updated 12/13/2007 1:50:09 PM ET 2007-12-13T18:50:09

Novartis AG said Thursday it will cut 2,500 jobs worldwide by 2010, the latest major pharmaceutical to make sizable cutbacks as industry costs rise, more patents expire and researchers continue to chase the next blockbuster drug.

The company offered a downbeat outlook for its U.S. pharmaceutical business in the first quarter, citing generic competition for four drugs and lost sales from a discontinued product.

Novartis said it would take a restructuring charge of about $450 million in the fourth quarter. The company had already announced in October that it would slash 1,260 U.S. marketing and sales jobs. The new cuts represent about 2.5 percent of Novartis' global work force.

The company said it hopes to save $1.6 billion through the new round of cuts.

Other major drug companies to announce job cuts in recent weeks include Pfizer Inc., Merck & Co., Bristol-Myers Squibb and GlaxoSmithKline PLC.

"We have taken the opportunity given the short-term down-cycle in our pharmaceuticals business to initiate this project," Chairman and Chief Executive Daniel Vasella said. "This will simplify our organization and redesign the way we operate."

Growth in the U.S. will be hurt by the loss of sales from bowel drug Zelnorm and generic competition for the company's Lamisil, Lotrel, Famvir and Trileptal drugs, the company said.

"We expect the first quarter to again be strongly negative, while there will be around zero growth in the second (quarter)," Vasella said on a conference call.

Novartis had said in October that its third-quarter earnings more than tripled from large divestments — including the sale of its Gerber baby foods and Medical Nutrition units to Nestle SA — but poor U.S. pharmaceuticals sales forced it to cut more than a thousand U.S. jobs and reorganize its divisional management. Without the divestments, Novartis' third-quarter profit fell 12 percent.

The company has struggled with increased regulatory demands and stronger competition from generics in the United States. It says it has partly balanced these setbacks through strong growth in its vaccines and diagnostics division, and sales of its own generic drugs.

The company makes hypertension drug Diovan, leukemia drug Gleevec — known as Glivec in Europe — and breast cancer treatment Femara, among others.

The Basel-based pharmaceutical maker said Thursday that it would focus on engineering new drugs. It also said it would streamline its units and improve its sales force organization to begin expanding its presence in emerging markets such as Africa, Central Asia and Southeast Asia.

Novartis shares, which have slipped more than 9 percent this year, fell 0.4 percent to 63.80 Swiss francs ($56.36) in Zurich.

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