Novartis has announced several organizational and leadership changes in an effort to improve efficiency and to generate cost savings of $1.0 billion by 2020.

The company announced serveral changes to its Alcon Division on its core Surgical and Vision Care business, which includes transferring Alcon’s pharmaceutical products (sales of $3.8 billion in 2015) to the Pharmaceuticals Division to create an ophthalmology business with approximately $6 billion in sales. At the same time, the company is shifting selected mature, non-promoted pharmaceutical products (totaling approximately $900 million in 2015 sales) into Sandoz, the company’s generics arm, to manage these mature products.

Also, the company plans to centralize its manufacturing operations across divisions within a single technical operations unit. The new unit is expected to optimize capacity planning and lower costs through simplification, standardization, and external spend optimization. Centralization is also expected to improve our ability to develop new technologies, implement continuous manufacturing, and share best practices across divisions, according to the company.

The company is also increasing group-wide coordination of drug development by establishing a single global head of drug development to improve resource allocation, technology,and standards across divisions. The company is also integrating certain common functions, such as the chief medical office, which will cover medical policy, safety and pharmacovigilance policy for the company. Novartis expects that these changes to generate over $1.0 billion in annual cost savings from 2020, with the ramp-up starting in 2016. Associated with these changes, the company expects one-time restructuring costs of approximately $1.4 billion spread over five years. Net savings will be used to fund innovation and improve our profit margins.

With the changes, the company has made several leadership changes. Mike Ball, formerly chief executive officer (CEO) of Hospira has been appointed Division Head and CEO Alcon, effective February 1, 2016. Mr. Ball will be a member of the Executive Committee of Novartis (ECN). He joins Novartis from Hospira, where he was CEO from 2011 until recently. Prior to Hospira, he spent five years as president of Allergan, where he held a series of leadership positions over 16 years with the company. Mr. Ball succeeds Jeff George, who has decided to leave Novartis.

Vas Narasimhan has been appointed global head, drug development and chief medical officer, a new position in the ECN. In this position, Dr. Narasimhan will have functional oversight for drug development for General Medicines, Ophthalmology Pharmaceuticals, Oncology and Biosimilars and leadr collaboration across these units.

Andre Wyss, already a member of the ECN, head of Novartis Business Services (NBS) and country president for Switzerland, has been appointed president, Novartis Operations. In his new role, he will assume responsibility for the integrated Technical Operations organization as well as for Global Public & Government Affairs, in addition to his current responsibilities.

Source: Novartis