Novartis is to axe 1,960 jobs as part of a restructuring of its US operations, prompted by the pending patent loss on its hypertension blockbuster Diovan and predicted lower sales of the blood pressure drug Tekturna/Rasilez.
The Swiss major said its field force will be reduced by 1,630 positions and headquarters functions will be realigned, with 330 other jobs to go. The changes are planned to take effect in the second quarter of 2012 and affected employees will be notified in early April.
The restructuring was prepared to respond to the loss of Diovan (valsartan) expected in the USA in September 2012. However “the plan has been accelerated” after a clinical trial of Tekturna (aliskiren)was halted at the end of 2011 over concerns the drug was linked to an increased risk of stroke and kidney problems in certain patients.
Novartis and regulators are recommending that hypertensive patients should not be prescribed aliskiren-based products for use in combination with an angiotensin converting enzyme inhibitors or angiotensin receptor blockers.
Novartis takes $1.22 billion charges
A “reassessment of the future sales potential” of Tekturna in light of the study results means that Novartis is taking a charge of $900 million (of which $800 million are non-cash) in the fourth quarter of 2011. The job restructuring is expected to result in a $160 million charge in the first quarter of 2012 and Novartis will take a further $160 million charge in the fourth quarter after terminating development programmes for the anti-clotting drug PRT128 (elinogrel) and SMC021 (oral calcitonin).
The moves should result in full-year savings of $450 million as of 2013, about half of which is expected to be realised in 2012. David Epstein, head of Novartis Pharma, said “we recognise that the next two years will be challenging” for the division” and “we are proactively making these changes to further focus our pipeline on the best opportunities and align our market position on our growth brands”.
He added that “these are difficult but necessary decisions that will free up resources to invest in the future of our business”.
