About 8,000 Novartis employees are out of work following the company’s decision to consolidate various departments, a move it says will save it $1 billion.
Rumors of layoffs have persisted since April, but the company only confirmed them on June 28, according to the Swiss newspaper Tages-Anzeiger. Among its 108,000 employees worldwide, the cuts will mainly be in sales and marketing, operations, general services and administration.
Their driving force is the merger of Novartis’ oncology and pharmacy departments into a single medicine unit, which “will allow us to reduce duplication of commercial structures in each country” and make the company “leaner and simpler”. “, said a spokesperson for the company. It is also combining its technical operations and its customer and technology solutions units, and is selling its Sandoz generics division via a spin-off or a sale. It hopes to complete its restructuring “at over the next few months,” according to the spokesperson.
Up to 1,400 positions will be cut at its headquarters, the Basel campus in Switzerland, including 250 in marketing and product management, 550 in operations and 600 in central administration. IT, purchasing, quality control and overall production management will also be affected. Some positions will be outsourced to cheaper countries, such as Prague and India.
The company confirmed in April that it was combining its global pharmaceutical units, resulting in three Novartis executives getting the boot, according to Fierce Healthcare. Previously, the two companies had their own legal, human resources, marketing and sales departments, and were separated by different countries. The company will now have a sales team in the United States and another for the international market, which will eliminate many jobs.
While marketing, sales and administration are the pharmaceutical industry’s biggest expenses, saving money isn’t necessary for Novartis, Tages-Anzeiger reports. Pharmaceuticals make up just about 30% of its sales, and it just sold its Roche shares back to Roche last year for more than 20 billion Swiss francs.
The company says stock market pressure to produce top-selling new drugs requires an alternative marketing model and the restructuring will help it reduce the workload.
It expects to save at least $1 billion a year by 2024 and expects the new structure to be fully operational by the end of 2022.