Novartis reverses course on Swiss OTC plant that was to be closed

Novartis is doing a complete U-turn on an OTC plant in Switzerland that 18 months ago was going to get the old heave-ho along with the people who worked there. Now the drugmaker says it will invest €150 million in the facility and anoint it a center of excellence. 

The plant in Prangins is being rewarded by CEO Joseph Jimenez for giving him want he wants, even as the company's troubled over-the-counter plant in Lincoln, NE is being demoted and downsized.  

Novartis ($NVS) had faced protests in 2011 when it said it would close the plant in Prangins and lay off its 320 workers as part of cost-cutting measures. But since then, workers have agreed to give up pay increases and work longer hours, according to The Local, an English-language newspaper in Switzerland. Novartis also received temporary tax breaks from local governments. The drugmaker now says it will invest €60 million ($78.6 million) in the plant immediately and another €90 million ($118 million) by 2020. The company says it will boost capacity by 70% at the plant, which makes such products as anti-inflammatory Voltaren and the decongestant Otrivin, The Local says.

That decision stands in stark contrast to its revelation last week about the Lincoln facility that has been a black eye to Novartis for a long list of manufacturing failures and attendant lost revenues. The company said it would "simplify the footprint" at Lincoln, reducing its focus to just two product forms--solids and powder. Those will be used primarily for making the popular veterinary product Sentinel, as well as Excedrin and Theraflu. And in so doing, the plant will lose 300 employees in the next two years--40% of the workforce. That is nearly the same number of employees whose jobs were saved in Switzerland.  

Last fall, Jimenez told the company it needed to demonstrate its "commitment to quality." The rallying call came after a number of foul-ups around its manufacturing network, but Lincoln figured prominently in the message. Instead of a clean bill of health in a recent re-inspection, the FDA handed the company a new Form 483 with 9 more observations, it said last week. The pharma company said it will continue to use contractors to manufacture some of the products that used to be made at Lincoln plant. It turned to outside help as problems dragged on there and consumers were desperate for such products as Excedrin Migraine. 

- here's The Local story
- and the earnings release

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