Novartis Outlines Procurement Cost-Savings Goals, Manufacturing Cuts

Novartis reported full-year 2013 revenues of net sales of $57.9 billion, a gain of 2% and operating income of $10.9 billion, according to the company's 2013 financial results. The company also highlighted procurement cost-savings targets and manufacturing adjustments.

Within procurement, Novartis highlighted ongoing productivity initiatives in procurement and resource allocation across the portfolio, as well as our its manufacturing network, offshoring and service hubs, and R&D. In Procurement, the company's focus is on leveraging scale to generate savings of approximately $ 470 million in the fourth quarter and $1.5 billion in the full year, according to a Jan. 29, 2014 press release.

The company continues to optimize its manufacturing footprint with the announced closure of its Alcon contact lens care manufacturing facility in Mississauga (Canada) in the fourth quarter, and its pharmaceuticals manufacturing site in Suffern, New York in January 2014, bringing the total number of production sites that have been, or are in the process of being, restructured or divested to 20. Related to this initiative, the company recorded exceptional charges of$ 115 million in 2013. This brings total exceptional charges to $515 million cumulatively since the program began in the fourth quarter of 2010. Furthermore, the company also started to consolidate its global research function, and in the fourth quarter of 2013 and announced the closure of four sites, which resulted in exceptional charges of $ 118 million in the quarter.

Source: Novartis


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