Novartis Cuts Jobs In Europe, Citing A Shifting Specialized Portfolio
Executive Summary
The Swiss drug maker will cut 1,700 jobs in manufacturing and business services in Switzerland by 2022 and another 395 jobs in the UK.
Novartis AG will be making a significant headcount reduction at the company's home country, a decision driven in part by the company's increasing focus on specialized drugs over high-volume ones.
The Basel, Switzerland-headquartered company announced Sept. 25 that it will cut a net of 1,700 jobs in Switzerland through 2022, taking into account the addition of 450 new jobs in cell and gene therapy. Another 395 positions in the UK will be eliminated as Novartis closes one manufacturing facility.
Novartis said the job cuts reflect the evolving portfolio of the company, increasingly focused on specialty and personalized medicines rather than high-volume products, as well as the ongoing realignment of the company's manufacturing network that began in 2015.
"This has led to a shift in investment strategy from more traditional production technologies to more advanced manufacturing platforms," the company said in a statement. "In addition, the creation of an integrated manufacturing organization continues to create synergies."
The bulk of the cuts will come from manufacturing in Switzerland, where a net 1,000 jobs will be eliminated in Basel, Schweizerhalle, Stein and Locarno through 2022. The reductions are inclusive of the company's recent decision to ramp up its cell and gene therapy manufacturing, which will bring about 450 new positions to Stein.
The company is investing in cell and gene therapy R&D, having launched its first CAR-T therapy, Kymriah (tisagenlecelucel), in 2017 for pediatric acute lymphoblastic leukemia (ALL). Novartis also paid $8.7bn in April to buy the gene therapy specialist AveXis Inc., with a lead candidate for spinal muscular atrophy on track for a US FDA filing in the second half of this year. (Also see "Novartis Goes Big On Gene Therapy With $8.7bn AveXis Acquisition" - Scrip, 9 Apr, 2018.)
Additionally, Novartis will exit manufacturing operations in Grimsby, UK by the end of 2020 in a phased two-year time horizon. The site employs about 395 employees and is part of the company's active pharmaceutical ingredient production network. Novartis will consider divesting the facility or close the facility if a buyer isn't found.
The decision will impact a little more than a quarter of Novartis' employees in the UK, as the company employs 1,500 people at three locations.
More Consolidation To Global Service Centers
More job cuts will come in business services, where the company has been shifting responsibility to five Novartis Global Service Centers (NGSCs) since 2014, located in lower-cost locations, including Dublin (Ireland), Hyderabad (India), Kuala Lumpur (Malaysia), Mexico City (Mexico) and Prague (Czech Republic). More management level positions will be shifting to those centers now as well, resulting in the elimination of up to 700 jobs, mostly at the company's Basel campus.
"We will continue to move more of our strategic roles and capabilities into these centers while we continue to move transactional roles as planned," the company said. The NGSCs were created to consolidate operations and include services like information technology, financial reporting and accounting, market analytics and data management. (Also see "Novartis Consolidates Indian Service Operations" - Scrip, 21 Dec, 2015.)
Novartis employs 12,800 people in Switzerland and 125,000 around the world. The company said it remains committed to maintaining 10% of its global workforce in Switzerland, even though only 2% of global sales come from the region. The company pointed out that it has invested $1bn in manufacturing technologies in Switzerland over the last five years. In addition to the cell and gene therapy technologies in Stein, Novartis has invested in a Flow Through Chemistry Platform in Schweizerhalle, the build-up of a continuous manufacturing plant in Basel and a new launch facility in Stein.
Novartis said it also is interested in maximizing the manufacturing capabilities of its Schweizerhalle site through collaborations with external partners to create a life sciences park.