Novartis has announced plans to eliminate more than 2,000 jobs over the next four years—most of those in its headquarters country of Switzerland, the rest in the U.K.—as part of a restructuring first announced in 2016.
The pharma giant said its Swiss job cuts would result in a net reduction of approximately 1,000 manufacturing positions. Novartis’ planned 1,500 job cuts in Basel, Stein, Locarno, and Schweizerhalle would be partially offset by 450 new positions in Stein tied to construction of a site for the production of cell and gene therapies.
Novartis also plans to shift another 700 business services positions from Switzerland to any of five service centers worldwide. Those centers are in Dublin; Hyderabad, India; Kuala Lumpur, Malaysia; Mexico City; and Prague. Within those centers, Novartis said, it will begin transferring managerial capabilities, saying that standardization, simplification, and a relevant global service localization strategy will benefit the company over time.
The Swiss workforce reductions would be in addition to the planned shutdown of a manufacturing plant in Grimsby, U.K., which will eliminate approximately 500 jobs—395 employee positions and more than 100 contract worker jobs.
“We are continuing our efforts to transform Novartis worldwide into a more efficient and agile organization that can innovate sustainably and deliver breakthrough medicines to patients,” Novartis CEO Vas Narasimhan said in a statement released in French, according to a translation via Google Translate.
On a conference call, according to Reuters, Narasimhan said Novartis needed to increase the operating profit margin of its Innovative Medicines division to about 35% of sales, up from 31.3% now. The company’s 66 global factories are operating below capacity, he added, following the expiration of patents on some top-selling, high-volume drugs of recent years, including Diovan (valsartan), whose indications include hypertension and heart failure—a reflection of Novartis’ evolution to a developer/marketer of more specialized and pricier biologics and gene therapies.
Narasimhan added that the latest restructuring moves were part of a program first announced in 2016 with the goal of saving the company about $1 billion in annual expenses.
Reducing ‘Overcapacities’
Novartis Chairman Joerg Reinhardt earlier this month told the Swiss weekly NZZ am Sonntag that it would streamline its production operations to reduce “overcapacities,” citing in part a 1–2% reduction in U.S. drug sales blamed on increased discounting.
Narasimhan insisted that Novartis would retain a strong presence in Switzerland, where the company employs 12,800 staffers and is headquartered in Basel.
That’s part of an overall company workforce of approximately 124,000. That number is projected to shrink to below 100,000 by 2022, reflecting in part Novartis’ spinout of its Alcon eyecare business, slated for completion next year.
The spinout of Alcon, whose headquarters would shift from Fort Worth, TX, to Geneva, and the job cuts in Switzerland and the U.K. follow a series of other cost-cutting moves by Novartis over the past year. These include the elimination of 450 jobs through the shutdown of a manufacturing plant for Novartis’ Sandoz generic-drug unit in Broomfield, CO; elimination of about 140 jobs by ending the Novartis Institutes for BioMedical Research early-stage anti-infectives research programs, and additional job cuts in Japan.
Novartis has committed to maintaining 10% of its worldwide workforce in Switzerland, creating new technology platforms and investing more than CHF 3 billion ($3.1 billion) in R&D each year.
“The strong commitment of Novartis to Switzerland is not in question. We are proud to maintain our global headquarters, our main R&D center, and advanced manufacturing capabilities that continue to expand.”
Novartis denied the planned shutdown of the 226-acre Grimsby site was related to Brexit in the U.K., which the Medicines and Healthcare Products Regulatory Agency (MHRA) recently predicted would not hamper biopharma innovation, even as an executive of Merck addressing the recent U.K. BioIndustry Association/MHRA Conference has warned of possible drug supply problems due to the expectation of additional regulations affecting manufacturing and supply, as well as clinical trials.
Novartis is one of several pharma giants eliminating hundreds of jobs in recent weeks. Takeda Pharmaceutical is shutting down its 1,000-employee U.S. headquarters in Deerfield, IL—a casualty of the planned £46 billion ($61 billion) acquisition of Shire—and relocating to the Boston/Cambridge, MA, region, where Shire has its U.S. operational HQ in Lexington, MA. And GlaxoSmithKline is eliminating 650 U.S. jobs as part of a restructuring it announced in July.
