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Cardinal Health consolidates businesses to reduce costs and focus resources

Cardinal Health : 08 July, 2008  (Company News)
Cardinal Health is to consolidate its businesses into two primary operating and reporting segments to reduce costs and align resources with the specific needs of each segment.
Cardinal Health’s network of pharmaceutical and medical product distribution centres and nuclear pharmacies will form the Healthcare Supply Chain Services segment, led by vice chairman George S Barrett. With annual revenue of more than $80 billion, this segment serves customers in North America with efficient and secure distribution services for prescription medicine and medical products.

Industry leading products for infusion, medication dispensing, respiratory care and infection prevention will be grouped in the Clinical and Medical Products segment under the leadership of vice chairman David L Schlotterbeck. With annual revenue of approximately $5 billion, this segment serves global customers with clinically differentiated products used in hospitals and other primary care facilities.

The segments will be connected by a lean corporate organization and Cardinal Health’s hospital sales force.

With these changes, the company will reduce its workforce by approximately 600 positions under a restructuring charge of approximately $63 million, the substantial majority of which it expects to recognize in the current fiscal year, which began July 1. Of those positions, about 160 are currently open and will not be filled. Employees affected will be offered severance benefits.

“Through this restructuring, we sharpen our focus on two distinct, large and growing segments of the health care industry by aligning our resources, reducing costs and helping to speed decision making for our customers,” said R Kerry Clark, chairman and chief executive officer of Cardinal Health. “In many ways, these changes formalise the organization we began to put in place 18 months ago and will make us a stronger company that has a greater focus on both our supplier-customers and provider-customers, with a goal of creating more value for shareholders.

“In fiscal ’09, we remain committed to the turn-around of our pharmaceutical supply chain business, as we continue to strengthen our medical supply chain business, invest in an innovative pipeline of clinical products and ensure we have strong regulatory compliance programmes in place across the company. We will also continue to optimize our portfolio to strengthen the core business. In all, we will do fewer things exceptionally well, all under our mission to make health care safer and more productive.”
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