SmithKline Expected to Detail Its Restructuring Moves

Times Staff Writers

SmithKline Beckman Corp. is expected to announce a major restructuring today that could involve layoffs of more than 3,000 employees worldwide.

The Philadelphia-based pharmaceutical and medical instruments company--which has 34,000 employees worldwide, including 4,300 in Orange County--has been reporting declining profits for several quarters.

It was unclear Monday whether the restructuring would affect SmithKline's Southern California operations, which include Beckman Instruments in Fullerton and Allergan Pharmaceuticals in Irvine.

SmithKline's board is scheduled to meet today to complete its reorganization plans.

The firm announced in July that it planned to cut costs and become more efficient by restructuring its corporate staff but has refused to detail the plans.

Analysts who have spoken to SmithKline executives since then say they believe that the shake-up could lead to layoffs of up to 3,000 people, mainly in the corporate staff and the beleaguered pharmaceuticals divisions of the company.

One medical industry analyst suggested Monday that the restructuring might also involve selling one or more operating units and specifically mentioned Beckman Instruments, a manufacturer of medical and scientific instruments.

One Beckman employee said rumors were rife that the company had been acquired by Hitachi, the Japanese electronics giant. Hitachi officials could not be reached for comment.

In Southern California, SmithKline Beckman owns Beckman Instruments, which has 4,000 employees, including 2,300 in Fullerton and Brea; Allergan Pharmaceuticals, with 6,000 employees, including 2,000 in Irvine, and SmithKline BioScience in Van Nuys, with about 1,000 employees.

Spokeswomen for both Beckman Instruments and Allergan declined to comment Monday. Elke Eastman, the Beckman Instruments spokeswoman, however, said the company expected to make an announcement this morning.

"Whatever is happening is being kept completely under wraps," she said. "I have no idea if it affects any Orange County operations or any operations in California."

PaineWebber analyst Ron Nordmann said up to 2,000 SmithKline's employees could be laid off and cautioned that "the restructuring may be more far-reaching than that."

The company said in July that it would reorganize its business after a lackluster first half in which earnings dropped by 25%. The company also predicted that earnings for the full 1988 fiscal year would be off by 25% as well.

SmithKline blamed the disappointing sales of its two top drugs--Tagamet, an anti-ulcer drug, and Dyazide, a drug used to treat hypertension--for the drop in profits.

The Associated Press contributed to this story.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World
57°