Mallinckrodt reports restructuring

June 29, 1994

The slowdown in the medicalimaging market appears to have caught up with pharmaceutical firmMallinckrodt Medical. The company's parent, Mallinckrodt Group,is restructuring the division to respond to changes driven byhealth-care reform. Mallinckrodt

The slowdown in the medicalimaging market appears to have caught up with pharmaceutical firmMallinckrodt Medical. The company's parent, Mallinckrodt Group,is restructuring the division to respond to changes driven byhealth-care reform.

Mallinckrodt Group's medical unit has traditionally been oneof the strongest performers in the company's three divisions,which include chemical and veterinary businesses. The companyexpects Mallinckrodt Medical's sales and earnings this year togrow 15% over last year, despite increased price discounting anda moderation in the pace of sales growth.

St. Louis-based Mallinckrodt Medical has decided to slim downto adapt to the increasingly competitive health-care environment,however. The company will shed about 10% of its 5000 employeesworldwide. Mallinckrodt Medical will begin implementing the programearly in fiscal year 1995 (end-June), with the program completedby 1996.

The restructuring is expected to save Mallinckrodt Medical$40 million a year. Short-term, however, Mallinckrodt Medicalwill take a one-time pretax restructuring charge of $80 millionin the fourth quarter.

A first step in the restructuring will be a revamping of MallinckrodtMedical's U.S. sales structure. The company's five divisionalsales groups will be replaced with a unified sales organizationheaded by a senior executive.