Novartis invests in factory once slated to close

The announcement of the closure of the Nyon plant in 2011 led to protests and widespread condemnation Keystone

Swiss pharmaceutical group Novartis has announced it will invest an additional CHF150 million ($160 million) until 2020 into bolstering its production site near Geneva, 18 months after it had threatened to close the facility.

Novartis Switzerland Chairman Pascal Brenneisen said in Nyon on Thursday that after promising last year to keep the site operational, the company now intends to modernise it and ensure increased production.

According to Novartis, there are currently 730 people working at the facility, 15 per cent more than 18 months ago. The company plans to invest CHF60 million over the next three years, followed by another CHF90 million by 2020.

The announcement also comes a few months after the company opened a building on the site housing laboratories and offices worth CHF12 million. 

Brenneisen said the site will now be radically transformed, notably with the construction of a new factory building. New production lines will also be opened for over-the-counter (OTC) drugs.

Novartis expects productivity to increase by ten per cent over the next decade, with the site eventually producing a quarter of the company’s OTC medications. Current staffing levels will be maintained for the next three years.

Novartis CEO Joe Jimenez said the turnaround was the result of teamwork and that the company considered the Nyon site a long-term proposition. He expects the factory to produce 300 million units of medication by 2023.

“Self-medication products are a growing market and we believe this will continue around the world,” added Jimenez. “Our DNA is Swiss,” he pointed out, promising further investment in Switzerland despite strong pressure from abroad to cut costs.

Government satisfaction

Economics Minister Johann Schneider-Ammann welcomed the announcement, calling it a “good day for Swiss industry.”

According to Schneider-Ammann, former Novartis chairman Daniel Vasella played a crucial role in saving the site. “It was him who convinced Novartis Switzerland to review its decision,” he added.

Novartis’ original decision in October 2011 to close the factory and cut 1,080 jobs caused consternation in Switzerland, especially since the company was reporting multi-billion profit figures at the time.

However, nearly three months later, a compromise was reached to save the site thanks to concessions by the workers and sweeteners from the local authorities.

Because the plant was kept open in order to be redeveloped, the canton agreed to give Novartis the same favourable tax treatment afforded to a new project. The president of the canton Vaud government, Pierre-Yves Maillard, said on Thursday that the company had only received benefits provided it increased its activities at the site.

In addition, the Nyon municipality agreed to rezone some land held by Novartis at the site from commercial to residential, thereby increasing its value.