September 1, 2018 / 7:10 PM / in 2 months

Novartis to streamline production in response to lower U.S. prices: NZZ am Sonntag

VIENNA (Reuters) - Switzerland’s Novartis (NOVN.S) plans to streamline its worldwide production to increase its operating profit margin despite falling prices for its drugs in the United States, its chairman was reported as saying.

FILE PHOTO: Swiss drugmaker Novartis' logo is seen at the company's plant in the northern Swiss town of Stein, Switzerland October 23, 2017. REUTERS/Arnd Wiegmann/File Photo

Proceeds from the sale of drugs in its key U.S. market declined between 1 and 2 percent last year, Joerg Reinhardt told Swiss weekly NZZ am Sonntag. This was due to discounts pharmaceutical companies have to grant large buyers to sell their drugs in the Unites States, he said in an interview that will be published on Sunday.

Drugmakers can still charge slightly higher or stable prices in Europe, according to Reinhardt.

To increase the operating profit margin of its pharmaceutical business to around 35 percent from the current 32 percent within five years as planned, the group aims to increase its efficiency, the paper said.

“Overcapacities have accumulated in the area of production over the past years,” Reinhardt told the paper in an interview to be published on Sunday. “We are working on a global optimization.”

Reporting by Kirsti Knolle; editing by Andrew Roche

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