March 11, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Novartis AG CEO Joe Jimenez announced on Monday that the company would be making “very significant” cost cuts. It will likely involve layoffs, particularly in back-office staff and through consolidation of business units.
The company, headquartered in Switzerland, has been announcing layoffs fairly regularly. On Jan. 19 it announced it was shuttering its manufacturing plant in Puerto Rico by 2019 and laying off 270 people. On Sept. 18, 2014, the company indicated it was laying off 83 employees at its Suffern, NY facility. It was just part of a two to three-year plan to close the facility by 2016, which will ultimately result in 525 employees losing their jobs.
There are big changes at the company. In January Novartis announced a three-part transaction with UK-based GlaxoSmithKline . In that deal, GSK acquired Novartis’s vaccines business, except its influenza vaccines, created a consumer healthcare joint venture, and sold off its oncology portfolio and related research and development activities to Novartis, as well as the rights to two pipeline AKT inhibitors.
Novartis is apparently also cutting costs by way of its Novartis Business Services group. This new structure shifted 7,000 jobs to the new unit. Included in that shift was a new operations center in India that has room for 8,000 employees.
“When a manager sees a situation where [Novartis Business Services] helps lower costs for their part of the business,” Jimenez said in a statement, “they are going to support that through enlightened self-interest.”
Most observers point out that the demand for efficiencies and better margins are being driven by investors. A fair number of jobs seem to be shifted around, rather than eliminated. Cutting costs, however, frees up resources to invest in oncology and cardiovascular therapeutics.
Of particular interest is the company’s new cardiovascular drug, LCZ696, which is an angiotensin receptor-neprilysin inhibitor (ARNi). It is made up of Novartis’s Diovan and a new compound, sacubitiril.
This new drug had such promising results in the PARADIGM-HF study that the trial was ended early in March 2014. The Data Monitoring Committee (DMC) unanimously recommended early closure because patients who received the drug lived longer without hospitalization for heart failure than patients receiving enalapril.
“The result of PARADIGM-HF are truly impressive,” said Milton Packer , professor and chair of the Department of Clinical Sciences at University of Texas Southwestern Medical Center , Texas, USA, one of two principal investigators in a statement. “We now have compelling evidence that supports LCZ696 as a new cornerstone in the management of chronic heart failure.”
So, despite apparent cost-cutting, the company is expecting to make a big splash with the new drug and continues to invest in other promising areas of research and development.
BioSpace Temperature Poll
Vertex Pharmaceuticals made news last week when it terminated leases on three properties in Cambridge, Mass, that freed up 313,000 square feet of space in the Genetown area. The company has spent a significant part of 2014 consolidating its operations on the South Boston waterfront, leasing 291,000 square feet of office space at West Kendall Street in Cambridge’s Kendall Square. So we wanted to ask the BioSpace community: Is Boston going to be getting more biotech leases anytime soon, or fewer tenants?
