Novartis to cut 2,550 jobs in Switzerland, UK in profit push

Novartis will cut 2,550 jobs in Switzerland and Britain over four years, it said yesterday, as the Swiss drugmaker strives to boost profits and focus on new medicines. Switzerland will bear the brunt, with 2,150 cuts planned at four factories and its Swiss-based business services unit. Some 400 jobs will also go in Grimsby, northeast England, where the company will close a plant that makes pills. Novartis currently employs around 124,000 people worldwide. But following the planned spin-off of eyecare unit Alcon in early 2019, that will fall to fewer than 100,000 people by 2022, Chief Executive Vas Narasimhan said. Novartis's network of 66 global factories is operating below capacity after the expiry of patents on high-volume pills such as Diovan for heart disease, he added. As the company shifts to gene therapies and biologics like arthritis treatment Cosentyx, Narasimhan said the cuts were needed to help him boost the drugs unit's operating margin to around 35 percent of sales, what he calls the industry standard, from 31.3 percent now. Unions blasted the move, saying the Swiss pharmaceuticals industry would be the worse for it.

"There will be massively damaging side effects for Swiss workers, the drug industry and Switzerland's export economy," Employees Switzerland wrote in a statement. "We're not going to let Novartis destroy Basel as a center of industry."

Narasimhan, whose company's net income rose 15 percent last year to $7.7 billion, is seeking to transform Novartis from a traditional pills maker to a maker of cutting-edge therapies like its $475,000-per-patient Kymriah cancer treatment. He announced the sale of a U.S. generics drugs business last month to India's Aurobindo and a consumer healthcare joint venture to GlaxoSmithKline earlier this year. Meanwhile, he spent $8.7 billion to take over U.S.-based Avexis to get its experimental gene therapy against potentially deadly spinal muscular atrophy that is nearing a filing for U.S. approval. The cuts join those at other drugmakers: 1,000 Takeda workers will be affected as it moves a U.S. headquarters, while GlaxoSmithKline is axing 650 U.S. jobs. Severin Schwan, CEO of Novartis's crosstown rival Roche, said this month he also had his eyes on costs as his top-selling medicines face incursions from cheaper copies.