Novartis: Half of 1,400 Swiss Job Cuts are Leadership Positions
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Of the 1,400 jobs Novartis plans to eliminate in Switzerland, about half will include leadership and management positions, the company reported Monday.
At a media event held in Zurich, Matthias Leuenberger, the head of Novartis Switzerland, said the first people to receive pink slips will be informed in the coming weeks. This round of cuts is centralized in Switzerland.
Leuenberger said the job cuts in Switzerland probably won’t take effect until summer 2023 due to employee contracts. He added that some staff were concerned about the layoffs but are “neither frustrated nor angry.”
In June, Novartis announced plans to cut up to 8,000 jobs in order to save at least $1 billion by 2024. That figure accounts for about 7 percent of the company’s workforce. Of those, 1,400 are in Switzerland, and 600 of the jobs are in central administration on the Basel, Switzerland campus.
The cuts are part of the company’s planned strategic restructuring, which also includes integrating its pharmaceuticals and oncology business units. The goal is to ensure sales growth of at least 4 percent through 2026.
Novartis came into a large sum of cash last year after selling a 33% stake in Roche back to its Swiss competitor for $20.7 billion. The company also announced plans to buy back $15 billion of its own shares, although it plans to keep enough cash to invest in other companies and technologies, should the need arise.
Leuenberger indicated the job cuts in Switzerland probably won’t take effect until summer 2023 due to employee contracts. He also said that some staff were concerned about the layoffs but are “neither frustrated nor angry.”
An Investigation into Possible Fiduciary Duty Breaches
In other Novartis news, an investigation into possible breaches of fiduciary duties by some of the company's directors has been launched by the Shareholders Foundation. The organization offers professional portfolio monitoring, settlement claim filing services and investor advocacy.
The investigation revolves around a May 5 announcement that the company “announced a temporary, voluntary suspension of production at its radioligand therapy production sites in Ivrea, Italy and Millburn, New Jersey.” Production was halted to “address potential quality issues identified in its manufacturing process.”
At that time, Novartis' stock plunged from $88.50 per share on May 4 to $83.37 per share on May 9.
On May 31, STAT published an article titled, “Documents show problems at Novartis facility where cancer drug production was halted.” The article stated that the FDA cited deficiencies at the Novartis facility in New Jersey after a late 2021 inspection, including a “concern that Novartis failed to notify customers about batches of Lutathera…that were distributed despite failing to meet quality specifications.”
Again, company shares dropped from $92.12 on May 24 to $88.76 on June 6. The Shareholders Foundation indicates that people who purchased shares of Novartis “have certain options and should contact the Shareholders Foundation.”
A Rough Ride in August
The month of August has been tough for Novartis. On August 15, the company reported results from its Phase III CANOPY-A trial of canakinumab. The drug failed to hit the primary efficacy endpoint in adult non-small cell lung cancer (NSCLC). The primary endpoint was disease-free survival (DFS).
Three days earlier, on August 12, a report emerged stating that two patients who were taking Novartis's gene therapy for spinal muscular atrophy (SMA) had died from acute liver failure. The gene therapy, Zolgensma, appears to be effective, but a known potential adverse effect is liver issues.
In a press release, the company stated, “While this is important safety information, it is not a new safety signal, and we firmly believe in the overall favorable risk/benefit profile of Zolgensma, which to date has been used to treat more than 2,300 patients worldwide across clinical trials, managed access programs and in the commercial setting.”