Novartis to Cut 4,000 Jobs as Part of Restructuring Move



Novartis AG (NYSE:NVS) is continuing its cost cutting, this time by cutting or transferring up to 4,000 jobs, or approximately 6 percent of its workforce, according to a Reuters report Monday. Novartis, along with many competitors in the industry, has been challenged to reduce costs due to pressure from investors to restructure as patent expirations continue to sink sales of many companies best selling drugs and governments around the world try to reduce health costs.

The company’s best selling blood pressure drug, Diovan, for instance, will soon face competition from generic manufacturer Ranbaxy Laboratories, as soon as the regulatory delays for the generic version are surpassed. The company was hoping to win approval for a number new drugs this year, including serelaxin, a heart failure drug, which has since failed to win approval in Europe, and secukinumab, a treatment for moderate to severe plaque psoriasis, which has yet to be reviewed.

Spokesman Eric Althoff said the measures “reflect the need to respond to a dynamically changing healthcare environment” and that he expects that “an equal number of jobs will be created as are reduced.” Althoff also emphasized that that Novartis’ intention is to prioritize; the company wants to reallocate its resources in order to focus on planned product launches and other growth areas.

Earlier reports from Reuters said that Novartis was planning on adding several hundred positions in certain departments, such as oncology development, over-the-counter manufacturing, and supply chain management at its generics unit, per Reuters.

As part of the company’s consolidation strategy, the company says it plans to move its existing operations in Hyderabad, India to a business services center; thus, a number of the new jobs Althoff mentioned — along with the jobs that are being transferred — will likely be moved to India. ”The new center is expected to open in late 2015 or early 2016 and will bring together Novartis operations that are currently spread across three sites in Hyderabad as well as provide future growth,” a Novartis statement claimed, according to Reuters.

Novartis’ other efforts to reduce costs include its current review of its over-the-counter, animal health and vaccines businesses, which aren’t as large as its global pharmaceutical operation. Reuters reports that Novartis posted lower-than-expected core earnings per share last week.