Novartis Announces 2,200 Job Cuts in Switzerland to Advance Cell and Gene Therapy Strategy

Yesterday, Novartis announced that it would cut 2,200 jobs at its headquarters in Switzerland, primarily affecting the pharmaceutical production and marketing departments, to align with the previously announced construction of a cell and gene therapy production facility.

 

 

Yesterday (September 25), Novartis announced plans to cut more than 2,200 jobs at its headquarters in Switzerland, a move that will affect 1,500Medicinesproduction line employees and approximately 700 staff in the commercial services department. Currently, Novartis employs a total of 13,000 people across Switzerland.

 

Novartis CEO Vas Narasimhan stated in an interview that the layoffs were part of a 2016 strategy expected to save approximately $1 billion in the company’s production network by 2020.

 

According to available data, Novartis will cut approximately 1,500 jobs across its production sites in Basel, Stein, Locarno, and Schweizerhalle—a well-known chemical industrial zone in Switzerland—and eliminate around 700 positions in its Swiss business services division.

 

What is more evident is that, for Novartis, the cuts are aimed at focusing on key strategic priorities. According to Novartis, 450 new jobs had already been created prior to the layoffs, in support of the previously announced construction of a cell and gene therapy manufacturing facility. Furthermore, Novartis has committed to allocating an annual dedicated fund of CHF 3 billion for the research, development, and production of new drugs and therapies.

 

 

In fact, layoffs are merely the surface manifestation of broader developments. At their core, Novartis’s reduction of frontline pharmaceutical production staff and business services personnel reflects its strategic trajectory of focusing on core businesses.

 

Data shows that Novartis is focusing its strategy on the research and development of key drugs, including gene therapies costing hundreds of thousands of dollars. The current layoffs aim to cut costs and redirect resources toward R&D.

 

In recent years, Novartis has been strengthening its core businesses through capital restructuring and divesting non-core assets.

 

In particular, this year, Novartis has been actively divesting its non-core businesses.

 

In early September, Novartis announced that it had agreed to sell part of its subsidiary Sandoz’s U.S. business, particularly Sandoz’s U.S. dermatology operations and its U.S. oral generic solid-dosage formulation segment, to Alabaster (U.S.) Pharmaceuticals for $1 billion.

 

On July 12, Novartis announced that it would terminate early-stage research and development of antibiotics and antiviral drugs, resulting in 140 job cuts. Novartis stated that although the scientific foundation of these projects was solid, due to limited resources, the company has decided to focus on areas that can better improve patient health.

 

In late June, Novartis announced the divestiture of its Alcon eye care division and simultaneously launched a share buyback program of up to $5 billion. Upon successful completion of the spin-off, Alcon will become an independent company.

 

Previously, Novartis also swapped its oncology and vaccine businesses with GSK, divesting its influenza vaccine business for $275 million, and transferring its animalDietary SupplementsThe business was sold to Eli Lilly for $5.4 billion...

 

Meanwhile, in June 2018, Novartis’s CAR-T therapy Kymriah and Gilead’s Yescarta received positive recommendations from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency; in April, Novartis reached an agreement to acquire AveXis, a clinical-stage gene therapy company listed on the NASDAQ in the United States, for $8.7 billion...

 

Novartis has stated that it aims to become more focusedPharmaceuticalsthe company, consolidating its leading position in prescription drugs.

 

 

To focus on core areas, more foreign companies are saving capital by divesting core businesses, spinning off products, transferring sales rights, and even laying off employees, thereby concentrating their efforts on the field of innovative drugs.

 

For example, Tasly Pharmaceutical announced the acquisition of Novartis’ osteoporosis brand “Miacalcic,” including related intellectual property rights, licenses, and other assets, for a transaction amount of $145 million; French company LFB and Yabao Pharmaceutical jointly introduced VIALEBEX, a globally leading human albumin product, into China, with Yabao Pharmaceutical becoming the exclusiveAgent。

 

Information on layoffs at multinational pharmaceutical companies is also becoming increasingly prevalent, suggesting that the wave of job cuts at foreign enterprises has already arrived.

 

On September 19, GlaxoSmithKline announced that it would cut 650 jobs in the United States, including 200 internal staff positions and 450 pharmaceutical sales representative roles.

 

On September 18, Novo Nordisk’s official website released the “Plan to Transform R&D Approach,” announcing the layoff of 400 employees in China and Denmark as part of a restructuring of its research and development division.

 

On September 11, Takeda announced plans to close its U.S. headquarters in the Chicago area and consolidate its U.S. operations in the Boston area, where Shire operates. This move will eliminate 1,000 related positions and fulfill a commitment to reduce the combined workforce by approximately 7%.

 

The Wall Street Journal reported in July that another Swiss pharmaceutical giant, Roche Holding AG, also plans to restructure its organization by closing its regional offices.

 

In November 2017, global pharmaceutical giant Eli Lilly announced a significant layoff plan aimed at saving $500 million annually, with approximately 2,300 employees opting for voluntary early retirement.

 

In October 2017, Merck & Co. announced a restructuring of its sales force, resulting in 1,800 job cuts.

 

In August 2017, Teva announced it would lay off 7,000 employees, exit multiple markets before the end of 2017, and close 15 manufacturing plants within the next two years.

 

Multinational pharmaceutical companies have long been transforming by divesting non-core businesses, a trend particularly evident this year among multinationalEnterpriseRegarding layoffs, we may see more moves from multinational pharmaceutical companies in the future.