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Revised cost cuts at Novartis slash 2,500 more jobs

Novartis reveals a new a restructuring programme aimed at saving USD 1.6bn by 2010, streamlining management, research and sales

Swiss-based pharmaceutical company Novartis has announced a restructuring programme to save USD 1.6bn in cost by 2010.

The programme will focus on streamlining corporate functions in management, research and sales, slashing 2,500 full-time positions, or 2.5 per cent of its total workforce, according to the company.

The revised job cuts are in addition to announcement Novartis made in October 2007, where 1,260 jobs would be eliminated from the company's US pharmaceutical marketing and sales hub.

A spokesperson for Novartis said the new cuts would affect all Novartis businesses, apart from the vaccines and diagnostics division and the Sandoz generic drug unit. About 500 jobs will be cut at Novartis' corporate headquarters in Switzerland.

The "Forward" restructuring programme is a response to a company performance report for the first nine months of 2007, which revealed that operating income in Novartis' pharmaceuticals division grew a mere two per cent, compared with the same period in 2006.

Novartis' CEO, Daniel Vasella, said: "We have taken the opportunity, given the short-term down cycle in our pharmaceuticals business, to initiate this project. This will simplify our organisation and redesign the way we operate."

Vasella added that the cost cuts would increase speed and productivity at the company in anticipation of accelerated growth in H2 2008.

As part of the changes, Novartis will create company-wide shared functions in areas, such as purchasing and information technology. In the pharmaceuticals division, the company says it will develop a more geographically tailored marketing approach, eliminating duplicate efforts among sales organisations worldwide. Some marketing functions will be outsourced.

The US-based Novartis Institutes for BioMedical Research will concentrate on disease areas with significant new opportunities and will take advantage of synergies among research efforts globally, says the company.

The company expects to take a restructuring charge of USD 450m in Q4 2007.

18th December 2007

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