Switzerland’s Novartis has announced plans to cut around 2,500 jobs over the next two years in a bid to improve competitiveness “in a dynamically changing healthcare environment”.
The job cuts, which correspond to around 2.5% of the Basel-headquartered firm’s workforce, will lead to annual savings of $1.6 billion by 2010, the company said. As part of the restructuring, Novartis will take a restructuring charge of $450 million in the fourth quarter.
The news comes just a couple of months after Novartis announced the elimination of more than 1,250 sales and marketing jobs in the USA, leading to savings of around $230 million.
Novartis, which is gathering these initiatives together under the title ‘Forward”, said the steps will simplify working processes and decision-making by “eliminating layers, concentrating on core activities and systematically capturing growth opportunities, particularly in emerging markets”. The firm said that the project will “further enable Novartis to prepare for a new growth cycle in pharmaceuticals expected to emerge in the second half of 2008”.
Chief executive Daniel Vasella said that “we have taken the opportunity given the short-term down-cycle in our pharmaceuticals business to initiate this project”. He added that this will “simplify our organisation and redesign the way we operate”.
Novartis has been forced to act by the increasingly challenging industry conditions, the firm says, including “continuous price pressures on drugs, increasing R&D costs, a risk-averse regulatory environment and more aggressive generic competitors”. The cuts will be made primarily in general management and administration and the “effectiveness of the worldwide sales forces will be improved with a more geographic-tailored marketing approach”, Novartis added.
