Novartis will cut or transfer up to 4,000 pharmaceutical division jobs worldwide—about 6% of the division’s total 65,200 full-time employees—as part of the cost-cutting effort signaled by CEO Joseph Jimenez less than a month ago, according to an internal email cited by the Swiss newspaper NZZ am Sonntag.
The news report said Novartis will shift to Hyderabad, India, about half the 500 jobs the company said last month it will eliminate from its Swiss operations, in a move expected to cut its labor costs. Back on January 21, Novartis coupled its announcement of Swiss job cuts with an assurance that it would also hire an equivalent number of jobs there in research as well as manufacturing, so that the total number of jobs in its headquarters country would remain stable at about 15,000, after rising by 5% or 750 people in 2013, the fifth consecutive year of Swiss job growth.
In Hyderabad, Novartis will base the jobs shifted from Switzerland in a newly leased business services center that the company said would open in late 2015 or early 2016. According to a January 3 report in the Indian newspaper The Economic Times, a company spokesperson said Novartis has 2,300 employees based in Hyderabad there now, scattered through several sites that the new 8.7 lakh square-foot (870,000-square-foot) facility is intended to consolidate.
The Indian newspaper quoted an unnamed real estate source as saying Novartis plans to base 8,000 employees at the new center.
"Novartis has begun some time ago to incorporate appropriate backoffice and other activities in the Centers of Excellence and Global Business Solution Center. We continue the implementation of this plan,” the company is said to have stated, according to the internal email quoted by NZZ, translated into English via Google Translate. “The number of internal positions which are now being resettled in Novartis service centers or from third parties will rise as a result."
Hyderabad will also serve as a base for employees specializing in drug development and in the development and monitoring of clinical trials, as well as for data management tasks in IT and human resource management, NZZ reported.
In the email, Novartis justified the job cutting and shifting by saying it would “ensure the necessary funds for the large number of planned product launches and other growth areas” contemplated in 2014, by enabling the company, “especially in the pharmaceuticals division, to free up resources, prioritize, and redistribute.” The overall global workforce will likely stay stable at 135,700, according to the Swiss news report.
The shift of jobs to India is Novartis’ third key job-cutting move in less than a month. The same day it announced the Swiss job restructuring, Novartis confirmed it will shut down a manufacturing plant in the New York City suburb of Suffern, NY, affecting all of its roughly 525 employees. The company told GEN than the 2012 patent expiration of antihypertensive treatment Diovan (valsartan) was an important factor in its decision.
In releasing fourth-quarter and full-year 2013 financial results last week, Novartis said it anticipates losing $3 billion in sales this year if Ranbaxy launches a generic monotherapy version of Diovan in the United States during the second quarter. Ranbaxy hoped to do so in 2013, but the FDA barred the Indian company from importing to the United States ingredients from plants that could, the agency said, compromise product quality.
Addressing the JP Morgan 32nd Annual Healthcare Conference in San Francisco on January 14, Jimenez said the company would control costs in order to improve margins over the coming year: “Our intent is to increase the margins over time, and not five years from now, but starting now.”