Medical device and drugmaker Abbott Laboratories said Wednesday it will lay off 700 employees as part of ongoing restructuring efforts.
A company spokeswoman said most of the layoffs will affect employees who manufacture the company's heart stents and diagnostic tests. Abbott has seen a decline in orders for artery-opening stents, ahead of the expiration of a supply agreement with medical device rival Boston Scientific Corp. Abbott currently sells a version of its Xience stent to Boston Scientific, which pays a 40 percent royalty on sales. Boston Scientific recently replaced that device with its own in-house stent, Promus Element.
About 300 of the eliminated positions are at the company's stent business in Southern California. Less than 200 others involve the company's diagnostic business in Lake County, Illinois. Other layoffs affect the company's pharmaceutical manufacturing operation in Puerto Rico, among other places. Employees were notified of the cuts by their managers, according to Abbott spokeswoman Adelle Infante.
Abbott has been restructuring its operations for several years, laying off about 1,900 pharmaceutical division employees this time last year. About 1,000 of those terminated positions were in Illinois.
News of the layoffs came several hours after Abbott reported a 12 percent increase in fourth-quarter profit Wednesday, as the blockbuster anti-inflammatory drug Humira continued to dominate the company's performance with double-digit sales growth.
In October, Abbott surprised investors and analysts with the announcement that it would spin off its branded drug business, including Humira. Company executives said the split would allow investors to separately value Abbott's businesses, which also include baby formula, generic drugs and medical implants.
Wednesday's results highlighted the rationale for the split, with top-selling drug Humira dominating the company's results, contributing $2.18 billion, or over 20 percent, of sales.
While Humira has been the key to Abbott's growth, it has also a weighed on the company's stock, overshadowing performance of its other businesses. The drug, which is used to treat psoriasis and rheumatoid arthritis, loses patent protection in 2016, and no obvious successor has appeared in the company's pipeline. The split-up frees Abbott from the risks and obligations of developing innovative pharmaceutical drugs, leaving the company with a more predictable business built around nutritional formula, generic drugs and heart stents.
Abbott earned $1.62 billion, or $1.02 per share, up from $1.44 billion, or 92 cents per share, in the prior-year period. Excluding one-time items, the company earned $1.45 per share, up from $1.30 in the same period a year earlier. Total company sales grew 4.1 percent to $10.38 billion.
Analysts polled by FactSet expect fourth-quarter earnings per share of $1.44 on revenue of $10.59 billion.
For 2012, the North Chicago, Ill., company expects to earn $4.95 to $5.05 per share, compared with the average analyst estimate of $5.02 per share.
The company's branded drug business posted sales of $4.78 billion for the period, an increase of 6.7 percent. The business, which includes the cholesterol drugs Trilipix and Niaspan among other treatments, is scheduled to become a separate business before the end of 2012. The new company will have revenue of roughly $18 billion.
Among Abbott's remaining businesses, generic drugs slipped 4.6 percent to $1.39 billion. Nutritionals rose 8.6 percent to $1.56 billion while sales of the company's stents and other heart devices were roughly flat at $826 million.
Company shares fell 75 cents to close at $55.23 Wednesday.