ALLERGAN EYE CARE R&D, BUSINESS PLANNING CONSOLIDATION
ALLERGAN EYE CARE R&D, BUSINESS PLANNING CONSOLIDATION will create two main operating units with worldwide responsibility for research, business development and strategic market planning. Allergan's new Therapeutics Group will handle the development of the firm's drug and surgical products, while the Optical and Consumer Eye Care Group will develop and devise market strategies for contact lenses, lens care and OTC products. Heading the new units will be two Allergan management veterans. Effective March 31, the Therapeutics Groups will be headed by Robert Bishop, who has worked in both the firm's pharmaceutical and surgical businesses. Michael Donohoe will move from his current position as general manager of the firm's contact lens group to head Allergan's Optical and Consumer Eye Care Group. Allergan Chairman Gavin Herbert noted that the goal of the restructuring "is to reduce selling, general, and administrative expenses as a ratio to sales by four points over three years." Resources derived from the reductions in operating expense will be reinvested "toward acceleration of new product development and entry into new specialty areas." The reconfiguration is the second phase of an Allergan reorganization begun after the firm was spun- off from SmithKline Beckman in July 1989. The company is also restructuring its worldwide marketing operations into four geographic regions: Europe, PanAsia, North and South America and Japan. Each regional bureau will be responsible for implementing marketing strategies developed by the two new operating groups. The firm says it anticipates that approximately 300 sales people will be working in each of the four regions, and that it will continue to use both direct sales personnel and distributors. Heading the London headquarters of the European region will be David Bruns, currently president of the international division. Richard Haugen, who is currently leader of the firm's pharmaceutical and optical divisions, will head the Americas division from the firm's corporate headquarters in Irvine, California. In Tokyo, Japanese marketing operations will be headed by Edward Danse, while Warren Brainard will oversee business in the PanAsian region, which includes southeast and northeast Asia, Australia, New Zealand, and parts of northern and southern Africa, and India. Danse and Brainard currently are both on the firm's international management team. These appointments also take effect March 31. Previously, Allergan's eye care business was handled through five separate divisions. Allergan Pharmaceutical handled the firm's prescription and OTC drug lines. Allergan Medical Optics developed and manufactured intraocular lenses, surgery-related pharmaceuticals, surgical equipment and disposables. Allergan Optical was the firm's division for contact lenses and lens- related products. The firm's fourth eye care division, Allergan International, will be subsumed by the two new operations and the Allergan Humphrey division, which manages Allergan's micro-processor-based ophthalmic diagnostic systems, will continue under its current structure. The firm's skin-care division, Herbert Laboratories, is not part of the current restructuring and will continue to operate separately. Under the first phase of restructuring, the firm reduced its total work force by about 7%. While the specific areas to be cut are still being discussed, the firm say it expects to lay off an additional 7% of its current 6,344 employees in the next year. In the fourth quarter of 1989 the firm took a one-time charge of $ 22.8 mil. toward the restructuring, but has taken no such charges in 1990 and does not plan to do so in 1991. Allergan reported 1990 net earnings of $ 25.3 mil. as compared to a loss of $ 10.2 mil. for the same period in 1989, which included the firm's nonrecurring charge of $ 22.8 mil. Revenues were up 16% over 1989, with net sales climbing from $ 211.5 mil. in 1989 to $ 245.4 mil.
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