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Despite falling prices in the United States, Novartis plans to increase its operating margin. And the Swiss drug major plans to achieve that by streamlining its worldwide production, as also by cutting jobs, Jörg Reinhardt, the chairman of Novartis said in an interview with a Swiss newspaper.
Reinhardt said Novartis wants to streamline its production sites and administration worldwide.
“This will affect various plants globally and will also have an impact on Switzerland,” Reinhardt said. The impact will be felt not only at company headquarters in Basel but probably also in the Aargau plant in Stein, where 2,000 employees still produce many medicines using traditional methods, according to the newspaper.
Reinhardt justified the cost reduction plans citing the drop in net prices in the US over the past year. Proceeds from the sale of drugs in its key US market dropped by 1 to 2 percent last year. This was due to the discounts pharma companies have to grant large buyers to sell their drugs in the US. Since Novartis generates half of its profits in the US, this decline is significant.
Meanwhile, Israeli generic drug giant Teva Pharmaceutical Industries is moving ahead with the reorganization plan it had announced in December 2017. It would be outsourcing some of its in-house manufacturing to Israel-based Rekah Pharmaceutical Industry Ltd.
Earlier this week, Rekah announced the 10-year agreement with Teva in a filing to the Tel Aviv Stock Exchange.
According to this filing, Teva will transfer the technical know-how for some of the products currently manufactured in Ashdod to Vitamed Pharmaceutical Industries Ltd, a wholly-owned subsidiary of Rekah. The company will manufacture the products in its Israeli facility, and Teva will continue to sell them exclusively under its own brand.
Teva’s aggressive reorganization plan announced by CEO Kåre Schultz last year includes widespread asset divestments and the layoffs of 25 percent of Teva’s employees.
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