A Novartis over-the-counter manufacturing plant in Switzerland is receiving a new lease on life after giving CEO Joseph Jimenez what he wants, while the OTC plant in Lincoln, NE, is feeling the sting of failing to do so.
|CEO Joseph Jimenez|
Novartis ($NVS) will immediately invest €60 million ($78.6 million) in a plant in Prangins, Switzerland, that 18 months ago was set to be closed and its 320 jobs obliterated, according to The Local, an English-language newspaper in Switzerland. Last week, the company said it plans to modernize the plant and increase its size by 30%. It will invest another €90 million ($118 million) by 2020, with plans to boosts its capacity by 70% in the next 10 years, feeding Novartis' growing emphasis on OTC products. "It's really a new plant that is being built," said Pascal Brenneisen, president of Novartis Switzerland. The turnaround came after workers agreed to give up pay increases and work longer hours. Local governments provided temporary tax breaks, The Local says.
The good fortune was bestowed on the plant the same week Novartis said in an earnings release that over the next two years it will whack 40% of the workforce at its troubled consumer health plant in Lincoln, NE. That plant has been a source of frustration for Jimenez--and expense and lost revenue for the company--since 2011, when inspectors excoriated it for the mess there.
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, and 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. Most had to do with the handling of consumer complaints, one of the major areas of focus in the precipitating inspection.
So Jimenez has decided that if the process is too complex for Lincoln to master, then the company will "simplify the Lincoln manufacturing plant" to focus on 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. It also means it will need 300 fewer workers. It expects to take a $100 million hit for the restructuring.
The pharma company said some of the products those 300 people used to help manufacture will continue to be made by the contractors that Novartis turned to in hopes of getting them back in consumers' hands. "We are continuing to aggressively remediate the plant and have shared with the FDA the additional corrective actions we are taking as well as our plan to simplify the Lincoln footprint," it said.
- here's The Local story
- and the earnings release