Novartis cuts jobs, takes $1.22 billion charges

In anticipation of the blockbuster antihypertensive Diovan’s (valsartan) patent expiration and an expected reduction in demand for Rasilez/Tekturna (aliskiren) following termination of the ALTITUDE clinical study, Swiss drug major Novartis (NOVN: VX) revealed this morning that it will reduce its cost base with the current restructuring focused on the US market, including a significant number of job reductions.

A central element of the plan is a restructuring of the General Medicines business in the important US market, where Novartis Pharmaceuticals will continue to focus on expanding its presence in specialty businesses aligned with the product portfolio and pipeline. As a result, the field force is planned to be reduced by around 1,630 positions and headquarters functions will realign to support the new organization, resulting in an additional reduction of about 330 positions. The changes are planned to take effect in the second quarter of 2012.

Savings of around $450 million as of 2013

The restructuring is expected to result in an exceptional charge of some $160 million to be recognized in the results for the first quarter of 2012. It is planned to produce full-year savings of approximately $450 million as of 2013, about half of which is expected to be realized in 2012 due to reorganization timelines.