Novartis To Cut 2,000 Jobs

Swiss pharmaceuticals maker Novartis plans to eliminate 2,000 jobs—equivalent to 1% of its workforce—as it tries to reduce expenses in line with drug price cuts and the impact of the strong Swiss franc on profits.

About 1,100 employees will be laid off in Switzerland, and another 900 or so will be let go in the U.S. Some 270 preclinical safety profiling and siRNA research positions in Basel, Switzerland, will be shifted to the firm’s Cambridge, Mass., site, a company spokeswoman says.

Plans include the shutdown of two chemical intermediate buildings in Basel and an over-the-counter drug operation in Nyon, Switzerland, to achieve total annual savings of $200 million. At the same time, the firm will hire 700 new employees in “low-cost” countries including China, where its sales rose 35% in the past 12 months.

Other jobs will be outsourced as the plan goes into effect over the next five years, says CEO Joseph Jimenez. Novartis will take a $300 million charge against earnings to pay for the cuts.

All told, according to Swiss trade union Unia, Novartis’ plans threaten 760 Swiss jobs in R&D and another 320 in production. The union is calling on the firm, which announced net income of nearly $2.5 billion for the quarter ended Sept. 30, to forego the layoffs and work with Unia on alternatives.

Novartis’ moves follow similar cutbacks at other pharmaceutical firms. A year ago, fellow Swiss drug maker Roche said it would cut 4,800 jobs, largely in the U.S. Earlier this month, AstraZeneca said it will cut 700 U.S. jobs while boosting manufacturing operations in China.

Separately, biopharmaceutical maker Amgen will cut 380 research jobs, about 2% of its workforce, mostly in the U.S. The plan was revealed a few days before the firm reported third-quarter earnings of $1.1 billion before unusual charges.

In a conference call with investors, Roger M. Perlmutter, Amgen’s executive vice president of R&D, said the cuts “fell most heavily on scientists in early discovery.” He added that the headcount reduction “was necessary to refocus our R&D programs on those efforts likely to have a near-term clinical impact.”