NEW YORK (AP) -- Shares of drug maker Schering-Plough rose in premarket trading Thursday after the company announced job cuts that are expected to reduce spending by $1 billion per year.
On Wednesday, the Kenilworth, N.J. company said it will eliminate about 10 percent of its 55,000 employees. Most of the layoffs are expected to take effect before 2010. Analysts said the job cuts are a response to clinical studies that question the effectiveness of the company's cholesterol drugs.
Schering-Plough Corp. gets most of its profits from a joint venture with Merck & Co. The companies sell the drug Vytorin together.
The stock rose 24 cents to $14.10 in premarket trading. Shares closed at $13.86 Wednesday.
Deutsche Bank analyst Barbara Ryan said the move will boost Schering-Plough's profits, but she said the company is now relying on cost cuts instead of sales growth to increase the bottom line.
Schering-Plough announced a smaller round of job cuts in November. It expects to save about $500 million per year from those moves.
