CEO: Novartis cost cuts to target sales, manufacturing

Fresh off his promises that this year's round of cost-cutting would top last year's $1.9 billion, Novartis ($NVS) CEO Joe Jimenez (photo) gave the Swiss newspaper Handelszeitung some hints about what operations might face the axe. Jimenez has his eyes on cutbacks in sales and marketing and in manufacturing, as Dow Jones reports.

"We have spent too much money on marketing and selling our drugs," Jimenez told the paper (as quoted by Dow Jones).  And even though the company has already made cuts in those areas, the CEO believes Novartis can streamline further. "We can save even more, even if we grow. This business revolves around science, not around marketing."

Those are words sure to frighten Novartis marketing and sales folks, who've already absorbed hundreds of layoffs. The Swiss drugmaker cut its sales force by 1,400 last year in the U.S. as it shifts focus from mass-market medicines to specialty drugs. But the company's manufacturing operations could see some big changes, too. Cuts there could mean that underperforming plants are shut down completely.

"We have 83 factories and we only use about 50% to full capacity--that isn't good," Jimenez said. "We should identify centers of excellence, and consolidate our manufacturing."

One area that appears to be safe is R&D. Remember what Jimenez said about the science? With that in mind, he may even boost R&D spending over the next 5 years, he said.

- read the Dow Jones coverage
- get the Handelszeitung story (in German)

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