Abbott Laboratories said on Tuesday it will lay off about 1,200 workers in California and Ireland to compensate for a contracting drug-coated heart stent market and manufacturing
The company has cut 700 employees from the payroll at its factory in Temecula, California. It also plans to shut its plant in Galway, Ireland, and lay off the roughly 500 employees there, Abbott spokesman Scott Stoffel said.
"The changes are the result of overcapacity due to significant improvements in manufacturing efficiency and current market conditions," Stoffel said.
The Temecula cuts were effective on Tuesday and reduced the facility's overall work force by about 16 percent. Abbott is slated to begin the Galway layoffs in January and wrap them up by the third quarter of 2008, Stoffel said.
The news comes less than a week after advisers to the U.S. Food and Drug Administration voted to recommend approval of Abbott's new Xience stent despite uncertainty about the long-term risk of blood clots.
The FDA usually follows panel recommendations, and Abbott has said it expects to launch Xience in the United States in the first half of 2008. Analysts expect Xience to seize the market lead.
Stents are tiny mesh tubes used to prop open arteries after they have been cleared of blockages through angioplasty procedures. Drug coatings were added to newer versions starting in 2003 to help keep the vessels from reclogging.
Doctors have been doing fewer angioplasty procedures since the discovery of a rare but serious risk of blood clots developing months, or more than a year, after stents have been placed.
As a result, analysts said the global market for drug-coated stents has shrunk from about $6 billion to around $5 billion annually.
Stoffel said the Illinois-based company's facilities in Temecula and Clonmel, Ireland, have ample capacity to meet future demand for Xience, which it expects to revive market growth.