Novartis launches initiative with 2,500 job losses

By Katrina Megget

- Last updated on GMT

Related tags: Novartis

Novartis is to sever a further 2,500 jobs as part of a new
initiative aimed to 'improve competitiveness in a dynamically
changing healthcare environment'.

The announcement today follows October's news that more than 1000 positions would be lost in the US in a bid to "strengthen and streamline"​ there. According to a statement released by the company, the move to reduce positions and implement the new initiative, called "Forward" would "enhance productivity by streamlining the organisation and redesigning the way it operates"​. "This will enable Novartis to more rapidly meet the needs of patients and customers by focussing resources on priority activities that include the research and development of new medicines,"​ the company said in the statement. Speaking to, Novartis spokesman John Gilardi said while the initiative aimed to capitalise on the 14 regulatory approvals the company has so far received this year, the move was indicative of current market conditions including pricing pressures, generic competition and increased scrutiny in the approval process. The nine-month financial results released in October tell the story of how the Swiss drug giant has been affected by generic competition - Lotrel (amlodipine and benazepril) sales were down 34 per cent, Lamisil (terbinafine) sales down 31 per cent, while drugs Famvir​ (famciclovir) and Exelon (rivastigmine tartrate) have been involved in patent infringement lawsuits. Meanwhile, Zelnorm​ (tegaserod maleate) was suspended in March, following cardiovascular safety concerns. Forward is expected to provide the company with an annual pre-tax cost saving of $1.6bn in 2010. The loss of 2.5 per cent of the company's full-time positions would help direct the company towards that savings goal. "[The job cuts] are regrettable but at the same time we're doing this in a socially responsible way and believe many cuts can be handled through natural staff fluctuations,"​ Gilardi said. While the areas where the jobs would be lost from were still being evaluated, Gilardi said those most affected would mainly be in the pharmaceutical, consumer health and corporate headquarter sectors. Novartis is not the only big pharma feeling the pinch of the markets, with a long line of companies also slashing jobs and restructuring to save costs. Earlier this year, Pfizer announced it would be reducing its staff by almost 10,000 - 10 per cent of its global workforce - in a bid to save $1bn by the end of 2008. In October, GlaxoSmithKline announced its 'Operational Excellence' restructuring programme which would include plant closures, streamlining production processes, with anticipated job cuts speculated to be in the thousands, all designed to achieve savings of up to $1.4bn by 2010. AstraZeneca is cutting 7,600 jobs; Bayer Healthcare, 6,100 jobs; Johnson & Johnson, up to 4,800 jobs; Bristol-Myers Squibb, 4,300 jobs; and Amgen, up to 2,600 jobs. Roche, Merck, Abbott, King and other smaller companies have also announced job cuts this year. Other restructuring changes under Forward include: the streamlining of corporate functions as well as in the pharmaceuticals and consumer health divisions; the pharmaceuticals sales force will be improved to a more geographic-tailored marketing approach; the Novartis Institutes for BioMedical Research will focus on disease areas with significant new opportunities and review its research activities globally to take advantage of synergies among disease areas and locations to increase efficiency; and the formation of a new cross-divisional operation to accelerate growth in small emerging markets such as Northern and sub-Saharan Africa, Central Asia and parts of Southeast Asia. A pre-tax restructuring charge of approximately $450m will be taken in the fourth quarter of 2007.

Related topics: Novartis, Markets & Regulations

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