Novartis has announced plans to strengthen its long-term competitive position and reduce its cost base with a restructuring of U.S. operations.

Novartis will restructure the general medicines business in the U.S. market, where it will continue to expand its presence in specialty businesses, cutting its field force by approximately 1,630 positions and headquarters functions by an additional 330 positions. The changes are planned to take effect in the second quarter of 2012, and associates will be notified in early April.

The restructuring was prepared in anticipation of the loss of U.S. patent exclusivity for Diovan (valsartan), a leading hypertension medication, in September 2012, and an expected reduction in demand for Rasilez/Tekturna (aliskiren) following termination of the Altitude clinical study.

The plan was accelerated after the Altitude study was halted following the recommendation from the data monitoring committee overseeing the trial. The study was investigating Rasilez/Tekturna in a high-risk population of patients with type II diabetes and renal impairment. Novartis, in consultation with health authorities, is now recommending that hypertensive patients with diabetes should not be treated with Rasilez/Tekturna in combination with an ACE-inhibitor or ARB.

The restructuring is expected to result in an exceptional charge of approximately $160 million to be recognized in the results for the first quarter of 2012. It is planned to produce full-year savings of approximately $450 million as of 2013, about half of which is expected to be realized in 2012 due to reorganization timelines.

A reassessment of the future sales potential of Rasilez/Tekturna in light of the ALTITUDE results has led to an exceptional charge of approximately $900 million (of which approximately $800 million are non cash) to be recognized in the fourth quarter of 2011.

In addition, Novartis will recognize an exceptional charge of approximately $160 million in the fourth quarter of 2011 related to termination of the PRT128 (elinogrel) and SMC021 (oral calcitonin) programs.