Novartis Cuts 2,000 as Pharma Industry Continues to Falter
Novartis (NYSE: NVS) said it would cut 2,000 workers and outsource some functions to companies that will do the work for less than it can. Novartis will take a restructuring charge of $300 million. This is another sign that the…
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A new study by Booz & Co. shows that pharmaceutical multinationals are among the companies that spend the most on R&D. They have little to show for it. Each of these corporations, from Merck (NYSE: MRK) to Pfizer (NYSE: PFE), has been unable to develop a large portfolio of blockbuster drugs — the kind that sustained them with tens of billions of dollars in sales. Consequently, these companies will begin to slip down the Booz list of big R&D spenders. It is not one they can afford to head anymore.
One answer to pharma’s endless problems has been a series of mergers and layoffs. Merck bought Schering-Plough for $41 billion in 2009. Pfizer bought Wyeth for $68 billion in the same year. Each deal called for layoffs in the tens of thousands. What the drug companies could not create from new sales-based R&D, they tried to accomplish with M&A based on balance sheets that patented product sales had helped build over decades.
The Novartis disclosure shows that the dream that large pharmaceutical companies might reestablish robust product pipelines has been abandoned. There is little left these firms can do but to cut costs as quickly as they can.
Douglas A. McIntyre
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
