Drug Maker Warner-Lambert to Close 7 Plants, Lay Off 2,800

From Reuters

Warner-Lambert Co., strapped with drug price and regulatory pressures, said Tuesday that it will close seven drug manufacturing plants and cut its work force by about 2,800 as part of a restructuring plan.

The move will force the pharmaceutical company to take a charge of $327 million, or $2.43 per share, against its fourth-quarter earnings.

Warner-Lambert employs about 34,000 people worldwide.

The company's stock rose 62.5 cents to $67.75 on the New York Stock Exchange on Tuesday.

Warner-Lambert said the restructuring was prompted by the growing impact of managed care and other cost-containment efforts in the United States, cost-control regulations in Europe and the partial loss of tax credits.

"These actions will strengthen our ability to compete successfully in global pharmaceutical and consumer product markets," Chairman Melvin Goodes said in a statement. "Over the long term, our sights must remain set on continuing to contain costs, serving our customers more efficiently and enhancing shareholder value."

Warner-Lambert is hardly alone in announcing hefty layoffs. Merck & Co., Pfizer Inc., Upjohn Co. and others have announced restructuring plans and layoffs over the past several months.

Intensifying pressures from the White House on drug makers and hospitals to cut costs as part of the Clinton Administration's proposed health care reform have prompted many drug companies to restrain drug price hikes and contain costs. Several have voluntarily held price increases to the rate of inflation.

Warner-Lambert spokesman Peter Wolf said the growth of managed care is clearly causing industrywide changes in the United States and elsewhere.

"The industry has said that at some point something's got to give," he said of the pressures from health reform that have crimped research and development and prompted other cost-cutting measures.

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