Drug Maker To Sell 2 U.S. Units
Feb. 09, 1999
LONDON (AP) _ The huge drug maker SmithKline Beecham PLC is selling its U.S. pharmacy-benefits and clinical-lab businesses for nearly $2 billion and plans to cut 3,000 jobs, or 5.2 percent of its work force, within four years.
SmithKline Beecham chief executive Jan Leschly said today the sales reflected the company's desire to focus on its pharmaceutical and consumer healthcare businesses.
The company also anounced a restructuring that will cost $750 million through 2002 and yield $200 million in savings per year afterward.
The changes will lead to the loss of 3,000 jobs by the end of 2002, most of them in manufacturing operations, the company said. SmithKline currently employs about 58,000 people worldwide.
``We are ending up after these announcements with a stronger company, and a more focused company,'' Leschly said at a news conference in London.
The company expects 13 percent earnings growth this year.
SmithKline, which has its U.S. headquarters in Philadelphia, said that Quest Diagnostics Inc., based in Teterboro, N.J., was buying its Clinical Laboratories business for $1.27 billion. That includes $1.025 billion cash plus a 29.5 percent stake in Quest worth $245 million.
Clinical Laboratories is based in Collegeville, Pa., and employs 11,400 people in its network. In 1998, the company earned $179 million on net sales of $1.55 billion.
SmithKline is also selling Diversified Pharmaceutical Services, based in Minneapolis to Express Scripts Inc., from St. Louis for $700 million cash.
SmithKline Beecham paid $2.3 billion for Diversified Pharmaceutical in 1994. The company said the post-tax loss on the deal was about $713.6 million.