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Just hours before a scheduled meeting with analysts and investors, Bristol-Myers Squibb Co. (BMY) announced they will be laying off about 10 percent of its workforce through the closing down of up to half of its manufacturing plants by 2010. They said in a statement that they've already begun the process of letting some workers go.

The major reason for the move is to redirect capital toward its product pipeline through partnerships and acquisitions; specifically in the specialty and biologic pharmaceuticals related to categories like diabetes and cancer.

Bristol-Myers employs about 43,000 workers, and the layoff will result in around 4,300 jobs cut. The company figures they'll save about $1.5 billion in pre-tax savings by 2010.

Costs related to the restructuring will come in at between and estimated $900 million and $1.1 billion pre-tax dollars. Of that, $300 million is expected to be against its 2007 results, while another $400 million to $500 million will be incurred in 2008.

Including the costs for the initiative, the company changed its guidance for 2007, seeing earnings per share dropping to $1.15 to $1.20, instead of the original projection of $1.28 to $1.33. At the same time, adjusted earnings per share is expected to come in at the top end of the $1.42 and $1.47 estimated earlier in the year.

The company also said another part of the long-term strategy is to cut back on its mature products, while continuing to concentrate on developing new therapies related to metabolic and cardiovascular problems. They are looking at cutting about 60 percent of its older products from their portfolio by 2011.

Much of that is connected to the generic drug market which puts pressures on the growth of the older products.

Summing up the overall problems in the industry, last week Deutsche Bank analyst Barbara Ryan rightly commented, "The business is changing pretty rapidly and the cost structure out of the industry is out of sync. You have a pretty violent loss of earnings from patent expirations and therefore an inherent cyclicality to the earnings. The industry needs to find ways to be more efficient and also to make its cost structure more flexible."
 
With the pharmaceutical division accounting for about 80 percent of the company's overall sales, they are looking at getting rid of other divisions not related to pharmaceuticals. Mead Johnson, ConvaTec and their medical-imaging unit are the primary names being thrown out as probabilities.

Estimates are they could get about $10 billion for units not related to their core business.