Novartis cost push claims 2,000 jobs in U.S., Switzerland

Novartis ($NVS) has put a number to its job-cutting plans. The Swiss-based drugmaker will shed 2,000 jobs in its home country and the U.S., while shutting down expensive-to-operate European facilities and moving operations to lower-cost countries. The moves are designed to save $200 million annually.

More than 1,000 of those job cuts will come in Switzerland, which isn't exactly accustomed to major layoffs. The announcement touched off protests from Swiss union reps who vowed to fight the cutbacks, as Reuters reports. But the employee groups have currency stacked against them: The Swiss franc's strength has made domestic operations even more expensive in a country that wasn't exactly low-cost to begin with.

CEO Joe Jimenez (photo) put more of the blame for cost cuts on pricing pressures, however. On a call with reporters, Jimenez said budget squeezes in Europe have forced Novartis prices down by 5% this year--and he predicts those pressures will continue. "The main reason for the job cuts and cost reductions is the current difficult pricing situation," Jimenez said. "I don't expect the pricing environment to get better anytime soon."

Here's more on the cost-cutting specifics: Over the next three to 5 years, Novartis plans to shut down two Swiss facilities, including an over-the-counter manufacturing plant in Nyon. One Italian plant will get the ax. U.S. cutbacks will claim 900 jobs. Some research work will actually move to the U.S. from Switzerland, but emerging markets will be the real beneficiaries of Swiss cuts. For instance, reductions in data management and clinical trial monitoring will be offset by 700 hires in China and India.

The 2,000 job cuts come on top of 1,400 staff reductions in the U.S. sales group begun last November, as Bloomberg reports. Since then, the company has also announced cutbacks in the U.K. In fact, Jimenez has been focusing on cutting costs ever since he took over as CEO in February 2010. Obviously that focus promises to continue.

- check out the Novartis release
- read the Reuters news
- get more from Bloomberg
- see The Wall Street Journal story

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