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posted: 10/17/2012 12:58 PM

Abbott to cut 550 jobs; earnings exceed estimates as company prepares to split

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  • Abbott Laboratories Wednesday laid off 550 worldwide, including about 100 in the Chicago region.

      Abbott Laboratories Wednesday laid off 550 worldwide, including about 100 in the Chicago region.

 
 

Abbott Laboratories, which plans to separate into two companies, said it cut 550 jobs globally today -- including about 100 from its headquarters in Libertyville Township and an office in Des Plaines. "Several hundred" more layoffs are expected by next year worldwide, the company said today.

Affected employees were told this morning, despite the company posting its third-quarter profits today that beat analysts' estimates on higher sales of the rheumatoid arthritis injection Humira.

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"The cuts are mostly in our commercial and manufacturing areas," said Abbott spokeswoman Ann Smith.

She declined to specify exactly where all the cuts were taking place now and by next year. She added that its North Chicago facility was not affected.

Laid-off workers will be receiving severance packages and outplacement services, including chances to apply for other open positions within the company, Smith said.

The company has 91,000 workers worldwide, including 13,000 in northern Illinois, she said.

Earnings excluding one-time items of $1.30 a share beat by 2 cents the average of 17 analyst estimates compiled by Bloomberg. Revenue of $9.77 billion was hurt by the impact of foreign currency, the company said today.

Analysts anticipated revenue of $9.94 billion. Humira sales rose 10 percent to $2.33 billion.

Abbott is preparing to split by the end of the year into a namesake business that will hold Abbott's medical device and consumer brands and a new company called AbbVie Inc. that will get the prescription medicine lines. The drugmaker is seeking to expand use of Humira by applying for new indications beyond rheumatoid arthritis, such as ulcerative colitis and pediatric Crohn's disease.

"We will be listening for an update on timing of the upcoming split and for additional color on the company's pharma pipeline," Derrick Sung, an analyst at Sanford C. Bernstein & Co. in New York, said in an Oct. 12 note to clients. "The key for driving value on the pharma side will be if Humira growth can be sustained beyond 2015 and how much the pipeline can contribute."

Abbott shares had increased 28 percent this year through Tuesday, bolstered by anticipation of the separation and expectations for a new, injection-free treatment for the liver disease hepatitis C.

The experimental hepatitis C therapy, which avoids a yearlong series of shots that give patients flu-like side effects, could let Abbott compete with Gilead Sciences Inc., which is trying to be the first company with such a regimen. If approved, the treatment might be a $2.5 billion product for Abbott, Catherine Arnold, an analyst with Credit Suisse Group AG in New York, said.

Abbott narrowed its forecast for 2012 earnings excluding one-time items to $5.06 to $5.08 a share from a previous outlook of $5 to $5.10.

The new indications for Humira, if approved, might add about $1 billion in sales, Elizabeth Hoff, a company spokeswoman, said in August.

•Bloomberg News contributed to this report.

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