“Medicines for people, not regimens”

At Novartis, chemicals are usually blended into very complex drugs according to the most precise calculations, but this time a simple calculation in the dairy guide should help: The pharmaceutical giant is cutting 1,400 jobs in Switzerland. If each of those laid off brought home an annual salary of 200,000 francs – quite realistic in the industry – the Basel Group would save 280 million francs.

Novartis does not want to provide any information about specific savings through job cuts. In any case, the unions describe the mass layoffs as “meaningless” and the associated consultation process as “an alibi exercise.” Bleek met with Novartis Switzerland CEO Matthias Leuenberger (57) for an interview about job cuts and Switzerland’s future as a pharmaceutical hub.

Bleek: Mr. Leuenberger, our readers are probably most interested in the upcoming job cuts at Novartis.
Matthew Leuenberger: In fact, people should be most interested in the price of our shares and the general condition of the company!

Most Blick readers are probably not Novartis shareholders.
For now! Many people go through the pension fund without even knowing it.

Well, let’s talk about the stock price then. Novartis has lost 10 percent of its market value over the past five years. Competitor Roche added more than 20% over the same period. What is happening there?
The comparison with Roche is not entirely fair. For example, in 2019 we spun off Alcon and made it public. Our shareholders received additional Alcon shares. Adjusted for this factor, our share price has risen by more than two percent over the past five years.

Share value or not, Novartis is cutting 8,000 jobs worldwide and 1,400 in Switzerland, more than one in ten jobs. So everything seems to be out of order.
Job cuts are due to the merger of our two divisions, Oncology and Innovative Medicines. Of course, there are extra ones.

The entire economy is groaning from a shortage of skilled workers. Meanwhile, Novartis is kicking employees out into the street. How does it fit?
In production and research, we, in fact, also face a shortage of skilled workers. But not in control.

Labor market experts predict that managers of all people will have trouble finding work. Hierarchies are flatter, fewer people are needed who are “just” bosses. Instead, we need specialists. Do former Novartis managers get under the wheels?
Not! We have a very generous social plan. Most of the victims have already been informed in these weeks. However, we will not announce a termination for four months. And there’s a six-month notice period on top of that. So the first of them will leave the company next summer.

And then?
We have experience in this regard from an earlier reorganization: in 2018, we announced the reduction of 2,150 jobs and implemented them in subsequent years. At that time, about 80 percent found a connection solution. Our people are well trained and their specialist knowledge is up to date. Many of them are expats who can look for new jobs anywhere in the world. And the lack of skilled workers plays into their hands. I don’t want to name any names right now, but our competition continues to lure employees away from us.

If masses of expats are now looking for new jobs abroad, this does not bode well for Switzerland as a place to do business. Shouldn’t this be of concern to us?
Many will stay here. After all, Basel is home to the most important pharmaceutical center on the entire European continent. But it’s true, the competition is fierce. In research, we compete with the US, UK and Israel. After being excluded from the EU’s Horizon research programme, Switzerland is lagging behind. In studies, we are no longer part of the Champions League, so to speak. And when it comes to manufacturing, Switzerland is no longer as attractive as it used to be.

Novartis now supplies drugs throughout Europe from Stein AG’s manufacturing site. Are you saying there is no future?
The more bilateral agreements with the EU are eroded, the more difficult it becomes. Today, Swissmedic ensures that we manufacture our medicines the right way. The entire EU accepts this release. If we ever lose barrier-free access to the EU market, as has already happened in the medical device industry, EU inspectors will have to come to Stein to inspect the plant themselves. This makes export more expensive. Yes, and Switzerland as a place for pharmaceutical production is less attractive.

Switzerland and the EU are currently in “preliminary talks”. cause for hope?
In my opinion, a framework agreement 2.0 is unrealistic. The Federal Council unilaterally broke off negotiations. This is not exactly what created goodwill for the EU. I’m shocked. There is stagnation. And since there are elections in Switzerland in a year, nothing will happen until then. Now Europe is also at war and there is a risk of energy shortages. These issues are much higher on the EU Commission’s list of priorities than Switzerland.

The lack of energy will also affect Novartis. Where are you saving energy?
When it comes to gas, we are not one of the big consumers. When it comes to electricity, you have to distinguish between production, laboratory and office. At our Basel campus, if the crisis escalates, we can save 10 to 15 percent of electricity by temporarily closing all office buildings and taking other measures. It would be radical, but it could be implemented like this. It is difficult with production in Stein and in our laboratory buildings: saving there is a Herculean task.

Do you expect the federal government to cut off your juice there?
no The production of medicines is of systemic importance. We supply it not only to Switzerland, but to the whole world. We export to 200 countries and therefore bear a huge responsibility. The interruption in production will be at the expense of the patients and will also cause unprecedented damage to the reputation of Switzerland. Therefore, we do not expect quotas.

It sounds a little relaxed. After all, the pharmaceutical industry consumes 5.5 terawatt-hours of electricity per year – that’s 9 percent of Switzerland’s consumption!
The pharmaceutical industry is also the largest exporter in the country. Every year we export goods worth 100 billion francs. We don’t need above average amount of electricity per unit of output we produce. But, of course, if the crisis worsens, we must also cut consumption even further.

Speaking of exports, you are one of the few industries that continue to export to Russia. Pharmaceutical companies are exempt from sanctions. Are you still limited in your work?
We have stopped investments and advertising activities in Russia. We are also suspending the start of new research. However, we have committed ourselves to ensuring access to our medicines in Russia, because, unlike coffee and cheese, medicines are indispensable. They are not created for regimes, but for people.

Let’s go back to Switzerland. Next year, health insurance premiums will increase by an average of 6.6 percent. Critics, including Public Eye, complain that this is also due to high drug prices. Are you involved in the price explosion?
Medicines account for 12 percent of health care spending. This value has remained constant over the past seven years. In the case of generics, we are even seeing price pressures leading manufacturers to no longer manufacture in Europe for cost reasons. In the worst case, this will eventually lead to delivery bottlenecks. It can’t be that an ibuprofen tablet costs 7 centimes and an herbal candy costs 16 centimes! In addition, we do not set prices ourselves. This is done by the Federal Public Health Administration.