Novartis Reorganizes US Operations, CEO Leaves
8 CommentsBy Ed Silverman // April 14th, 2010 // 11:59 am
After reorganizing its worldwide ranks earlier this year (see here), the drugmaker is now doing the same thing with its US pharma biz. The changes include the departure of Ludwig Hantson who, for the past two years, was US pharma ceo (that’s him in the photo). And four new business units are being created, according to the email sent earlier today to employees by David Epstein, who runs the global pharma biz (see the note below). The changes are effective May 1 and about 250 employees are being let go.
Dear Colleagues,
Across Pharma a key objective is to innovate for patients and win in a changing environment. As you are aware, NPC initiated several changes last year through the Customer Centric Initiative (CCI) and Shape the Future Together strategy. Given the importance of our US business, we asked the US leadership team to assess the organization and its structure to continue to compete effectively given the expected changes in our product portfolio over the next several years.
Based on their assessment, the NPC leadership team is making leadership and organizational changes to provide clear competitive advantage and deliver stronger results. These changes support NPC’s need to maximize our evolving portfolio, align all functions with our new commercial model, and reduce our cost structure as we reinvest in high-growth opportunities.
In addition, Ludwig Hantson has decided to leave the organization for an external opportunity.
The following changes, effective May 1st, support the goals outlined above:
Four New Business Units to Address Portfolio Shift and Growth Opportunities
We will create four new Business Units to address our changing portfolio and growth opportunities: Primary Care, Multiple Sclerosis, Psychiatry/Neuroscience and Respiratory/Transplant/Infectious Disease.
We are aligning our Primary Care Operating Units (OUs) under one new Head of Primary Care. The Head of the Primary Care Business Unit will also have responsibility for Primary Care Marketing and Patient Services & Mature Products. This should facilitate faster decision-making and more integrated sales and marketing.
We are also reducing from five to four Primary Care OUs to achieve greater balance in the span of control for our General Managers. It will also facilitate governance of our top-line business strategy across the OUs while maintaining focus on our local customers.
Brian Goff, previously responsible for Primary Care Marketing, will lead the Primary Care Business Unit reporting directly to the Head of Pharma North America and President of NPC. Jeff Bailey (Northwest OU), Christopher Kaplan (Northeast OU), Gary Menichini (Southwest OU), Gerry Melillo (Southeast OU) and Cynthia Hogan (Mature Products & Patient Services) will report into Brian and will remain part of the Commercial Executive Committee (CEC).
The former West OU Managing Directors, RDAM and LTC Directors will be re-aligned across the four OUs. We are working with our associates in the West OU office to find alternative positions. Tony Yost will leave the organization. We wish Tony continued success in his career.
Our Primary Care business is critically important and will represent more than half of our sales. We will continue to invest in Primary Care as many of our competitors have shifted their attention elsewhere. This provides us with competitive advantage that we can leverage in the future as we develop primary care medicines in an era of fewer competitors.
In the area of Specialty Medicines, we are replacing our Specialty Medicines OU with three new Business Units: Multiple Sclerosis, Psychiatry/Neuroscience, and Respiratory/Transplant/ID. Each Specialty Business Unit will report directly into the Head of Pharma North America and President of NPC. This ensures dedicated focus on important future growth drivers.
Dagmar Rosa-Bjorkeson, previously responsible for BD&L, will lead the expanded Multiple Sclerosis Business Unit. We will grow our Multiple Sclerosis field force by approximately 160 associates in preparation for the Gilenia launch. Lisa Pilla will be responsible for the Psychiatry/Neuroscience Business Unit. Jesus Leal, who previously led the NPC Transplant and Immunology (IDTI) Business Unit, rejoins the organization to lead the new Respiratory/Transplant/ID Business Unit.
Jayson Dallas has decided to pursue his career outside Novartis. We would like to thank Jayson for his contributions and wish him continued success.
We will combine New Products and BD&L under Carol Lynch, who will report directly into the Head of Pharma North America and President of NPC, enabling further support and focus on portfolio growth.
