Novartis said today the patent expiration of Diovan (valsartan) was an important factor in the company’s decision to shut down by 2017 its manufacturing plant in the New York City suburb of Suffern, NY, affecting about 525 employees—the latest in a series of cost-cutting moves by the pharma giant in recent months.
Novartis spokeswoman Julie Masow told GEN this morning the company was responding to the 2012 loss of patent exclusivity for the antihypertensive treatment and other changes in its U.S. portfolio of marketed products, which she said “have significantly reduced the future production demand on the Suffern site.”
“Consequently, the site’s future volumes would be significantly below the minimum required to operate it cost-effectively. As such, Novartis has made the difficult, but necessary, decision to close pharmaceutical operations in Suffern,” Masow said. “This difficult decision was a strategic choice made to optimize our manufacturing infrastructure.”
Novartis plans to begin the shutdown of the site, which specializes in pharmaceutical operations for the Novartis Pharmaceuticals unit, in phases starting in the second quarter of this year, and continuing until the first quarter of 2017. Some staffers that have “necessary” functions will be transferred to other facilities, Masow said.
“All impacted associates will be treated fairly and with respect. Where possible, associates will be redeployed to other Novartis sites. A comprehensive support package aligned with the company policy will be available as well as outplacement and other support services,” Masow said. “The company will also make every effort to identify open positions at other locations and communicate these opportunities to our associates.”
Novartis’ closest sites to Suffern, according to its website, include offices for its pharmaceuticals and Sandoz generics/biosimilars units and companywide or group offices in East Hanover, NJ; a pharmaceutical plant in Morris Plains, NJ; Sandoz sales and marketing offices in Florham Park, NJ; a Sandoz manufacturing site in Hicksville, NY; and Sandoz offices in Melville, NY.
The Suffern shutdown, she added, is part of Novartis’ global strategy to create manufacturing centers of excellence worldwide. The strategy, unveiled in 2010 by CEO Joseph Jimenez, is intended to better support the company’s future product supply chain and maximize productivity.
The creation of those centers, according to Masow, is an ongoing evaluation that helps to ensure Novartis has the right production capacity in place to meet market demand and support its products and pipeline.
Novartis’ Suffern plant shutdown is the latest of moves by the company to contain costs by cutting back some operations. Addressing the JP Morgan 32nd Annual Healthcare Conference in San Francisco last week, Jimenez said the company would control costs in order to improve margins over the coming year.
Just yesterday, Novartis said it will eliminate up to 500 pharmaceutical division support jobs this year in its headquarters country of Switzerland, but create an equivalent number of jobs there in research as well as manufacturing.
The company in November sold its blood transfusion diagnostics unit to Grifols for $1.675 billion. Also that month, Novartis said it planned to eliminate some 500 R&D positions companywide while adding 175 jobs in Cambridge, MA, where the pharma giant has its research headquarters. The R&D restructuring entails the shutdown of a cancer research program in Emeryville, CA; a respiratory R&D site in Horsham, West Sussex, U.K.; a biologic development site in San Diego; and a dermatology research site in Vienna.
Late last year, Novartis began eliminating jobs in Emeryville, the site of its vaccines and diagnostics division. News of job cuts at Emeryville was first reported by GEN in October.