Basel-based pharmaceutical giant Novartis AG said the cuts will affect 1,630 sales positions in the field and 330 posts at its U.S. headquarters in New Jersey.
Th restructuring does not affect Novartis's operations in Canada, where the company employs about 2,000 people and has its head office in Dorval, just north of Montreal.
Novartis also has key operations in the Toronto area and other parts of Quebec through its various subsidiaries, including Alcon Canada Inc. and Sandoz Canada Inc.
Among its products are the Excedrin brand of over-the-counter painkillers. Health Canada announced Friday that a U.S. recall of Excedrin Extra Strength Caplets and Excedrin Tension Headache Caplets would be extended to Canada following reports of chipped and broken pills and inconsistent packaging.
In the United States, Novartis said the streamlining was necessary because of the expiry of its patent for the bestselling hypertension drug Diovan and the failure of a clinical study into another hypertension drug Tekturna, Novartis said.
"We recognize that the next two years will be challenging in the Pharmaceuticals Division and we are proactively making these changes to further focus our pipeline on the best opportunities and align our market position on our growth brands," the head of Novartis' pharmaceuticals division, David Epstein, said in a statement. "These are difficult but necessary decisions that will free up resources to invest in the future of our business which we view as well suited to bring new valuable therapies to patients and payors."
Novartis said the job cuts would save $450 million a year from 2013 after an initial charge of $160 million, to be booked in the first quarter of 2012.
Diovan contributed $1.43 billion to Novartis' net pharmaceutical sales of $8.16 billion in the third quarter. Its patent expiry is likely to markedly increase competition from generic products.
Meanwhile, Novartis said a reassessment of the future sales potential of Tekturna, which is known as Rasilez outside of the U.S., will result in an exceptional charge of $900 million in the fourth quarter. The company said last month at it had terminated a trial into the expanded use of Tekturna after it was found to cause increase complications in patients already taking other common hypertension drugs.
Two other experimental drugs will also be dropped, leading to one-off charges of $160 million in the fourth quarter, Novartis said.
In its statement Novartis made no mention of a recent announcement that it was recalling several over-the-counter drugs in the United States following reports of a possible mix-up with powerful prescription pain medications at a Nebraska manufacturing plant.
Novartis shares closed at 53.35 Swiss francs ($56.61) on the Zurich exchange Thursday. The market was closed for trading Friday morning due to an unspecified technical problem, but is expected to open later in the day, said Stephan Meier, spokesman for SIX, the Swiss stock exchange.
With files from The Canadian Press