Some 2,000 jobs, largely in Switzerland and the U.S, will give way to 700 new positions in India and China for Novartis ($NVS) in the coming 5-year period. Upside for the company: annual savings of $200 million, according to the drug giant's third-quarter financial report.
The move is part of an ongoing effort to improve productivity and absorb pricing pressures. The job cuts are part of a company restructuring that includes the reallocation of production, which will close two sites in Switzerland and one in Italy. The company also plans to restructure its development organization "largely in Switzerland and the U.S.," according to the financial report.
"We are acting out of a position of strength," said CEO Joe Jimenez (photo) in the WSJ's "The Source" blog, which described the restructuring as a pre-emptive move rather than a reaction to market difficulties stemming from healthcare reform efforts.
The planned restructuring follows recent efforts "to optimize our manufacturing footprint," including the shutdown of a chemical operations site in Torre, Italy. Plans also call for the closing of an OTC manufacturing site in Nyon, Switzerland, and a chemical operations site in Basel. The work will be distributed across the Novartis production network, the report says.
"With these steps we are reducing excess capacity and enabling the shift of strategic production to technology competence centers," according to the report. Analysts were generally receptive to the news, reports The Wall Street Journal.
Novartis will take a restructuring charge of about $300 million in the fourth quarter of 2011.
- here's the release
- see the WSJ story
- check out "The Source" blog
- get more