Will close 2 R&D sites and reduce redundancies
Elanco Animal Health Inc. will eliminate 350 positions around the world as part of its next step of restructuring to improve operational efficiency.
In a press release on January 26, the company said it would consolidate research and development (R&D) activities and would close R&D sites in Manukau, New Zealand, and Cuxhaven, Germany. It also said it would reduce duplication and optimize structures in U.S. operations, marketing, manufacturing and quality central functions and administrative areas, resulting in the elimination of approximately 350 jobs.
“With a number of milestones achieved since IPO, including the Bayer acquisition, today’s actions are the next step in our commitment to drive operational efficiencies and deliver attractive returns,” said Jeff Simmons, Elanco president and CEO, in the release. “As we start 2021, our team is clear on their priorities and brings momentum as we continue to execute and deliver against our expanded and strengthened (innovation, portfolio and productivity) strategy.”
Elanco said it expects the restructuring to save the company between US$20 million and US$24 million in 2021 and between US$45 million and US$50 million in future years.
The company expects to record charges of between US$58 million to US$77 million in connection with this restructuring, with US$55 million to US$70 million in severance and other cash charges and the balance in asset impairments and other non-cash charges. Elanco expects to recognize between US$58 million to US$70 million of the total restructuring costs in the first quarter of 2021 with the remaining amount recognized over the balance of 2021.
Elanco has previously said it aims to achieve US$300 million in cost efficiencies by the end of 2023.
In September 2020, Elanco announced a restructuring that would eliminate 900 jobs in 40 countries. In December 2020, it said it would establish global consolidated operations in Indiana, anchored by a new streamlined fit-for-purpose global headquarters in downtown Indianapolis.
Elanco will announce its fourth quarter 2020 financial results on February 24.