US drug delivery specialist Hospira will reduce its workforce by around 10 per cent, or 1,400 employees, over the next 24 months as part of its $140m (€104m) a year “Project Fuel” cost cutting and efficiency drive.
The move follows a mixed set of fourth quarter financials for Hospira where a 24 per cent leap in earnings was overshadowed by a 3.4 per cent revenue decline, to $914m, missing analysts’ expectations.
While Hospira attributed the drop to currency fluctuations, the unusually high level of US orders for injectables in 2007 and lower demand for its contract services, today’s news suggests the firm may be taking the opportunity to streamline for difficult economic times.
Christopher Begley, CEO of the Illinois firm, said that the cuts are one of “a number of important steps to simplify our business, strengthen our financial position and establish a strong foundation for our future.”
Company COO Terrence Kearney echoed Begley’s comments when he explained the need for cost-cutting and restructuring in the current economic climate, despite stressing that the firm’s had decided on the reduction before the global downturn had begun.
While Hospira did not say in which divisions the workforce reductions would be made, it did name the firm’s generic injectables and medication management businesses as key growth drivers, indicating that cuts in these two units are unlikely.
“Not satisfied with being in the middle”
When Hospira was hived off from US healthcare giant Abbott Laboratories in 2004, Begley said that a lack of investment had hurt the company and promised to shake up its operations to improve margins and revenue.
While he reported that these goals had been reached when first mooting Project Fuel at last month’s quarterly report, he suggested that further progress could be made, commenting that Hospira is: ”not satisfied with being in the middle, and we know we can do better.”
Hospira’s share price rose $2.04 or 7.8 per cent to $28.37 on the New York Stock Exchange yesterday afternoon after the job cuts were announced.