Novartis Sales Force Job Eliminations a Cause for Concern

| About: Novartis AG (NVS)

Just eight days after declaring that thousands of jobs would not be eliminated (see this), Novartis (NYSE:NVS) has announced plans internally to eliminate 1,400 sales positions from its field force; 1,150 are coming from primary care, which is being slimmed down to three units from four in the US, and another 250 from psychiatric and neuroscience. No US headquarters staff are being affected.

Novartis had attempted to dampen speculation that a huge bloodletting was imminent after Roche (OTCQX:RHHBY) disclosed plans to axe 4,800 jobs worldwide (back story) and, in fact, Joe Jiminez, the CEO, had written on his internal blog that news reports about big layoffs were inaccurate. Technically, the Novartis reduction is not in the thousands, but the number is still large and, essentially, confirms concerns that have been expressed over the past month at CafePharma, the online forum where reps dish the dirt (look here).

Those concerns were well founded, given the recent statement issued by Jimenez more formally.

“With the pharmaceuticals portfolio shifting to a greater percentage of specialty care business, Novartis will continue to optimize its marketing and sales spending by reallocating resources geographically as well as simplifying current processes,” according to the Nov. 17 press release, which noted that marketing and sales spending has declined to 25.2 percent of sales from 29.2 percent in 2007.

UPDATE: In response to a request for comment, Novartis sent a statement that does not appear on its web site, but notes a one-time cost of $85 million.

Disclosure: None