Novartis AG (NOVN), Europe’s second-biggest pharmaceutical company, plans to eliminate 2,000 jobs in Switzerland and the U.S. and add employees in China and India to offset the effect of drug price reductions.

The company, which is based in Switzerland, operates a huge vaccine production plant and research facility in Holly Springs, N.C.

The company’s statement on the job cuts:

“Novartis is announcing today additional cost reduction activity, which will be executed over three to five years. Elements of the activity to include: reallocation of production within the Novartis network resulting in closure of two sites in Switzerland and one in Italy; restructuring the development organization largely in Switzerland and the US and relocating some research activities from Switzerland to the US

“In total, approximately 2,000 positions will be reduced in the Group, subject to required employee consultation, mostly in Switzerland and the US offset by 700 new positions in low cost and other countries.”

The cuts, equivalent to about 1 percent of Novartis’s workforce, will be implemented over three to five years, and will generate annual savings of more than $200 million a year, the Basel, Switzerland-based company said in a statement today. Novartis plans to close a plant in Nyon, Switzerland, that makes over-the-counter drugs, and chemical sites in Basel and Torre, Italy. The company will take a fourth-quarter restructuring charge of about $300 million.

Austerity measures in Europe have forced Novartis to lower prices by about 5 percent this year, Chief Executive Officer Joe Jimenez said on a call with reporters today. He declined to forecast price cuts beyond this year.

“We really don’t know what’s going to happen, but I wouldn’t anticipate the pricing environment, particularly in Europe, getting better any time soon,” Jimenez said.

In his statement about the cuts, he noted: ”To strengthen our future, we have accelerated actions to reduce our cost base over the next few years. These actions are necessary to ensure that we adapt our organization to continue delivering on our
mission of bringing innovative new drugs to patients.”

The company will cut 1,100 jobs in Switzerland, with the balance in the U.S., Jimenez said. Some research will be moved to the U.S. from Switzerland, and reductions will be made in technical research and development, data management, clinical trial monitoring, drug safety and regulatory affairs. Novartis will add 700 positions in China and India in data management and trial monitoring, he said.

(Bloomberg news contributed to this report.)

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