Novartis ($NVS) to cut costs, aim for specialty drugs

Prior to its investors day in London, Novartis ($NVS) said it's implementing a number of cost-cutting an productivity improvement measures to help the company focus more on R&D and emerging markets, which it hopes will boost future growth. Though the company declined to name a figure, execs did say Novartis will cut sales and marketing spending, streamline procurement and review its manufacturing footprint.

Novartis will concentrate its activities on several business areas: specialty pharmaceuticals, eye care, generics (via its Sandoz unit), consumer health, and vaccines and diagnostics. "With the pharmaceuticals portfolio shifting to a greater percentage of specialty care business, Novartis will continue to optimize its marketing and sales (M&S) spending by re-allocating resources geographically as well as simplifying current processes," the company said in a statement. By 2015 Roche plans to increase sales of specialty and oncology drugs to 75 percent from 65 percent. Additionally, the Swiss drugmaker will increase investments in the emerging markets of China, Russia, Brazil and India. The cost-cutting and productivity improvement plans will help Novartis put more money toward R&D and emerging markets.

The drugmaker has one of the strongest pipelines among all pharma companies. It has 142 pipeline projects, 35 percent of which are in Phase III or have already been registered with the FDA. Novartis is planning 30 regulatory submissions by the end of 2012. With a $7.05 billion R&D budget, the company ranks third among all drugmakers on R&D spending.

"Novartis has leading businesses in fast growing segments of healthcare, and by focusing on our strategic priorities we are well positioned to succeed in a rapidly changing healthcare environment," said CEO Joseph Jimenez in a statement. "Novartis remains committed to the core strategy of focused diversification in high-growth healthcare segments. We are leveraging our core competencies in scientific discovery and development to continue driving innovation, growth and productivity across the businesses."

- here's Novartis' release
- check out the Reuters article for more