Novartis' 500 Swiss job cuts announced earlier this month are just the tip of a global iceberg. The company plans to cut or shuffle up to 4,000 jobs in its pharma business, with many of the positions moving to a new operations center in Hyderabad, India, a Swiss newspaper reports.
The news comes two weeks after CEO Joe Jimenez pronounced his dissatisfaction with the company's operating margins, and days after two back-to-back job-cutting announcements. And Novartis ($NVS) is in the midst of a worldwide strategic review. "I am not satisfied with operating margins," Jimenez said at an investor conference (as quoted by the NZZ am Sonntag). "We intend to increase these margins over time, and we begin now."
Soon after, the company announced its Swiss layoffs and rehires. The company plans to cut 500 jobs in Switzerland from R&D and administrative functions, while hiring another 500 or so Swiss workers for different positions in the pharma business, as well as generic drugs and over-the-counter products. According to the NZZ, half of the 500 jobs cut are moving to the Hyderabad service center. India is a lower-wage market, so maintaining the same number of jobs there would cost less.
At the time, Novartis took care to stress that its employment in Switzerland would remain about the same. It says the same about this latest news, only this time, it's speaking globally. Now, Novartis tells the NZZ that its overall worldwide workforce will remain "relatively stable" despite cuts and transfers in various geographic locations. The various layoffs and new hires are designed to help the pharma division "free up resources, prioritize and redistribute" as it prepares for new product launches.
The job moves are also part of a global reworking of its business-services and back-office functions. "Novartis began some time ago to incorporate appropriate back-office and other activities in Centers of Excellence and Global Business Solutions Centers," the company told the NZZ. "We continue the implementation of this plan. The number of internal positions which are now being resettled in Novartis service centers or from third parties will rise as a result."
The Hyderabad service center is taking shape in newly leased office space that can accommodate up to 8,000 employees. The Hyderabad site will open in late 2015, Novartis told the newspaper. According to the NZZ, Novartis is recruiting workers in IT, human resources, clinical trial monitoring and more via Indian job portals.
Novartis has already been cutting jobs in a worldwide restructuring. On top of the Swiss cuts, this month the company marked a manufacturing plant in New York for shutdown; some 525 employees work there. The company's off-patent blood pressure drug Diovan is made there, and Novartis expects the drug to see head-to-head generic competition sometime this quarter. Last year, the company rolled out a series of layoffs, with several hundred at each of two manufacturing sites, plus another several hundred in R&D, each announced individually. The total amounted to more than 1,000 jobs.
Those cuts followed 2,000 announced in early 2012, and another in October 2011 involving a similar number. Meanwhile, the company added at least 700 employees in India and China, both low-wage markets. The company has shut down or sold 20 manufacturing facilities worldwide over the past four years, Jimenez said last week.
Special Reports: Top 10 largest pharma layoffs of 2013 - Novartis | Top 10 pharma layoffs of 2012 - Novartis