Novartis to cut 2,150 jobs in Switzerland; Novo to slash 400 in Denmark, China

By PharmaCompass

2018-09-27

Impressions: 89 Article

Earlier this month, we had carried news that Swiss drug major Novartis plans to increase its operating margins. Jörg Reinhardt, the chairman of Novartis, had said one of the means of achieving this was by cutting jobs in Switzerland.

This week, there is news that Novartis will cut 2,550 jobs in Switzerland and Britain over the next four years. While Switzerland will see 2,150 job cuts, Grimsby in northeast England will see 400 retrenchments. This is being seen as a measure to boost profits and focus on new medicines.

Novartis currently employs around 124,000 people worldwide. However, post the planned spin-off of its eye-care unit Alcon in early 2019 that number will reduce to less than 100,000 people by 2022, CEO Vas Narasimhan said.

Novartis is shifting its focus to gene therapies and biologics like arthritis treatment Cosentyx. According to Narasimhan, the job cuts were needed to help him boost the drugs unit’s operating margin to around 35 percent of sales, from 31.3 percent now.

“Our medicines portfolio is evolving from high-volume products to more specialized and more personalized innovative medicines,” Narasimhan said.

Unions criticized the move. “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.”

Meanwhile, Bagsværd, Denmark-headquartered Novo Nordisk said it will lay off 400 staff in Denmark and China. This is being undertaken in order to divert funding towards investment in biological and technological innovation.

The firm, which employs more than 42,000 people in 79 countries, has seen growth slowdown due to pricing pressures in the United States, from where it sources about half its revenue.

“This is not a cost-cutting exercise,” Novo’s chief science officer Mads Krogsgaard Thomsen said in an interview, adding that the company’s research and development budget will be larger in 2019 than this year.

“Our analysis shows that we have a surplus of manual labor and are lacking competences in the digital sphere, informatics, data science, artificial intelligence and automations,” he added.

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“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”

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