Novartis to cut 2,550 jobs in Switzerland

ZURICH (Reuters) – Novartis (NOVN.Swill cut 2,550 jobs in Switzerland and Britain in four years, said Tuesday the Swiss pharmaceutical group, which strives to boost profits and focus on new drugs.

Switzerland will suffer the consequences, with 2,150 planned reductions in four plants and its business service unit based in Switzerland. Some 400 jobs will also go to Grimsby, in northeastern England, where the company will close a pill manufacturing plant.

Novartis currently employs around 124,000 people worldwide. But after splitting the Alcon Eye Care Unit in early 2019, that figure will drop to less than 100,000 by 2022, said General Manager Vas Narasimhan.

The network of 66 global factories Novartis operates below capacity after expiry of patents on high volume pills such as Diovan for heart disease, he added.

While the company is turning to gene and biological therapies such as arthritis treatment, Cosentyx, Narasimhan said the cuts were needed to increase the operating margin of the drug unit to about 35% of sales, compared to 31%. , 3% currently.

"Our drug portfolio is moving from high-volume products to more specialized, more personalized, innovative drugs," the 42-year-old US doctor told reporters.

"We do not need the same scale that we have always needed. That's the evolution you see in our portfolio, and it's reflected in our manufacturing footprint. "

The unions launched the move, claiming that the Swiss pharmaceutical industry would be the worst for it.

"Swiss workers, the pharmaceutical industry and the export economy of Switzerland will suffer perverse effects," Employees Switzerland said in a statement. "We will not let Novartis destroy Basel as an industrial center."

MORE SOON?

Narasimhan, whose net income from the company rose 15 percent last year to $ 7.7 billion, is looking to turn Novartis into a leading-edge therapeutics company like its $ 475,000 Kymriah cancer treatment per patient.

He announced the sale of a US generic drug company last month to the Indian Aurobindo (ARBN.NS) and a general health care joint venture at GlaxoSmithKline (GSK.L) earlier this year.

At the same time, he spent $ 8.7 billion to take over US-based Avexis for his experimental gene therapy against life-threatening spinal muscular atrophy that is about to be approved by the United States. .

The cuts are added to those of other pharmacists: 1,000 Takeda (4502.T) workers will be affected as they move a seat in the United States, while GlaxoSmithKline cuts 650 jobs in the United States.

Severin Schwan, CEO of Roche, Novartis competitorROG.S), said this month that he was also staring at costs, his best-selling drugs facing incursions from cheaper copies.

The restructuring of Novartis is part of a program announced in 2016 to save about $ 1 billion a year, Narasimhan said. Previous moves included the closure of a US tabletting plant in Colorado, which resulted in the loss of 450 jobs and layoffs in Japan.

The company did not announce the cost of the last cuts, but said it would take charges over the four-year period.

The net effect of the restructuring is the loss of about 2,100 jobs, said Novartis, taking into account the new positions it creates in Swiss establishments to be built soon to manufacture Kymriah.

Novartis shares rose about 0.8% at 09:00 GMT.

Analysts said the measures were in line with expectations – this month, Novartis chairman Joerg Reinhardt hinted that they were coming.

"The company's ambition to offer EBIT margin (profit before interest and taxes) in the mid-1930s in Innovative Medicines requires productivity programs," said Michael Leuchten, an analyst at UBS.

"We believe that the above will not be the last program to be announced."