Align Medical with New Operating Model
Under the leadership of John Orloff, we are taking important steps to appropriately align medical and commercial and to adapt our medical structure to mirror our new operating model. Field Medical will go from five to four OUs. This will allow better alignment on priorities, increase span of control for the Regional Medical Heads, and enhance collaboration among teams. In headquarters, Primary Care and Specialty MS&A groups will realign into four therapeutic Medical Units: Primary Care, Multiple Sclerosis, Psychiatry/Neuroscience and Respiratory/Transplant/ID. These new units will report into Medical and coordinate with our Business Unit Heads to best meet the needs of our customers and patients.
Focus Functions on Growth Drivers While Reducing Cost Structure
To maximize investment in high-impact growth areas, we are implementing a brand prioritization approach that will allocate resources based on the brand’s growth potential and lifecycle stage. This means we will elevate support for some brands and reduce support for others. We will ensure that critical patient needs are met but we can no longer sustain the old approach to resourcing. You will be hearing more about this from your functional leaders.
In addition, to further free up resources, we are reducing headcount by 383 positions, mostly in headquarters. We anticipate minimal headcount impact on the commercial sales organization, where we will work to minimize disruption and maintain focus externally on our customers.
As an organization, we have been carefully managing vacancies and instituting other measures to avoid the even more significant cuts we have seen among our competitors. Still, we are making reductions that will impact approximately 250 individuals. These employees will be notified starting today, with most discussions completed by tonight.
Change is difficult especially when it impacts individuals and I want to personally recognize these colleagues for their contributions and commitment. To help with the transition, we are providing significant support, including enhanced severance packages, out-placement services and, as feasible, redeployment opportunities within the Novartis Group.
Ultimately, the changes we are making demand a shift in mindset from doing more with less to prioritizing our focus and resources on areas of our portfolio that will have the greatest impact for patients now and into the future.
I want to thank Ludwig for his contributions to NPC and Novartis, and wish him continued success. We expect to name a new Head of Pharma North America and President of NPC, before the end of the week. Ludwig will be available in the short-term to help with the transition.
Please join me and the General Medicines leadership team for a Town Hall to be held tomorrow, April 15th from 11:15 am – 12:15 pm in the 438 Auditorium. You are also welcome to send questions in advance to the Communications Mailbox.
In closing, I am counting on you to successfully manage the transition and prepare our US organization for future growth driven by an innovative product pipeline that is among the very best in our industry.
David Epstein
mike long
Wow,these guys are total pigs. The United States needs to start supporting American drug manufacturers and quit buying these Euro trash companies product that hire and fire Americans without giving a thought. They make more money than 99.9% of American companys and they have the nerve to lay off people when the new health care policys the govt has introduced will only benefit them. Additionally, our economy is recovering and they are reaping the benfits yet they decide to lay off Americans now? GREEDY PIGS
Codes R not us.
They are more (actually less) than greedy PIGs.The way this Co operates, especially since the imfamous merger and destruction of two great cos. Sandoz and Ciba in 1996, is simply scary stuff.Hantson did not “leave” for external opp. just as Gorsky or Ebeling to mention few. They were all fired once they were considered useless for the new way of Novartis biz.As to Novarti’s care for America or any other country where they make (usually) huge profits, forget it. It is all about transfer of wealth to Swissland and only that money that has to be paid out for running of local biz, stays with you, the foreigner.Novartis has take “globalization” to entirely diff level.If you ever go to Basel and look at what selling pills around the world did for them,just watch your jaw drop.And if you were lucky enough to be Swiss working at Novartis HQ, you’d be more than OK. Dan Vasella, the Doctor/God that runs Novartis gets 44.000.000.00 Swiss Franks as base salary, same in USA dollars.He has already take home more than billion and that is not from local sales to sick Swiss.
