Novartis CEO Vas Narasimhan credits manufacturing “productivity programs” for helping improve company margins. That productivity tightening will play out next at operations in Ireland where up to 320 are at risk of losing their jobs.
The drugmaker will close a production facility at the Ringaskiddy site as it consolidates its active pharmaceutical ingredient operations there by mid-2022, a company spokesman said, confirming a report in the Irish Times.
Novartis also announced plans to relocate from the site a number of workers in the global services unit to centers in Europe and Asia by 2021. Both units are part of Novartis Technical Operations.
“This is a strategic decision and part of the ongoing evaluation of the Novartis manufacturing network around the world and transformation programs. These changes could impact up to 320 employees at the Novartis Ringaskiddy campus," the company said in an emailed release.
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Novartis lauded employees and gave assurances of good separation packages. It said some business services will continue at Ringaskiddy and the site will continue to manufacture medicines for hypertension, heart failure and acromegaly. But Novartis made clear more cuts are possible at the site where about 550 people currently work.
"Looking to the future, Novartis will continue to evaluate potential partnership opportunities and divestment scenarios across the Ringaskiddy campus to enhance competitiveness and support a more sustainable future," Novartis said.
Narasimhan specifically spoke to the restructuring program during his call with analysts Tuesday after the Swiss drugmaker reported improved earnings. He said they could expect to see the same kinds of improvements in 2020 that occurred this year.
“We'll continue the strong productivity programs, where our goal has been to deliver $2 billion in absolute savings across NTO, our manufacturing as well as procurement as well as business services,” he said.
Earlier, Narasimhan pointed to margin improvements of 1.4% in Q3 and 2.4% year-to-date at the company.
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Not all of Novartis’ manufacturing news was as upbeat. Margins have been hurt by the manufacturing of the company’s CAR-T drug Kymriah and as well as questions by regulators about manufacturing that will the delay of launches in Europe and Japan of its gene therapy Zolgensma.
While Zolgensma sales beat forecasts by the street at $160 million for its first full quarter, JPMorgan analysts said it may have trouble meeting $1 billion expectations.
The CEO said there are plans to improve those manufacturing operations. “I think you were correct we have with the cell and gene technology had to take some hit on our gross margins, particularly in oncology with CAR-T therapy,” Narasimhan said on the analyst call. “Our aspiration is now to start to improve that and get that back up now in the coming year."