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Novartis AG (ADR)(NYSE:NVS) Unveils New Structure To Boost Profitability

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By on BioPharma

Novartis AG (ADR)(NYSE:NVS) has outlined plans for a new structure in an overhaul designed to boost profitability, according to a report from Reuters. The new structure will focus on the company’s three designated “powerhouse” divisions – pharmaceuticals, eye care and generics. 

Novartis also wants to consolidate some back-office functions spread across all divisions which account for over $6 billion in expenses.

Novartis said the new initiatives would have lifted its core operating margin to 27.2% had the deals been completed last year. The company reported a core operating income margin of 24.7% for 2013. 

The company unveiled a series of deals worth more than $25 billion in April in which it will get out of underperforming businesses and add higher margin cancer drugs from GlaxoSmithKline. In its Alcon eye care business, Chief Executive Joe Jimenez said he was not happy with the growth rate and the priority would be to accelerate sales in the division while maintaining the margin. Jimenez also said the Sandoz generics business would serve as an important foothold into emerging markets and should help it push ahead with growth in developing regions. 

Shares of NVS are up $0.37, or 0.41%, at $90.23 in pre-market trading with a 52-week range of $67.67 – $90.53. 

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