Sector News

Novartis cuts more jobs at U.S. consumer plant ahead of handing it off to GSK

November 4, 2014
Life sciences
Novartis is into Phase III at its Lincoln, NE-based consumer health plant–phase three of its job cuts there as it whittles the workforce by 40%. The latest, and final, round of cuts comes even as the company readies its consumer health partnership with GlaxoSmithKline.
 
The Swiss pharma company cut another 75 jobs last week at the plant, which resulted in 44 people being let go and 31 unfilled positions being eliminated, spokeswoman Julie Masow told the Lincoln JournalStar. The company had already laid off 99 workers and whacked 99 open positions in two previous phases of cuts since May 2013. That leaves about 500 employees.
 
The company said in an emailed statement that, “Since announcing a three-phased restructure in April 2013, Novartis Consumer Health has strived to minimize the impact to associates by eliminating roles through attrition, vacancies and transfers.”
 
Novartis temporarily closed the plant, long plagued by quality lapses and product recalls, in 2011 to make upgrades after FDA inspectors excoriated it for the mess there. The closure left Novartis scrambling to find contractors to keep its key products on at least some retailers’ shelves and took a big cut out of its revenues. Even after significant investments, the plant continued to have problems, and last year Novartis said the facility would be limited to producing essentially three products, Excedrin, Theraflu and veterinary drug Sentinel. The narrower focus would require fewer workers, and thus the 40% employment shrinkage was ordered.
 
In its Q3 earnings report last week, Novartis said that its Consumer Health business, which comprises both the OTC operations and Animal Health, had a strong quarter with sales up 8% to $1.1 billion “driven by strong OTC momentum.” But the consumer health operations, including the Lincoln plant, will soon be under the oversight of GlaxoSmithKline, part of a partnership it created in an effort to limit exposure to underperforming operations. That deal is slated to be completed in the first half of 2015, but so far the two companies have provided no insight into how the new operation will shape up or what it might mean for either company’s current manufacturing plants. Novartis also sold its animal health business to Eli Lilly ($LLY) for $5.4 billion as part of the restructuring.
 
By Eric Palmer
 

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