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Novartis closes three sites, cuts 2000 jobs

Novartis is to close three plants in Italy and Switzerland and restructure business in the US resulting in the loss of 2000 jobs

Novartis is to close three plants in Italy and Switzerland and restructure business in the US resulting in the loss of 2000 jobs over the next three to five years.

The Switzerland-based pharmaceutical company said 700 new positions will be created in low-cost countries, with expected annual savings of $200m.

In a video discussing the company's financial results for the third quarter of 2011, Joseph Jimenez, CEO at Novartis, blamed the cost-cutting measures on an "increasingly difficult environment" that is likely to get even tougher over the next five years.

He said: "These actions are necessary to ensure that we adapt our organisation to continue delivering on our mission of bringing innovative new drugs to patients."

Previously in 2011, Novartis announced the loss of 550 jobs at its plant in the UK, and in December 2010 around 1,400 sales reps were laid off in the US.

The cuts come despite an increase in net profit of 16 per cent (at constant exchange rates) for the Q3 period, with Novartis making $3.54bn.

Revenue was up too, increasing by 12 per cent to $14.84bn for the third quarter of 2011.

However, the company is facing pressures from a strong Swiss franc, and upcoming patent expiries for key drugs.

These include blood pressure treatment Diovan (valsartan), which is already feeling the effects of generic competition as patent protection is lost in stages over the next two years. Sales of the drug fell by 7 per cent to $1.43bn during the quarter.

In its outlook for the rest of 2011, Novartis said it expects deliver sales growth in the low- to mid-single digits, with volume growth more than offsetting the impact of generic competition and price pressures.

Sales from its Alcon eyecare division, purchased in October 2010, are expected to increase at a mid- to high single-digit rate, while generics division Sandoz is expected to deliver high single-digit sales growth.

25th October 2011

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