Novartis cuts manufacturing jobs, closes North Carolina plant ahead of Sandoz spinoff

Even as Novartis charts a course to convert Sandoz into a standalone generics juggernaut in Europe, long-standing pressure on the copycat drug industry is forcing the Swiss pharma’s hand stateside.

By the end of 2023, Novartis plans to shutter its Sandoz oral solid dosage plant in Wilson, North Carolina, where the company’s soon-to-be-spun-off generics division makes products such as tablets and capsules for Canada and the U.S. The site’s roughly 246 employees have already been alerted to the closure, a Novartis spokesperson said over email.

“Associates won’t be transferred with product transfers and have been given notice of this, too,” the spokesperson continued, adding that staffers could keep their jobs if there is a “late sale of the site” to a buyer interested in retaining staff.

“We will continue to look for divestment opportunities prior to discontinuing operations, but for now we are focused keeping the site running and retaining our skilled teams to continue with business as usual until transfers are completed,” the Novartis spokesperson said.

News of the Wilson site’s fate comes right after Novartis locked in plans for Sandoz following a roughly 10-month strategic review. Novartis will spin Sandoz into a publicly traded, standalone business, which will also comprise Europe’s largest generics company, the Swiss pharma said Thursday.

Competition and U.S. pricing pressure have taken a toll on Sandoz and the broader generics industry in recent years.

That said, the Wilson site closure is not related to the company’s strategic review; its fate was predetermined, and the shutdown would have proceeded regardless of the spinoff decision, Novartis’ spokesperson said.

Alongside the manufacturing site, Novartis is also closing additional office space in Durham, North Carolina, The Triangle Business Journal pointed out.

While Novartis originally planned to close the Wilson site in 2022, the company extended the process into late 2023 to ensure product transfers are complete.

Job cuts certainly aren’t unfamiliar territory for Novartis, which earlier this summer said it would lay off roughly 8,000 of its 108,000-strong global workforce in a bid to save $1 billion. Novartis is currently in the process of wedding its oncology and pharmaceuticals businesses into a singular innovative medicines unit. The move is designed to turn Novartis into a “leaner and simpler” drugmaker, a company spokesperson told Fierce Pharma in June.

Meanwhile, Novartis’ staff pruning is going all the way to the top. Of some 1,400 jobs the company plans to cut in its home country of Switzerland, up to half will be leadership positions, the company said Monday during a media event in Zurich.

When it comes to Sandoz, Novartis had previously tried to sell its generics unit off in pieces—paying special attention to unshackling itself from its problematic U.S. oral solids franchise—to India’s Aurobindo Pharma. Antitrust resistance ultimately scuttled that deal in April of 2020.

Last year, Sandoz generated $9.6 billion in full-year sales, down 2% year over year, courtesy of a 15% downturn in the U.S. Still, things have been looking up lately for the company, which grew sales 6% at constant exchange rates to $4.7 billion in the first half of 2022.

And, despite widespread pressures on the industry, Novartis chief Vas Narasimhan, M.D., still sees generics as a “high attractive” industry, as quoted by Reuters. That's because $400 billion to $500 billion worth of branded drugs are expected to lose market exclusivity over the next 10 years, the helmsman explained.