Novartis cuts 2,000 US jobs after patent loss

Swiss pharmaceutical company Novartis has again drastically reduced its workforce in the United States to deal with the expiry of an important patent and its failure to get traction on other drugs,
the firm said on Friday.

Novartis cuts 2,000 US jobs after patent loss
Andrew Hecht (File)

After cutting 2,000 positions in late October, mainly in Switzerland and the US, the Basel-based company has again downsized its American operation.

The group plans to eliminate 1,630 positions resulting in the loss of a further 330 medical sales management posts in the US.

The step is to take effect from the second quarter and is expected to save the group $450 million annually from next year.

Novartis’ action stems from losing the patent of its lead drug for hypertension, Diovan. This “blockbuster” was the best performer for the group reaching sales $1.4 billion in the third quarter.

The US patent for Diovan, which ended in Europe at the end of last year, will expire in September making it vulnerable to competition from generics.

These are, however, not the only setbacks for Novartis.

The group has faced difficulties with another hypertension drug, Rasilez (Tekturna in the US) and in December stopped the Phase III clinical study of a drug used in patients with diabetes, due to side effects.

Two other drugs under development, the anticoagulant Elinogrel and Oral Calcitonin used for osteoporosis and arthritis, also failed to reach the Phase III clinical studies’ stage and were removed from the company’s portfolio.

These setbacks led Novartis to collect special charges totalling $1.2 billion.

These include a $160 million charge in the first quarter of 2012, another $900 million for Rasilez and $160 million for ending the Elinogrel and Oral Calcitonin projects. The latter two write-offs will be accounted for in the fourth quarter of 2011.

“We recognize that the next two years will be difficult for the pharmaceutical division,” division director David Epstein said in the company’s statement.

“These are difficult but necessary decisions freeing up resources for investment in our future business,” Epstein said.

Novartis, which employs 121,000 people worldwide, had already in late October announced the elimination of 2,000 jobs mainly in Switzerland and the United States.

The group is not the only one facing the thorny problem of patent expiry.

According to Fitch ratings agency, 15 major companies worldwide are facing “significant challenges” this year due to an unprecedented period of patent expiries.

In 2012, the pharmaceutical sector will feel the impact of the loss of four patents in the top 10 drugs, amounting to $50 billion in business. Besides Novartis, the US groups Eli Lilly, Bristol-Myers Squibb and Pfizer are affected.

The restructuring of Novartis in the United States due to the loss of the Diovan patent was expected, according to analysts at Wegelin Asset Management.    

But the extraordinary charges and problems with Rasilez are likely to “disappoint” investors, they noted.

In Friday afternoon trade on the Swiss Stock Exchange, Novartis shares fell by 1.22 percent to 52.70 francs in a market up 0.22 percent.

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Switzerland’s Novartis to help make Pfizer-BioNTech Covid vaccine

Swiss pharmaceuticals giant Novartis said Friday it had signed an initial agreement to help produce the Pfizer-BioNTech vaccine against Covid-19, as countries scramble to boost supplies.

Switzerland's Novartis to help make Pfizer-BioNTech Covid vaccine
Novartis will help manufacture Pfizer vaccine. Photo by AFP.

The rare act of cooperation — in an industry usually marked by cut-throat competition — comes after French pharma group Sanofi announced earlier this week that it would also team up with rivals Pfizer and BioNTech to help produce 125 million doses of their jab.

The two-dose vaccine, which is based on mRNA technology, has been shown to be around 95 percent effective and has been approved for use by the World Health Organization and in some 50 countries.

But it is in limited supply as nations around the world race to immunise their populations against the coronavirus, which has killed nearly 2.2 million people in just over a year.

Novartis said in a statement that it would use its sterilised manufacturing facilities at its site in Stein, Switzerland to help produce the Pfizer-BioNTech jabs.

Under the agreement, the company said it would “take bulk mRNA active ingredient from BioNTech and fill this into vials under aseptic conditions for shipment back to BioNTech for their distribution to healthcare system customers around the world”.

Once a final agreement is reached, Novartis said it expected to begin production in the second quarter of the year, with initial shipment of finished product expected in the third quarter.

Steffen Lang, Head of Novartis Technical Operations, stressed that the company was “committed to leverage our manufacturing capabilities to help support the supply of COVID-19 vaccines and therapeutics around the world”.

“We expect this to be the first of a number of such agreements,” he said in the statement.

Novartis said it was already in “advanced discussions” with a number of other companies about with other production tasks, including of mRNA, therapeutic protein and raw material production for Covid vaccines and therapeutics.