NOVARTIS, the pharmaceuticals group, has announced plans to cut more than 2,000 jobs in the UK and Switzerland. The decision was made as part of a global programme to lower production costs and increase profitability.
Currently, Novartis employs about 12,800 people in Switzerland. The company plans to cut a net total of around 1,000 positions in its Swiss manufacturing facilities by 2022. It will cut 1,500 jobs and create 450 jobs at facilities for their new cell and gene therapies.
A further 700 Swiss jobs will be lost as Novartis shifts business functions to service centres into other countries, such as the Czech Republic, Ireland, and Mexico. However, The Financial Times reported that Vas Narasimhan, chief executive of Novartis, said the company remains committed to Switzerland – where it is headquartered. Currently Switzerland accounts for 10% on the company’s global workforce, and he expects this figure to stay the same.
In the UK, Novartis will be cutting about 400 jobs by 2020. This will result in a complete exit of the company from its Grimsby manufacturing site. Haseeb Ahmad, country president of Novartis UK, ensured that the move is “not linked to the decision of the UK to leave the European Union”.
Ahmad referred to the Grimsby site as “an effective, well-running operation that is testament to the hard-working and dedicated employees.” He added: “We will treat every employee with the utmost respect, sensitivity and fairness during this difficult time.”
According to Ahmad, Novartis “remains committed to the UK and believes that the UK is a world-leader in life sciences”. The company intends to carefully consider divestment, and other options, that could allow the Grimsby site to remain open.
Over the coming period Novartis will work closely with an elected staff consultative body to support associates. It will also offer staff enhanced severance packages and outplacement services if they do close.
In addition to these cuts, Novartis previously announced changes in its facilities in other countries such as the US and Japan. These decisions have all been made as part of a programme Novartis announced in 2016. The goal is to save US$1bn in annual manufacturing costs of its production network by 2020.
Narasimhan, who became chief executive in February, said the cuts were a result of the company’s strategy to move away from high volume drugs and towards specialised and personalised medicines. Since taking over the job, Narasimhan has sought to streamline the group and focus on innovative medicines.
Gene and cell-based therapies are very high value products, for example, Novartis’ Kymriah – the first cell therapy approved in the US. The chimeric antigen receptor T-cell therapy is tailored to a patient’s own cancer cells and costs US$475,000.
Luxturna, a gene therapy developed by Spark therapeutics, is a treatment that can partially restore the vision of patients with a rare form of blindness. Novartis acquired the rights to commercialise the drug outside of the US this year. A single pair of one-time injections costs US$850,000.
Some of Novartis’ other moves include the plan to spin-off the Novartis Alcon eyecare unit, which could be worth US$25bn. This decision could result in a further loss of 600 Swiss jobs. That announcement followed the US$13bn sale of Novartis’ stake in its consumer health joint venture with GSK. Novartis also plans to purchase AveXis for US$8.7bn in order to obtain the small company’s gene therapy for infants with spinal muscular atrophy type 1.
Novartis has invested more than US$1bn in new Swiss facilities, including a continuous manufacturing plant in Basel, and cell and gene therapy production in Stein.
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