Forest Laboratories Inc. (FRX) outlined plans to trim $500
million in costs by 2016, while scaling back its research and
development efforts and reducing its work force.
The company said about $270 million of the savings will come
from streamlining and realigning its research and development arm,
while $150 million will result from cutting marketing expenses,
with the remaining from reducing general, administrative and other
expenses.
The moves comes as new Chief Executive Brenton Saunders puts his
stamp on the company and follows similar plans by the others in the
pharmaceutical industry to scale back R&D spending as the
companies put less emphasis on in-house efforts to develop
potential blockbuster drugs.
Like its peers, Forest Labs has lost market exclusivity on major
drugs, including its antidepressant Lexapro, but has managed to
drive up sales with the development of new drugs and licensing
opportunities. It named Mr. Saunders -- formerly head of Bausch
& Lomb Holdings Inc. -- as CEO in September.
Forest said about $110 million in cost cutting will come from
"headcount savings," although sales staff and employees involved in
late-stage R&D won't be subject to those cuts. The company
didn't outline how many jobs it intends to eliminate.
Forest said it hopes to achieve 60% to 75% of the cost savings
by 2015.
The company also unveiled plans Monday to launch a $1 billion
debt offering and a share buyback of the same amount.
Separately, Forest Labs agreed to acquire exclusive U.S. rights
to Merck & Co.'s (MRK) sublingual tablets for adults with
schizophrenia and bipolar disorder for $240 million upfront, plus
potential milestone payments.
Forest's shares were up 3.3% to $52.99 in premarket trading.
Shares are up 45% year-to-date from Friday's close of $51.31.
Write to Everdeen Mason at everdeen.mason@wsj.com
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