Novartis Cuts Another 2,000 Jobs In The US

Novartis Cuts Another 2,000 Jobs In The US

January 13th, 2012 // 1:17 pm @

Just one more after a key clinical trial for its Tekturna hypertension pill was a bust – there was evidence of an increased incidence of non-fatal stroke, renal complications, hyperkalemia and hypotension – Novartis has decided to eliminate 1,960 jobs in the US, including 1,630 sales reps and another 330 positions at its US headquarters in East Hanover, New Jersey.

The move is not surprising, given that the clinical trial for the drug, which is called Rasilez in Europe, was seen as a salve for generic competition. The pill was launched four years ago and faces stiff competition from older meds, some of which are available as low-cost generics (back story). Moreover, its best-selling Diovan blood-pressure drug, which lost patent protection in Europe last year, faces generics in the US in September.

“We recognize that the next two years will be challenging in the Pharmaceuticals Division and we are proactively making these changes to further focus our pipeline on the best opportunities and align our market position on our growth brands,” Novaritis Pharma head David Epstein says in a statement. “These are difficult but necessary decisions that will free up resources to invest in the future of our business which we view as well suited to bring new valuable therapies to patients and payors.”

During the first nine months of the most recent fiscal year, Tekturna generated sales of $449 million, but analysts had forecast sales could reach $1.4 billion by 2016 before the recent trials results were released. Now, though, “you can easily take $1 billion,” Martin Voegtli, an analyst at Kepler Capital Markets in Zurich, tells Bloomberg News. “Earnings will come down. “The new products that are growing have a much lower margin than Diovan.”

As part of the restructuring, Novartis will take a $900 million, including $160 million in the first quarter of 2012 related to ending development on two other compounds. The drugmaker expects that the cuts will yield annual savings of around $450 million by 2013.

The pending layoffs, which will take place over the next several weeks and months, extend job cuts that began more than a year ago. Last fall, Novartis began eliminating 1,100 jobs from Switzerland, where its operations are headquartered, although this engendered various protests (read this and this). Another 900 jobs, meanwhile, were cut in the US. And in 2010, the drugmaker slashed 1,400 US sales reps and another 550 jobs at a manufacturing site in the UK (back story).

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