Swiss pharmaceutical giant Novartis AG (ADR)(NYSE:NVS) has announced that it will lay off 450 workers in the U.S. in the course of the next two years as it moves to gradually close down its generics manufacturing facility which is located in the state of Colorado. This comes at a time when the drugmaker is facing intense price pressures and thus the decision to discontinue some products.

“To remain competitive in the U.S., Novartis will discontinue or divest limited growth products in saturated markets. The products that are being discontinued are oral generics that treat a variety of conditions in cardiology, central nervous system, endocrinology, respiratory and pain,” said a company spokesperson on Thursday.

Phased closure

The closure of the Sandoz plant which is located in the Broomfield suburb of Denver will be phased. Some of the operations of the facility will be moved to North Carolina. The closure of the plant is expected to be complete by the end of 2019.

In its second quarter report sales from the Sandoz division fell by 5% to reach a figure of $2.5 billion. Novartis attributed this to stiff price competition witnessed in the retail market in the United States in the generics space. According to the chairman of Novartis, Joerg Reinhardt, the Sandoz division will still remain key to the rest of the business and there are plans to increase the portfolio by introducing complex biosimilar copies where it is expected the pricing pressures being witnessed will be mitigated.

CAR-T therapies

The plan by Novartis to close its Sandoz facility comes at a time when Novartis’ dominance in the CAR-T therapy segment now stands challenged after the U.S. Food and Drug Administration granted approval to a gene therapy developed by biotech firm Kite Pharma which is owned by Gilead Sciences, Inc. (NASDAQ:GILD).

Though Novartis’ Kymriah and Kite Pharma’s Yescarta are different in that Yescartis is approved for the treatment of B-cell non-Hodgkin lymphoma while Kymriah is designed to treat B-cell acute lymphoblastic leukemia, the two could find themselves in direct competition when the indications for use are expanded.

On Thursday shares of Novartis AG rose by 0.07% to close the day at $86.16.