Novartis is undertaking a huge restructuring to simplify its organization, and some of its employees will feel the pain.
The company will cut thousands of jobs worldwide as part of a revamp unveiled last week, Swiss newspaper Tages-Anzeiger reports based on anonymous company sources, according to Reuters. As of the end of 2021, Novartis housed over 104,300 full-time equivalent employees.
Because the goal is to have better efficiency through leaner structures, the new initiative will “inevitably lead to roles being impacted,” a Novartis spokesperson said in a statement to Fierce Pharma. The company wouldn’t confirm whether “thousands” being impacted is in the right ballpark, saying it’s too early to give specific numbers.
Novartis rolled out the restructuring last Monday. The aim is to save at least $1 billion a year by 2024. The new structure is expected to be fully operational by the end of 2022, the spokesperson said.
Under the plan, Novartis is combining the pharmaceutical and oncology business units and is also integrating technical and customer support functions into one operations department. It’s carving out some responsibilities from the commercial and R&D teams to create a new strategy and growth function focused on optimizing the company’s pipeline.
During a presentation, Novartis CEO Vas Narasimhan noted that the company’s non-product-related expenses as a percentage of sales have remained stable over the past few years at around 29%. Among a group of 15 large pharma companies, Novartis ranked 12th for that spend percentage.
Before the reorg, Novartis’ commercial activities were managed under separate pharma and oncology organizations. They each had their own president and global marketing functions, including separations by different countries. Now, the company is dividing the commercial team into two, for the U.S. and, separately, the international market, and will have fewer layers and redundancies.
As of year-end 2021, Novartis had 41,280 employees working in sales and marketing, nearly 12,800 in operations and 4,727 in general and administration. Based on Novartis’ plan, those areas are likely where the job cuts will hit the most.