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Published on 22 October 2007

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Novartis to axe jobs despite rise in earnings

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Novartis has announced that its third-quarter earnings more than tripled due to large divestments, but that despite the growth 1,260 US jobs will be cut due to poor pharmaceutical sales.

Net profit rose to £3.3bn from £0.8bn in the third quarter of 2006, boosted by the sale of its Gerber baby foods and Medical Nutrition units to Nestlé SA.

But without the divestments, Novartis’s profit fell 12% to £0.7bn from £0.9bn in the July-September period last year. Revenue rose 9% to £4.7bn from £4.3bn.

However, the company, which has struggled with increased regulatory demands and stronger competition from generics in the US, revealed that it has seen strong growth in its vaccines and diagnostics division and sales of its own generic drugs.

Growth in pharmaceutical sales slowed to 2%, coming to £2.9bn compared with £2.8bn in the third quarter last year, while operating profit in the division dropped 13% to £0.7bn from £0.9bn.

Novartis said it would respond by cutting 1,260 jobs across the marketing and sales departments of its US pharmaceuticals division, a move which it claims will help the firm save £112m a year.

Copyright © PA Business 2007

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