The moves will cost about $235 million to $260 million this year, and save the company about $100 million in 2007 and each year beyond, the Kenilworth, New Jersey-based drugmaker said in a statement.

The plant at Manati, Puerto Rico, will close by the end of 2006, the company said.

Schering-Plough, developer of the Claritin and Clarinex allergy drugs, has been working on a long-range turnaround program since Claritin lost patent protection in 2002, leading to three years of losses.

Refocused on cardiovascular drugs, the company enjoyed a return to full-year profitability in 2005, earning $269 million. The streamlining effort "is a modest positive for Schering," wrote analyst Chris Shibutani of J.P. Morgan Securities in a research report Thursday.

"Given the low plant utilization (and unfavorable mix) that was a substantial reason for low gross margins, manufacturing streamlining was the logical next step," he wrote.

The company's shares rose 57 cents, or 3 percent, to $19.63 at 4 p.m. in New York Stock Exchange composite trading.

`Transforming the Company'

Chief Executive Officer Fred Hassan, who joined Schering in April 2003, said in the company statement that the cuts are designed "to transform this company into a high-performance competitor for the long term." Schering is the eighth-largest U.S. drugmaker by sales.

About 550 full-time positions will be eliminated at the Manati plant, which makes Nasonex, an allergy spray, and Afrin, an over-the-counter decongestant.

A further 50 jobs will be cut at a plant in Las Piedras, Puerto Rico, which will continue to operate, employing 475 people. That plant makes Zetia, for cholesterol control; Clarinex, an allergy medication; and Rebetol, for hepatitis B.

About 500 jobs will be cut in New Jersey factories in Kenilworth and Union, the statement said. Schering will continue to employ about 7,000 people in that state, and plans to add research and development jobs.

All employees will receive a severance package and outplacement services, the company said.

Timothy Anderson, an analyst with Prudential Financial, said in a research note today that he hadn't anticipated "much in the way of cost-cutting flexibility. We continue to like the Schering story."

Consent Decree

The manufacturing changes have "nothing to do with the consent decree" that the company entered into with the U.S. Food and Drug Administration in 2002, spokeswoman Rosemarie Yancosek said in a telephone interview Thursday.

The FDA fined Schering $500 million and required it to make 212 remedial steps and take 30 validation actions to fix manufacturing quality problems. Those issues were resolved by the end of 2005, Yancosek said.

Given that history, "maintaining quality will be the most important task associated with the manufacturing streamlining," J.P. Morgan's Shibutani said.