Novartis has further streamlined its US business in pharmaceuticals to maximise the potential of the changing portfolio in both primary care and specialty markets.
The company has taken this initiative in anticipation of changes to the product portfolio in the US, which includes expected approvals for a number of new specialty medicines but also the loss of market exclusivity for Diovan and other medicines in the next few years.
This initiative, announced in April, will create three national specialty businesses focused on multiple sclerosis, respiratory diseases and neuroscience to complement the existing Oncology business unit.
In addition, a fourth business for primary care medicines, including the cardiovascular portfolio, will be consolidated into four regional units (reduction from the current five units).
The company also provided information about its plans to cut pharmaceutical jobs.
“Approximately 383 full-time equivalent positions, primarily in headquarter-based functions, are to be reduced in a socially responsible manner, with 35% expected to be achieved by not filling vacant positions. A one-time charge of US$ 24 million is planned to be taken in the second quarter of 2010, with annual cost savings of USD 56 million anticipated from 2011,” stated the company.
It has been reported that these positions are “primarily in headquarter-based functions”, meaning most are on the East Hanover campus.
Novartis reported strong sales and earnings in the first-quarter. Sales rose by 25% to $12.13 billion. Net sales rose on improvements in all businesses, particularly sales of A (H1N1) pandemic flu vaccines and rapid growth of recently launched products across the group.
The company shared that its new products, the result of successful R&D investments, are rejuvenating the Novartis portfolio together with initiatives to strengthen positions in emerging markets, build global businesses of scale, develop new commercial skills and improve talent. Contributions from recently launched products across the Group rose 68% to US$1.9 billion in the first quarter, representing 16% of net sales compared to 12% in the 2009 period.
In Pharmaceuticals, recently launched products provided US$1.5 billion of net sales in the 2010 period, representing 20% of the division’s net sales compared to 14% in the 2009 quarter.
Net income advanced 49% (+41% cc) to US$2.9 billion as contributions from associated companies and financial income more than offset increased interest expenses and a higher tax rate.
“Novartis is building momentum in 2010 and reaffirms expectations for Group net sales to grow at a mid-single-digit percentage rate in constant currencies (excluding Alcon) and for improvement in the Group’s operating income margin in 2010, driven by the business expansion and ongoing productivity gains,” stated the company.
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