Novartis job losses are a blow but not the start of a downturn

The announcement that Novartis was shedding just under 60 per cent of the workforce at its Ringaskiddy operation came as a shock. Perhaps it shouldn't have.

The Cork plant makes active pharmaceutical ingredient – the raw material for older generation medicines . It has been widely known in the industry for some time that Novartis Ringaskiddy has been operating with spare capacity.

The closure is the latest stage in a review of all Novartis operations that the group instigated back in 2016. That has already seen the closure of plants in Switzerland, England, Japan and the United States, with the loss of several thousand jobs, as the company has targeted annual savings of $1 billion (€898 million).

Chief executive Vasant Narasimhan has noted that Novartis is evolving from high-volume products, such as those that would be produced at Ringaskiddy, to more specialised gene therapies and modern biologic drugs.

Alzheimer’s drug hopes see Biogen shares surge 27%

---

Pretax profits at Genzyme fall 65%

---

Fusion Antibodies sees revenue continue to grow

---

Boston Scientific’s Irish unit makes dividend payment of €1bn

---

“We don’t need the same scale that we’ve historically needed,” he said at a briefing earlier this year.

The decline in importance of the company’s cancer drug, Glivec, for which the active ingredient was manufactured at Ringaskiddy for many years, was just one warning bell for the 550-strong workforce.

While the shutting down of the oldest of Novartis’ three manufacturing units on the site is certainly a blow to the workers affected, the job losses will not take effect immediately but will be phased in over the next three years.

And the good news for the 320 workers being let go is that there are other employment options locally. Unemployment in the pharma sector is negligible and industry sources said there were a number of drug companies in and around Ringaskiddy actively looking for staff. Novartis has also offered to help with jobfinding and reskilling of the workers.

Coming hard on the heels of the news that 500 workers at Molex in Shannon will lose their jobs, the announcement raised initial fears for jobs at multinaitonal companies in general. But the two plants have little in common, apart from the fact that both were involved in manufacturing a product that was towards the end of its life cycle.

IDA Ireland mentioned in its half-year report that job losses among foreign direct investment "clients" were at a record low. That was never likely to last forever but there is no expectation that the job losses of the past 48 hours are the sign of a new downturn.