Dow Jones, May 10, 2011 – Novartis CEO Warns On Misconduct After Executive Firings

In the memo, which was posted as a blog on Novartis\’s internal website and was seen by Dow Jones Newswires, Jimenez said the staff dismissals came after he had visited several local markets, where some senior staff failed to live up to the company\’s internal code of conduct.

Jimenez, who took over as CEO last year from long-standing Daniel Vasella, who remained chairman of the company, is known for taking quick, no-nonsense decisions. Soon after he took up the top management role at the Swiss firm last year, the former H.J. Heinz Co. manager started to curb costs and reduce staff, something he recently promised to continue as the company will use the funds to boost its research and development efforts.

Pharmaceutical companies are under strong pressure at the moment due to worldwide government efforts to curb healthcare costs. This price pressure has prompted many companies to reduce costs and cut staff levels to keep up profitability even as revenue is diminished.

Lawsuits have spiked up as a result, according to analyst estimates, as traditional drug firms are fighting generic drug makers over patent infringement. Many blockbuster drugs will lose patent protection soon and will increase pressure on traditional pharma players. Meanwhile, governments are also cracking down on pharma firms to bring down drug prices. Par Pharmaceuticals Cos Inc (PRX) recently settled a U.S. lawsuit over inflated wholesale drug prices.

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