- Novartis AG will split its operations group into two divisions, Technical Operations and Business Services, as part of a reshuffling of its executive committee designed to better support a years-long restructuring effort.
- Steffen Lang, a company veteran and past chief of Biologics Technical Development and Manufacturing, will join the Swiss pharma's executive committee as head of Technical Operations, filling the void left by the forthcoming departure of current operations chief André Wyss.
- In 2016, Novartis announced — among other cost-saving initiatives — plans to consolidate its manufacturing operations into a single unit. The company expects the ongoing changes to result in annual cost savings at or greater than $1 billion by 2020, mostly through improvements on the technical operations front.
Novartis Technical Operations encompasses over 60 production and supply chain sites and facilities across the pharma's global operations.
Lang's appointment to the executive committee as head of the unit suggests Novartis is elevating its efforts to streamline operations and realize its cost-savings goal. Part of the original plan in 2016 was to lower cost and better use capacity by centralizing manufacturing operations.
Relatedly, Novartis is working to boost the core margin of its Innovative Medicines division from its current 31% toward the industry average of mid-30s. Part of the plan to do that involves improving efficiency in both of the new units: Technical Operations and Business Services.
Comments from Paul Hudson, head of Novartis Pharmaceuticals, on a recent earnings call suggests there is still some work to be done.
"The majority of the technical operations savings up to date is not yet achieved, so in a very good way, we're actually slightly ahead on that program but still a lot to come," he said.
In addition to promoting Lang to the executive committee, Novartis will also elevate Bertrand Bodson, chief digital officer, and Shannon Klinger, chief ethics, risk and compliance officer, to the group.
"The appointments of Bertrand Bodson, Steffen Lang and Shannon Klinger to the ECN will help us accelerate our efforts to lead in data and digital, increase our focus on operational execution, and reinforce our commitment to return more to society than we take," said company CEO Vas Narasimhan in a March 12 statement.