Novartis AG is restructuring its General medicines business in U.S. market to power up its position in the light of loss of patent of its best selling blood pressure drug Diovan and lower sales of Rasilez/Tekturna drug worldwide after ALTITUDE clinical study termination.
The company is going to reduce 1960 positions in restructuring. 330 positions among them will be reduced as a result of headquarter functions realignment to support new organization.“We recognize that the next two years will be challenging in the Pharmaceuticals Division and we are proactively making these changes to further focus our pipeline on the best opportunities and align our market position on our growth brands,” David Epstein, Division Head of Novartis Pharmaceuticals, said in a statement. “These are difficult but necessary decisions that will free up resources to invest in the future of our business which we view as well suited to bring new valuable therapies to patients and payors.”
The planned changes will be effective in the second quarter of 2012 and notification to the associates will be given in the early April, 2012.
The restructuring is expected to result in an exceptional charge of approximately USD 160 million to be recognized in the results for the first quarter of 2012. It is planned to produce full-year savings of approximately USD 450 million as of 2013, about half of which is expected to be realized in 2012 due to reorganization timelines. Together with ongoing productivity programs, the company plans to continue to ensure that the product portfolio and research pipeline are fully invested in to sustain growth.
A reassessment of the future sales potential of Rasilez/Tekturna in light of the ALTITUDE results has led to an exceptional charge of approximately USD 900 million (of which approximately USD 800 million are non cash) to be recognized in the fourth quarter of 2011. The charge comprises impairments to intangible and manufacturing assets and excess inventory together with trial wind down and other exit costs. The accounting charge is triggered by lower sales expectations and does not seek to anticipate the results of our ongoing discussions with health authorities concerning Rasilez/Tekturna.
In addition, Novartis Pharmaceuticals will recognize an exceptional charge of approximately USD 160 million in the fourth quarter of 2011 related to termination of the PRT128 (elinogrel) and SMC021 (oral calcitonin) programs.