QIAGEN launches restructuring plan; 8% to 10% of workforce faces chopping block

VENLO, The Netherlands—QIAGEN N.V. has announced the launch of what it calls a "project to enhance productivity by streamlining theorganization and freeing up resources for reallocation to strategicinitiatives that will help drive growth and innovation, strengthen itsindustry leadership position and improve longer-term profitability."

Chances are most other people, including employees, will be calling this a "restructuring plan" rather than a "project."

The effort is aimed at eliminate organizational layers and overlappingstructures, actions that QIAGEN says will enhance its processes, speed andproductivity. The vast majority of savings will be reinvested intostrategic initiatives that focus on driving the success of automationplatforms, the company says, particularly the global rollout of QIAsymphony RGQ, addingcontent to QIAGEN's test menu and expanding QIAGEN's geographicpresence, especially in high-growth emerging markets.

These actions, which will be implemented in 2011 and 2012, "areintended to further improve QIAGEN's strong competitive positions in themolecular diagnostics and life sciences markets amid fast-changingconditions." It also means that implementation of the plan during this rest of this year and in 2012 will result in 8 percent to 10 percent of the roughly 3,800-strong global workforce being laid off.

"QIAGEN has undergone a significant transformation in recent years,successfully building up a strong presence in molecular diagnostics andthe life sciences by leveraging our leadership in Sample & AssayTechnologies," said Peer M. Schatz, CEOof QIAGEN. "Strategic initiatives are in place to drive the nextwave of growth at QIAGEN. Against a background of short-term challengesin both our business and the industry, we have initiated this project towork more efficiently and reallocate additional resources to theseinitiatives and prepare for future growth. The emerging opportunitiesand the speed at which the environment has changed led us to acceleratethese plans and take action."

Targeted actions, according to Schatz, include the following:

Organizational structures will be streamlined throughout QIAGEN, andduplications between global, regional and local activities will beeliminated.

R&D activities will be focused on high-growth areas in allcustomer classes. Important to this strategy is greater focus on drivingplatform success and expanding the menu of regulatory-approved tests torun on QIAGEN's automation platforms. Some R&D programs will bediscontinued in order to place greater priority on the most importantprojects.

QIAGEN will optimize capacity utilization at selected locations inorder to increase production efficiency and leverage investments thathave already been made. Improving site utilization will also result inchanges for other functions.

Initiatives are under way to capture savings from the expansion ofshared service functions, including administration functions,procurement and data processing, that will provide greater economies ofscale. Certain non-core support activities are also planned to beoutsourced.

QIAGEN maintains that allstaffing reductions "will be handled in a socially responsible manner with fairand respectful treatment of employees. QIAGEN will consult with workscouncils and fully comply with local labor laws."

Implementation of the restructuring plan is expected to generate annual pre-tax cost savings of approximately $50 millionstarting in 2012, "with the vast majority of savings to be reinvestedinto areas of focus as defined by QIAGEN's strategic initiatives".

Apre-tax restructuring charge of approximately $70 millionwill be taken in the fourth quarter of 2011, of which 30 percent is expectedto involve cash-related charge components. QIAGEN doesn't expect this restructuring charge to have an impact on its outlook for adjusted earningsin the fourth quarter of 2011 or for the second half and full-year2011. QIAGEN further anticipates taking a pre-tax restructuring chargeof approximately $20 million during 2012(which is expected to include mostly cash-related charge components) foradditional restructuring measures related to this program, and whichwill generate additional annual cost savings.