Medtronic Inc. is hoping for FDA approval to launch its Endeavor stent in the U.S. before the end of this year.
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