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Bristol-Myers Squibb outlined a comprehensive review of its operations and a strategy to improve top-line growth, a plan that involves staff reductions and rationalization of its manufacturing plants.
New York (Dec. 5)-Bristol-Myers Squibb (BMS) outlined a comprehensive review of its operations and a strategy to improve top-line growth, a plan that involves staff reductions and rationalization of its manufacturing plants.
BMS plans to “transform the company through its productivity initiative into a next-generation BioPharma company that pairs the scale and resources of a mid-sized pharmaceutical company with the entrepreneurial spirit and innovative focus of a biotech start-up,” said the company in a release. That process involves focusing the company’s commercial and scientific units on growth areas such as specialty, biologic, cardiovascular, and metabolic drugs and providing a framework to enhance productivity and reward entrepreneurship.
As part of a productivity initiative, BMS plans to consolidate its global manufacturing network by reducing the number of manufacturing facilities by more than 50% by the end of 2010. It also plans to reduce its total headcount by roughly 10% between 2007 and 2010. The company says that some positions were eliminated in 2007, but the substantial majority of positions will be eliminated in 2008 and 2009. “While we are reducing headcount in certain functions, we will continue to invest in R&D, biologics, and commercialization talent,” said BMS CEO James M. Cornelius in a company release.
BMS plans to reduce general and administrative operations by simplifying, standardizing, and outsourcing, where appropriate, processes and services. It also plans to reduce the number of brands in its mature product portfolio by 60% between 2007 and 2011.
The productivity initiative is expected to generate approximately $1.5 billion in cost reductions and avoidance on a pretax basis versus the company’s previous strategic plan for 2010. Costs for implementing the initiative are estimated at $0.9–1.1 billion on a pretax basis. BMS expects to incur costs of approximately $300 million in 2007 and $400–500 million in 2008.
BMS lowered its 2007 fully diluted earnings per share guidance on a GAAP (general accepted accounting principles) basis to $1.15–1.20 from $1.28–1.33, reflecting potential fourth-quarter charges of $300 million from the productivity initiative. Its 2008 guidance is $1.44–1.54 on GAAP basis.
BMS will also divest its medical imaging business and its reviewing strategic alternatives for its ConvaTec (medical products) and Mead Johnson (nutritional products) businesses.
BMS announces closure of packaging facility
BMS also announced on Dec. 4 that it will cease operations at Bristol Laboratories International Sociedad Anónima, a secondary packaging facility in Colón, Panama, by the middle of 2008. The facility began operations in 1959 and performs secondary-packaging operations for the company’s pharmaceutical and ostomy products. Packaging operations will be phased out as products are transferred to other facilities. Ninety-eight positions will be affected.
“The closure of the Colón facility aligns with the company’s strategy to optimize its supply chain,” said BMS in a company release. “The decision is also a result of the decreased market demand for the mature products packaged at the site.”