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Novartis' Pink Slip PowerPoint: CEO Plans Thousands of Layoffs

Novartis (NVS) CEO Joe Jimenez gave a presentation to investors in London today that contained plenty of management cliches such as "synergy," "strategic," "leverage" and "productivity," but precious little straight talk about what all of that means: thousands of job losses for Novartis staff.


We know that Novartis is in the process of laying off thousands of staff because news of 2,000 job cuts has leaked out in dribs and drabs, often months after entire sites have been closed down. (UPDATE: Jimenez gave another hint he was preparing layoffs to Dow Jones.) Jimenez's communications strategy is markedly different to that of Sanofi (SNY) CEO Chris Viehbacher, who at least has the cojones to say ahead of time how many people expects to ditch.

Both companies are in a similar situation -- Novartis says it wants to wring more than $1.9 billion in savings from its operations in 2011; Sanofi is aiming for €2 billion. And both companies' communications to Wall Street feature similar looking charts that with declining costs and budget lines to do with staffing.

What follows is a translation into plain English of Jimenez's slideshow as it relates to job cuts at Novartis.

Begin: Novartis' Pink Slip Slideshow
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The goal: $1.9 billion-plus in savings

Novartis saved $1.9 billion from its operations last year and has already saved $1.2 billion this year. All its major budget lines -- manufacturing (COGS), marketing and sales, R&D and general/administrative -- face the ax.

Next: Cuts in HR and IT.


On the chopping block: Human resources and IT

In this slide, Jimenez gets a little more specific about where cuts will come -- finance, human resources and IT -- but it still doesn't say anything specific about how those savings will be made.

Next: The confession.


Jimenez confesses: We're cutting staff

This slide describes a Q4 2010 round of 1,400 job cuts. Note that Jimenez expects the percentage of his revenues that are spent on sales and marketing to decline in 2011. That suggests more layoffs will come.

Next: 6 factories axed.


6 Factories closed or sold

This slide doesn't mention any specific numbers but it does confirm that Novartis has gotten rid of six of its manufacturing sites since last year. What Jimenez isn't saying is that those sales and closures cost 600 jobs.

Next: Alcon won't be spared.


Alcon: More of the same

Jimenez says he wants to repeat the plan at Alcon, the eyecare company Novartis acquired earlier this year. He expects $350 million in annual "synergies" -- which will almost certainly require job losses.

Next: The losers at Alcon, by department.


How the Alcon cuts break down

Jimenez wants to spend $130 million less on admin, and $100 million less on sales and marketing. Again, it is tough to cut those areas without cutting jobs because the operating expenses that fall under that line tend to consist largely of salaries and staffing costs. Also, Jimenez has broken out $120 million in procurement savings -- which means that the cuts to G&A and sales are in addition to cuts those departments may make in buying things (such as ad campaigns) from third-party suppliers.