The CEO of Novartis intends to cut tens of thousands of employees to transform the $220 billion pharmaceutical giant.

 

  • Novartis is laying off thousands of employees, CEO Vasant Narasimhan told Insider.
  • Through layoffs and spin-offs, the Swiss giant expects to cut headcount by around 30% by 2024.
  • Narasimhan said he is in the final stages of Novartis’ focus on new drug development.

SAN FRANCISCO — Thousands of layoffs “are happening now,” Vasant Narasimhan, CEO of Novartis, told an insider as he hopes the $220 billion Swiss giant is taking the final steps to transform into a smaller, more focused pharmaceutical company.

Narasimhan said he hopes to spin off Sandoz’s generic drug business by the end of this year. According to Narasimhan, since he became CEO in 2018, he has made close to $100 billion in deals to focus the business, including selling his stake in the joint healthcare business to pharmaceutical company GSK in 2018. spinning off his ophthalmology company. devices division of Alcon in 2019 and sold over $20 billion worth of shares in fellow pharmaceutical giant Roche in 2021.

Other health care giants such as Johnson & Johnson and GSK are also losing weight and narrowing down their efforts to develop new prescription drugs. These drug makers have recently withdrawn or are preparing to withdraw from areas such as generic drugs, animal health, and consumer health. They are betting that working on patent medicines will be the future of their business.

The spin-off of Sandoz later this year “completes Novartis’ strategic transformation” as the company ramps up drug research in areas such as cancer, cardiovascular disease and neuroscience, Narasimhan said.

“It finally brings us to the point where we really are what I think we are best placed to, at least over the next period of time, which is pure play, an innovative R&D engine in medicines,” Narasimhan told Insider. on the sidelines of the JPMorgan Healthcare conference.

The layoffs are expected to be completed by mid-2024.

Overall, Novartis expects to have about 40% fewer employees than it did five years ago when Narasimhan took over. At that time, the Swiss giant had about 125,000 full-time employees, and today it has about 108,000. After layoffs and the separation of Sandoz, about 75,000 employees will remain, which is about 30% less than now.

“I think we’re coming out of that proper size compared to our peers given the skill set we have,” he said.

When Sandoz spins off, it will take about 25,000 employees with it. But Narasimhan said he is pushing further cuts within Novartis, including about 8,000 layoffs that began last year.

“They are happening now,” Narasimhan said of the timing of the layoffs, which were reported in June by the Swiss newspaper Tages-Anzeiger. He said he expects the layoffs to be completed by mid-2024.

New Jersey, for example, plans to eliminate 285 jobs by January 28, a Novartis spokesman said. Affected workers will receive severance pay and support in finding new positions with the company, the source added.

The restructuring will save Novartis about $1.5 billion a year, Narasimhan said during his presentation Monday at a JPMorgan conference.

The layoffs will affect a number of positions and teams, including the former Pharmaceuticals and Oncology, Communications, Risk and Compliance, Finance, Legal and Human Resources divisions, a company spokesperson said.

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