Novartis To Ax 2,000 Jobs As Part Of Restructuring Plan

Novartis To Ax 2,000 Jobs As Part Of Restructuring Plan
September 26, 2018

 

As part of a global restructuring, the Pharmaceutical company Novartis AG (NYSE: NVS) stated that it plans to slash 2,000 jobs in Switzerland by 2022, while nearly 400 jobs could disappear from the British job market. The job cuts are part of CEO Vasant Narasimhan’s plan to focus on “personalized and specified” drugs, such as gene therapies that could cost several thousands of dollars per patient. Novartis believes that the tactics would turn out to be more profitable in the long-run, compared to the yield from high-volume drugs.

 

Novartis restructuring plan

The Swiss group made an official statement saying there would be a net loss of 1,000 jobs at multiple manufacturing facilities across Switzerland, primarily in Basel, Stein, Schweizerhalle, and Locarno.

Novartis emphasized that the announced job cuts include the recently announced construction of a cell and gene therapy manufacturing facility in Stein which anticipated the creation of approximately 450 jobs. The remaining 700 jobs are to be decreased due to a shift in business operations from Switzerland to other Novartis sites across the globe. The company employs nearly 12,800 people in Switzerland.

In another news release, Novartis stated that it plans to exit its manufacturing site at Grimsby in Britain by the end of 2020.

Novartis issued the following statement “Three hundred and ninety-five Novartis employees at the Grimsby site are directly affected by the decision, and additional contractors employed through third parties may also be impacted.”

As part of a revamp strategy announced in 2015, Novartis has already announced changes to its manufacturing units in Japan, the US, and other countries. The company emphasis lies in personalized and specialized medicines over that of high-volume drugs.

Novartis chief executive Vas Narasimhan said: “We are continuing our efforts to globally transform Novartis into a more efficient, agile organization that can sustainably innovate and deliver breakthrough medicines to patients.”

Narasimhan further stated the following: “We will do everything possible to help our associates who might be impacted manage through this difficult transition,”  and emphasized that Novartis remains “deeply committed” to its presence in Switzerland.

Novartis stated that it would continue to have its global headquarters, the biggest R&D center, and “advanced manufacturing footprint” in Switzerland.

The announcement was criticized as a “bitter pill” by the Employe Suisse Union. The Union has argued that there is no guarantee that costs will decrease by integrating this method, and has requested management to reconsider its decision.

In the case of the Grimsby site, Novartis stated that it was “an effective, well-running operation.” The company also revealed that it is considering a range of options including divestment, “which could potentially allow the facility to stay open.”

Commenting on Novartis decision to divest the UK operations, Haseeb Ahmad, Novartis UK Country President, said: “We will treat every employee with the utmost respect, sensitivity, and fairness during this difficult time.”

Investors consider it as a good sign, however, as several patents are due to expire and the company will be facing tougher competition from generic pharmaceutical companies.

Technically, the stock is trading above its 50-day moving average, and the MACD indicator is in the positive region. We are, therefore, expecting the stock to remain bullish in the short term.

nvs - technical analysis - 26th September 2018

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Sammy

Sammy

Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world


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