Novartis Achieves $400 M Procurement Savings in 2QBy
Novartis reported positive gains from a transformation of its procurement functions into a new shared services organization, Novartis Business Services (NBS), as part of the company’s second-quarter 2015 results. At the end of the second quarter, NBS had over 9,000 full-time-equivalent associates, transferred from within the Novartis Group. The cost within the scope of NBS was stable from the prior year. Moving from division-specific services to a cross-divisional model, NBS is scaling up the offshoring of transactional services to its five selected Global Service Centers.
In the second quarter, the company generated approximately $400 million in procurement savings by leveraging its scale. The company is also continuing to In to optimize its manufacturing footprint. In the second quarter, Novartis announced the planned closure of two Sandoz manufacturing sites as well as the partial restructuring of a pharmaceuticals manufacturing site.
For continuing operations, this brings the total number of production sites that have been or are in the process of being restructured, closed, or divested to 23. Exceptional charges amounted to $214 million in the second quarter and $259 million in the first half. Exceptional charges recorded cumulatively since the program began amount to $834 million. In total, the company’s productivity initiatives generated gross savings that contributed approximately $750 million in the second quarter.