Novartis AG is cutting nearly 2,000 jobs in the United States ahead of the patent loss of top-selling blood pressure drug Diovan as it braces for tough market conditions and a slump in sales of another key drug.
Novartis is the latest in a long line of global drugmakers to cut their sales forces as the industry faces its biggest wave of patent expiries in its history.
The group will book a one-off charge of $900 million in the fourth quarter after a clinical trial showed patients taking its blood pressure pill Rasilez actually did worse, meaning sales of the treatment, previously tipped to rake in sales of more than $1 billion, are likely to plunge.
The Swiss drugmaker is currently in talks with regulatory authorities on both sides of the Atlantic about whether this drug, once seen as a Diovan successor, could end up being pulled from the market, a spokesman said on Friday.
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, David Epstein, the group's pharma chief said in a statement.
Novartis shares were indicated to open 1.5 percent lower, according to premarket data from Clariden Leu, but Helvea analyst Karl-Heinz Koch said the move would boost margins and accelerate its push into specialty care.
Novartis plans to cut 1,630 jobs in its U.S. field force and another 330 positions are expected to go as it reorganizes the headquarters of its U.S. general medicines business. The changes are expected to take place in the second quarter of this year.
The group anticipates the restructuring measures, which will result in a charge of $160 million in the first quarter of 2012, will lead to annual savings of around $450 million by 2013.
Novartis' latest round of job cuts comes just months after it said it was cutting 2,000 jobs in Switzerland and the United States to keep costs under control in the face of growing price pressures.
The Basel-based group has already cut thousands of jobs and shut several sites, notably in Britain. It has also shifted its focus to specialty medicines in a bid to boost profitability and protect its bottom line.
Novartis will also take another $160 million charge in the fourth quarter of this year after it stopped two further late-stage trials of PRT128, or elinogrel, and SMC021, or oral calcitonin.
(Reporting by Katie Reid; Editing by Hans-Juergen Peters and Mike Nesbit)