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CALIFORNIA / News and Insight on Business in the
Golden State

Allergan to Cut 550 Jobs, Close Five Factories

September 16, 1998|BARBARA MARSH | TIMES STAFF WRITER

Allergan Inc. said Tuesday that it will cut 550 jobs, or 8.9% of its work force, and shut five of its 12 factories in an effort to slash costs and boost profit.

The Irvine-based manufacturer of eye-care and skin-care products and drugs said it will lay off 110 employees at its corporate headquarters and close a factory on the 28-acre site near the John Wayne Airport.

About 75 local corporate employees and 35 factory workers will lose their jobs over the next three years. The factory's production of skin-care products will be sent to other manufacturers, officials said.

Allergan will take a pretax charge of about $103 million in the third quarter for costs of the restructuring. It also may take $10 million in charges in the fourth quarter.

David Pyott, the company's chief executive, said Allergan is being trimmed down so that it can move more quickly to bring new products to market ahead of its rivals.

"Before I started here, I looked at our overhead and it was pretty high compared to the competition," said Pyott, who joined Allergan in January.

Allergan--which last year posted profit of $128.3 million, or $1.97 a share, on sales of $1.1 billion--has struggled like other medium-sized drug companies to compete against both the industry's global giants and small, emerging biotech companies.

Pyott said he expects that the cuts will be sufficient to prepare the company for the future.

Analysts said the reductions reflect promises by management earlier this summer to take strong action to improve Allergan's financial performance. Allergan's stock has climbed from $44.56 a share June 16 to $59.06 on Monday. On Tuesday, it retreated $2.94 to close at $56.13 on the New York Stock Exchange.

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