Novartis cuts jobs to counter losses
Novartis will eliminate 1,630 sales rep jobs and 330 headquarters marketing jobs as its hypertension franchise faces the impending loss of Diovan patent exclusivity and the impact of ugly study results on Tekturna sales.
The cuts will take effect in the second quarter, with the affected reps and managers to be notified in early April, the company said.
“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,” said David Epstein, division head at Novartis Pharmaceuticals. “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.”
Renin inhibitor Diovan loses exclusivity in September, and a planned round of cuts was accelerated following the early shutdown of the firm's ALTITUDE trial of aliskiren (marketed as Tekturna in the US) due to a finding of increased risk of serious side effects including non-fatal stroke, renal complications, hyperkalemia and hypotension. Novartis pulled all promotion of the hypertension drug, once expected to be a blockbuster.
Novartis forecast an exceptional charge of $160 million to be taken in first quarter results, and said the cuts would produce full-year savings of around $450 million in 2013, with around half of that to be realized in 2012. The company will take a charge of around $900 million to fourth quarter results in recognition of the ALTITUDE study's impact on Tekturna sales.The company is also taking a $160 million exceptional charge in the fourth quarter to account for termination of two experimental drug programs—for PRT128 (elinogrel) and SMC021 (oral calcitonin).