Novartis to cut thousands of jobs in Switzerland to boost profits

Multinational pharmaceutical company Novartis will reportedly cut 2,200 jobs in Switzerland over the next four years as it focuses on new medicines and strives to boost profitability. Vasant Narasimhan, Chief Executive Officer of Novartis, was quoted saying that about 1,500 positions will be terminated from Novartis’s production sites in Basel, Locarno, Stein, and Schweizerhalle.

As the company prepares to transfer jobs elsewhere, it will further eliminate 700 more positions in its Swiss business services. Although a total of 1,750 jobs will be lost, 450 new positions will be created for production of cell and gene therapies.

A news report by BBC states that some 400 jobs will also be lost in Novartis UK as it prepares to shut down its Grimsby plant by 2020. The company ascertained that the move is not linked to the UK’s decision to exit the European Union but a part of the company’s major restructuring of operations.

Joerg Reinhardt, Chairman of Novartis, said in a statement that the company has plans to restructure its worldwide production to boost its operating profit margin as prices of its drugs in United States are on a decline.

According to sources familiar with the development, the company is planning to shift to gene therapies and biologics such as arthritis treatment. Therefore, the cuts were required to help the company boost the operating margin of drug unit to achieve nearly 35 percent of sales.

For the record, Novartis’s net income was up by 15 percent to $7.7 billion last year. The pharmaceutical giant is seeking to transform itself from a traditional pill maker to a provider of cutting-edge therapies such as Kymriah cancer treatment worth $475,000 per patient.

Novartis’s restructuring comes as a part of its program to save $1 billion annually, which was announced in 2016. The company hasn’t announced costs pertaining to the latest cuts but said it would take charges over the four-year period, cite sources.