Novartis Announces Further Job Cuts

Swiss pharmaceutical Novartis AG (NVS) said Thursday it will slash 2,500 jobs around the world, or 2.5% of its workforce, as part of a broader restructuring. "We have taken the opportunity given the short-term down-cycle in our pharmaceuticals business to initiate this project," said CEO Daniel Vasella. "This will simplify our organization and redesign the way we operate." Novartis will take a restructuring charge of $450 million in Q4, but the cutback is expected to result in annual savings of $1.6 billion by 2010. Three months ago, the company said it was cutting 1,200 marketing and sales posts in the U.S. (full story).

The new job cuts will be in management, research and sales positions. Novartis has had to contend with a delay in its diabetes drug Galvus, the withdrawal of irritable bowel treatment Zelnorm, and the failure of the Prexige painkiller to win regulatory approval. Generics, meanwhile, are eroding sales of heart treatment Lotrel and antifungal drug Lamisil. "In general, now is not a good time in big pharma," said Denise Anderson of Landsbanki Kepler. "Sales and profitability are slowing, and the company doesn't see it as a short-term thing." AstraZeneca (AZN), Pfizer (PFE) and GlaxoSmithKline (GSK) are also cutting jobs in an effort to save money in the face of product delays, sales slowdowns and rising competition.

Sources: Press release, Bloomberg, Reuters, Wall Street Journal

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