Novartis Scales Back In Tough Times
In the war on drugs--generic drugs, that is--big pharmaceutical companies are having to trim down their workforces in order to turn themselves into lean, mean fighting machines.
Switzerland's Novartis (nyse: NVS - news - people ) is the latest drug company to slash away. It's cutting 2,500 jobs, or 2.5% of its global staff, over the next two years because of increasing competition from generic medicines, as well as delays in developing its own products. Novartis said it would take a $450 million charge for the restructuring in the current quarter, but it would save $1.6 billion annually by 2010. It said that the job cuts would help prepare the company for a "new growth cycle" that would begin in the second half of 2008.
The layoffs will come in management and sales. Shares in Novartis rose 1.6%, to 65.10 Swiss francs ($57.50), on Thursday morning in Zurich. The company's stock has fallen about 13% since February. The company had already announced in October that it would eliminate 1,260 positions in U.S. pharmaceutical marketing and sales. While whittling down in staff at its pharmaceutical divisions, Novartis, like other drug giants, is also trying to armor itself by getting hold of what the cutting-edge biotechnology companies have to offer.
Earlier this month Novartis spent $1 billion on a 10-year collaborative deal with Germany antibody research company MorphoSys (other-otc: MPHSF - news - people ). (See: "Novartis Builds Its Antibodies") Other pharmaceutical giants like Pfizer (nyse: PFE - news - people ) and AstraZeneca (nyse: AZN - news - people ) have made similarly large cutbacks to their workforce to try to deal with the long-term problems of slowing sales and profitability. As part of its restructuring plan, Novartis said it would boost operations in emerging markets such as Asia and sub-Saharan Africa.
By Parmy Olson
Source : http://www.forbes.com/markets/2007/12/13/novartis-restructuring-generics-markets-equity-cx_po_1213markets05.html
Switzerland's Novartis (nyse: NVS - news - people ) is the latest drug company to slash away. It's cutting 2,500 jobs, or 2.5% of its global staff, over the next two years because of increasing competition from generic medicines, as well as delays in developing its own products. Novartis said it would take a $450 million charge for the restructuring in the current quarter, but it would save $1.6 billion annually by 2010. It said that the job cuts would help prepare the company for a "new growth cycle" that would begin in the second half of 2008.
The layoffs will come in management and sales. Shares in Novartis rose 1.6%, to 65.10 Swiss francs ($57.50), on Thursday morning in Zurich. The company's stock has fallen about 13% since February. The company had already announced in October that it would eliminate 1,260 positions in U.S. pharmaceutical marketing and sales. While whittling down in staff at its pharmaceutical divisions, Novartis, like other drug giants, is also trying to armor itself by getting hold of what the cutting-edge biotechnology companies have to offer.
Earlier this month Novartis spent $1 billion on a 10-year collaborative deal with Germany antibody research company MorphoSys (other-otc: MPHSF - news - people ). (See: "Novartis Builds Its Antibodies") Other pharmaceutical giants like Pfizer (nyse: PFE - news - people ) and AstraZeneca (nyse: AZN - news - people ) have made similarly large cutbacks to their workforce to try to deal with the long-term problems of slowing sales and profitability. As part of its restructuring plan, Novartis said it would boost operations in emerging markets such as Asia and sub-Saharan Africa.
By Parmy Olson
Source : http://www.forbes.com/markets/2007/12/13/novartis-restructuring-generics-markets-equity-cx_po_1213markets05.html
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