Some may say don’t be envious, after all this is free market and they have every right to make these profits. Yes, if that profit were only from legally done business. They don’t, all the bigpharma by design and approval from the very top (Dan in this case) operate their biz with combination of at least equal parts of legal and illegal biz practices. Can you say offlabel promotion? That is just one of them and it gets even worse like bribery, fraud etc. They never run out of new and improved illegal modes to combine it with perfectly legal.In USA as you all know this is very common and in spite of huge fines cos pay for such behaivior (Novartis 185M recently and more to come) they continue. It is simply too profitable to stop.
I knew Ludwig personally (not in US) and he too was one of those who approved many illegal activities. He would sit in a meeting where these things would be planned to the last detail and never said a word against it. It is simply part of this Co’s culture.
The new reorganization, is just one of yearly ones they do. Some are bigger than others.One thing for sure, the long tradition of use of illegal ways will continue, only it may be harder to spot, at least for a while.
keiner
Interesting to read the comments from a European perspective, as it is exactly the way simple minds in Europe think about, let’S say: GM/Opel/Vauxhal, UPS, andandand…
Not to talk of these awfull American investment firms, buying Europena companies, letting them pay the price for buying by depts and requesting extra credits for the annual bonuses to be paid to the US and then bankrupt the companies
:-)
Enjoy your day!
pharmavet
I would daresay that the leukemia patients whose lives were saved by Novartis’ Gleevec would not consider them to be greedy pigs.
Former Pharma Marketing Director
Speaking about the Leukemia patients, there doesn’t seem to be anything in the remodeling here that speaks to the Novartis Oncology franchise. Rumors were abounding that Novartis was planning to branch into all other hematological cancers.
Something looks strange….
Codes R not us.
No one who is even 10% fair minded disputes the role bigpharma Cos and this one play in well being of all of us, especially in cases like most serious diseases like leukemia, transplant and similar patients.So what? That is the “business they chosen” and many times but not always they are successful and we all benefit. What we dispute is their dark side that includes all kinds of misconduct which is planned and built int their MO, deliberately and approved by the very top and along their management food chain.
Somene said, others do it too. Is that an excuse for the most (supposedly) ethical biz to do the same? But they do it, for the bigpharma has been tranformed into just another biz with all the dark side you can imagine. Further, by doing such good things as saving our lives, they think they are entitled to do almost anything they want or need to increase their returns far beyond what using ONLY the acceptable biz practics would bring in. That is not enough for them. By, say pushing their ARB Diovan early on when ony mild to mod. BP was approved indication, for 2-3 additional unaproved indications and using all kinds of unethical and illegal incentives for doctors, they made it #1 ARB in the world. Diovan is no better than any other ARB (personally I asked my doc to Rx Cozaar for my BP even though I pushed Diovan for BP and those other indications and my BP is as perfectly controlled as with any ARB) that are very good drugs as a class. And yet made it to the top coming from behind two leading ARBs after an early agressive use of illegal promo practices.
Generally all businesess thing they are entitled to special treatments for they have created a climate where it is felt that businesses are here for us to serve them not the other way around. Till this is changed we’ll be paying dearly for letting them get such an upperhand. Bigpharma is in a specially “good” position to keep us hostage, for when you are sick, you’d pay and do anything to get that life saving pill. Just ask that leukemia patient.This fact the bigpharma protagonists know and visably use with very little retributions from us or our representatives.
Yes this is a sweetest biz in the world, better than oil, for oil will run out some day.
pharmavet
Just like oil running out, so do patents, such as Diovan. The business model is that of life cycle management. Same thing with cars. When steel-bodied three ton Cadillacs were getting seven miles to the gallon they were replaced by lighter more fuel efficient cars. For every one blockbuster like Diovan there are many smaller market drugs whose sales are supported by the Diovan revenues, which also pay for the next generation of life-saving drugs. Diovan revenues from legitimate indications paid for further development of additional indications.
I disagree on Cozaar vs Diovan. The development of Cozaar fit the Merck approach of introducing the first in class but not necessarily the best in class. Same thing with Crixivan, Captopril Mevacor and others. Cozaar falls into that same group, but if it works for you then that is what personalized medicine is all about.
pharmadoc
Onco was not part of the restructuring as it’s a separate business unit. This was focused on general medicines US business