Novartis Cuts 550 Jobs & Shakes Up Management
4 CommentsBy Ed Silverman // October 20th, 2008 // 7:28 am
As reorganizations go, this one reaches most parts of the company. First, the drugmaker is cutting 550 sales reps, although half of the jobs are said to vacant, as part of a new business model with five new regional units for reaching doctors and insurers called “Customer Centric Initiative” (back story). The move should save $80 million annually as of 2010.
Then, Joerg Reinhardt, who was running vaccines and diagnostics, is now chief operating officer, and replacing him is Andrin Oswald, who heads Speedel and the global pharma biz. And George Gunn is the new head of the consumer health business, replacing Tom Ebeling, who is leaving altogether.
But we’re not finished: Andreas Rummelt is now head of quality assurance and technical operations, a new position, and remains a member of the executive committee. Jeff George, currently in charge of the pharma unit’s emerging markets biz, will now run the Sandoz generics unit. And David Epstein, who heads oncology, will also run a new unit focusing on innovative molecular diagnostics. Let’s not forget that Thomas Werlen, the general counsel, is now a member of the executive committee, too.
Tucked away in the statement is the news that Dan Vasella has been given a new contract extending his reign as ceo and chairman, a combined role that has drawn repeated criticism from some investors. Terms weren’t disclosed. Also, board member William George won’t stand for re-election and, instead, the William Broady, president of Johns Hopkins University and designated President of the Salk Institute, will be nominated.
The reorg was disclosed in the quarterly earnings release in which Novartis reported a 32 percent rise in net profit thanks to strong sales and the positive impact of the weak US dollar. Net profit rose to $2.1 billion, up from $1.57 billion a year earlier, when the company booked a one-time charge for environmental clean-up operations. Sales grew 12 percent to $10.75 billion, and Vasella claims the drugmaker has overcome the loss of its bowel drug Zelnorm, which was yanked from the US last year.
Lichtstrasse 35
Hi Ed: It’s Ebeling, not Eberling. Regarding staff cuts this is not as bad as many inside the company thought it would be. Reinhardt goes way back with Vasella, Epstein gets more juice, and Ebeling’s departure is no surprise since he was essentially demoted a year ago. It will be interesting to see how the contract extension of Vasella affects the relationship with Roche.
Ed Silverman
Thanks, Lichtstrasse. Sometimes, I simply type too quickly. Moreover, thanks for the insights.
ed
shelly
what is the exact head count of the sales force prior to the cut of 550?
Hypocrisy rules
Judging by the panic and chaos on Novartis board at CF, it is not as benign as you say here. More than 550 jobs are involved if you go by the intensity of the panic and the fact that no one knows the number, yet paople are just disappearing.
What seems to be much worse than loseing a job that you don’t like anymore and getting a package, is the new territory realignments. If this is Novartis’ new business model it is wrong on many levels. First they do not care for environment. How? Their reps are sent to “new” territories 2-3 hours away from the current ones, without the transfer. So imagine the amount of driving and gas use. Most think that this is done as a way to get rid of these reps for no one will survive for too long travaling 4-6 hours per day just to get to and back from the new territory.
This mybe a way to “construct dismissal” and some people think that all those reps abused this way should arganize and launch a class action law suit against the company. Others think that such thing will not work in USA because of the lack of employee protection in this country as they have for instance in Canada. Novartis there is not doing anything at this time but they certainly will not try this trick on their reps. The courts would throw at them the biggest book they have and have them pay big time.
For those of us who knew this company when it was THE pharma Co. in names like Sandoz or Ciba/Geigy the curren action of this once great company is appaling.
Swiss were never like this. It is the “Americanization” of this Co after the merger that lead to such brutality and resultinjg hatred of the company by most employees. Vasella although Swiss by birth and training, as brainwashed into “American” ways while beng treated for mental disorder here. As we all know while in such condition one is easily brainwashed and turned into whatever those who do it want to.
It is really surprising he got a new contract for there are all kinds of rumors that he completely lost confidence of everyone in Swiss land. Someone though is backing him. Perhaps his father-in-law still has the power bahind the closed doors.