CEO Daniel Vasella (photo) gave us the broad outline two days ago. Now here are the details: Novartis is slashing its payroll by 2,500 jobs, or 2.5 percent of its worldwide workforce. The cutbacks are designed to save $1.6 billion in annual costs by 2010; Novartis will take a $450 million charge to pay for the program. In October, the company announced it would cut 1,250 jobs, mostly in the U.S. These new cuts come on top of those, bringing the grand total to 3,750 jobs.
The litany of Novartis' woes is familiar to anyone in pharma these days. The company has new generic competition for three of its big drugs. It's been stymied in getting new drugs to market; witness Galvus, which has been delayed because of safety concerns. Another blow was the withdrawal of its bowel drug Zelnorm earlier this year.
This less-than-stellar news has depressed Novartis stock by 8.8 percent this year. But the market likes the cutback plan: Shares were up 1.6 percent this morning.
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