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Novartis to cut 2,000 US jobs

Published on 13/01/12 at 10:12am
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Novartis will slash 1,960 jobs in the US as it prepares for life without its blockbuster medicine Diovan.

The hypertension drug goes off patent in the US this year and lost protection in Europe last month, which will decimate the $6 billion in peak global sales it enjoyed in 2010.

Novartis will reduce its US sales force by around 1,630 positions and cut some of its American headquarter functions, resulting in the loss of a further 330 jobs. 

The changes are planned to take effect in the second quarter of this year and staff will be notified in early April, Novartis said.

The job cuts will lead to a one-time cost of $160 million in the first quarter of 2012, but the firm expects to see annual savings of $450 million by next year as a result of the restructuring.

David Epstein, division head of Novartis Pharmaceuticals, said: “We recognise 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.

“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.” 

Trial failures to cost $1 billion

The Swiss firm has also announced a $900 million charge relating to the failure of the ALTITUDE study, which was examining its licensed hypertension drug Tekturna (aliskiren) in a high-risk patient population.

The trial was terminated after the study showed an increased risk of non-fatal stroke, renal complications, hyperkalemia and hypotension. The EMA is now reviewing the safety of the medicine.

The firm said it was ‘reassessing the future sales potential’ of Tekturna, and would take the charge in the fourth quarter of 2011. The drug had sales of $449 million in the first nine months of the year.

Novartis said the $900 million charge comprises “impairments to intangible and manufacturing assets and excess inventory, together with trial wind down and other exit costs”.

And the bad news doesn’t stop there: in addition, the firm will also incur a charge of around $160 million in the fourth quarter of 2011 related to termination of the PRT128 (elinogrel) and SMC021 (oral calcitonin) programmes.

PRT128 was undergoing Phase III trials for use as an oral anticoagulation drug for patients with certain cardiovascular problems, and was licensed from Portola Pharmaceuticals in 2009.

Novartis did not release details about why the drug’s study was terminated, but it would have had to compete in an increasingly crowded market, which includes a number of new treatments such as AstraZeneca’s Brilique. 

SMC021 (oral calcitonin) was being studied in conjunction with Nordic Bioscience for osteoarthritis and osteoporosis, and was also undergoing Phase III trials.  

Ben Adams 

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