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Uncertainty in Leek: is it a new owner and what will be the production in Slovenia?

Chief Executive Officer of Novartis Vas Narasimhan again questioned the further fate of the Sandoz generic unit, under which an umbrella belongs to Ljek. According to information on (temporary) termination of the construction of the new factory in Prevalje, so far the largest investment in Slovenia, we also checked the unions whether the fear of employees was justified.

At today's presentation of the Novartis business results, Narasiman announced that Sandoz will now focus even more on products with higher added value. At the same time, they will withdraw from less prosperous markets and continue "regional consolidation", which could indicate a prediction of the closure of factories in Europe. Which, for now, is not known.

Vas Narasimhan, the head of Novartis

Vas Narasimhan, the head of Novartis
Photo: Reuters

For Sandoz, who recently faced serious competition and, consequently, lower prices for drugs on the market, he announced that he would soon become an independent unit within Novartis.

Additionally, he ignored the information to think about the sale of Sandoz. Last fall, they have already begun to withdraw from the US market, which was critical to them, because they sold their company there to the Indians there. At the same time, Narasiman explained in his talks with investors that Sandoz is studying all "strategic options".

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The revenues of Sandoz fall

Sandoz scored even worse results last year. Revenues fell 3 percent to 9.86 billion dollars, while operating profits rose 2 percent to 1.33 billion dollars. The Lek Group contributes about a tenth to this.

If in Novartis, where all efforts are to turn business trends and seek cost savings, they finally decided to sell Sandoz, this can be a big uncertainty for many of its production units in Slovenia.


Photo: Lek

In recent years, a number of acquisitions are taking place in the market for generic drugs, while tens of thousands of workers are already out of work, especially in Western countries.

"Sandoz is part of Novartis and we will invest in it to succeed," Narasimha said today about the issue of a possible sale of the company.

Although the plan for what will happen next year and a half in Sandoz next year and a half, it is not yet known, but Sandoz CEO, Richard Francis, does not expect significant changes at this time in Slovenia. As he noted, he is extremely pleased with the work of Slovenians in the group. He also highlighted Slovenia's contribution to development.

More than 4,000 people work in Lek

In front of us, several Lek employees have already contacted us, who are worried about current events, for example, because of the uncertainty whether Sandoz will get a new owner and whether it will also result in job cuts and a reduction in rights.

According to the latest data, 4.085 people work in Lek, whose average age is about 40 years. Of this, almost half of them have a primary or secondary level of education.

Leku, headed by the Chairman of the Board of Directors from August 2017 Zvonko Bogdanovski, so we sent the following questions:

  1. What about Leka's future in Sandoz Group is Novartis CEO's announcement to focus on products with greater added value?
  2. What is the position of Leka within Sandoz, according to his predictions, that Sandoz will deinvest in less prosperous markets? What will be the future?
  3. What does it mean to rationalize Sandoz's business for Lek?


Photo: Lek

"Lek is one of the key development centers for Sandoz and Novartis. It is also important for the development and production of biological and similar biological drugs and generic drugs with high added value," Lek said.

What will be the role of Sandoza in the Novartis group will be known within 18 months.

They added that they have already begun a transformation path that involves the production of innovative drugs and active ingredients. "We support the owner at Mengsu at various stages of developing innovative biological medicines, we are building a new facility for the production of biologically active substances, which will further strengthen the role of this site as a key Biotechnology Center Novartis."

According to information about employees' concerns, we also asked questions with questions Lidija Mielcic, a syndicalist in Lek. We answer her questions for questions:

1) Are there any negotiations or discussions about the rights of employees of Lek recently? If so, what is the subject of conversations and how are they progressing?

Currently there are no negotiations or discussions about the rights of employees in Lek.

2) Are there official or informal information that will result in job cuts and the reduction of employees' rights? Is there pressure on the administration of Leka, representatives of the owners?

Such information did not come to us.

3) Has an agreement been reached on a new collective agreement? If not, why not?

At least until the end of this year, Lek has a valid collective agreement.

4) Have they committed Slovenia to remain a location for production and development, in any way jeopardized?

There are no such obligations to the union and I can not answer the question.

5) Given Novartis's announcement of job cuts in the group, are there production locations in Slovenia?

There is no information about job cuts in Slovenia.

6) According to you, does the union have full confidence in employees or how to comment on information that the management of the union, in exchange for its own benefits, gives the administration the right to reduce costs? These are the claims of several Lek employees who contacted us.

The leadership of the Union enjoys full confidence in our membership in our information. In the future, as in the past, the union leadership will work for the benefit of all employees.

There are 200 new jobs in the air

However, in Lek, however, they think that the current announcement about the new head of Novartis, who led the Swiss giant earlier this year, would have no special influence on them.

They explain that they have entered the way of producing innovative active ingredients and drugs, as well as biological and similar drugs. They also want to become the main center for the chemical activities of Novartis for the launch of new products.

However, it should be emphasized that Lek created only 3% of the revenues in the biopharmaceutical sector in 2017.

Lek, Prevalje

Photo: Lek

It is not beyond the fact that in Lek immediately after Narrasiman's arrival, they set up an investment of $ 105 million in Prevalje, where they will produce an antibiotic amoxiclav. It is one of the key products of Lek and the best-selling drug Sandoz.

According to Mayor Prevalay Matija Tasic it was supposed to be the fate of a factory that will be known around 200 people, known by the end of February. The reason for the delay in launching the new plant is the change in Novartis's technology and new management, which examines developments in the global market for antibiotics.

Recently, they have already completed a new facility in Prevalje, while the production building remains empty. Initially, they decided to announce whether they would invest at all until the autumn. That did not happen. According to the latest information, they should decide in the coming months.

Since 2003, Novartis has invested more than 2.3 billion euros in Lek and Slovenia.

Novartis, a Swiss pharmaceutical group, posted net profit of 12.61 billion dollars last year, up 64 percent from 2017. Its revenues rose 5 percent to $ 51.9 billion a year.

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