Novartis halts decision to close Swiss plant

Novartis has said its facility at Nyon/Prangins site in Switzerland is to stay open, saving 320 jobs.

The manufacturing plant had originally been one of three marked by Novartis for closure in Italy and Switzerland to move operations to countries with cheaper labour in order to cut costs.

However, a deal negotiated between authorities, employee representatives and the pharma firm came up with several proposed solutions that would allow the site to remain in operation.

This included an agreement that the entire workforce at the plant would forego part of a company pay increase agreed for 2012, and employees who had signed up to the collective bargaining agreement would give up an increase in working hours.

A reduction in fixed costs at the facility, as well as local tax relief over a limited period, were also negotiated by Novartis.

In addition, the company said it now had plans to invest in the plant, to modernise its production capabilities and apply for approval from the US Food and Drug Administration (FDA) to allow products made there to be marketed in the US.

Joe Jimenez, CEO of Novartis, commented that the negotiated solutions would lead to “sustainable improvement” of the site's profitability.

“A very important job has been done in a particularly difficult situation,” said Philippe Leuba, government councillor of the Swiss region of Vaud.

“More than 300 industrial jobs have been saved which also brings a long-term diversification of the economic tissue in the canton of Vaud. The Council of State is fully satisfied with the result.”

Despite the result in Nyon/Prangins, the fate for employees at the site's facility in Basel, the closure of which was also announced in October 2011, is still uncertain.

In a statement, the company said it intends to offer other positions to around one third of affected employees, while another third will be offered early retirement deals.

The situation is currently under review however to decide if there are further chances for employees to be transferred to a spin-off of the company's toxicology division.

The news was less positive in the US earlier this week, with Novartis cutting 1,960 jobs in its salesforce and at its New Jersey headquarters.

The losses come as the company prepares for sales to be affected by generic competition to its blockbuster high blood pressure drug Diovan and safety concerns for successor Tekturna/Rasilez.