Novartis reports procurement savings of $1.6 billion in 2014

Will Green is news editor of Supply Management
27 January 2015

Healthcare firm Novartis has reported it made procurement savings of $1.6 billion (£1.1 billion) during 2014.

In its annual results the company said it made overall savings of $2.9 billion (£1.9 billion) with net sales of $58 billion (£38.2 billion) and core operating income of $14.6 billion (£9.6 billion).

In a report Novartis said: “The most significant savings of the $1.6 billion came from ongoing efforts in procurement to manage spending on goods and services across all our divisions. That represents 7 per cent of the annual spending of $22 billion (£14.5 billion) managed by the procurement organisation.”

The company said half a billion dollars of the savings were made in the fourth quarter of the year.

The report said spending on travel was cut by around 23 per cent, primarily by increasing the use of virtual meetings, while standard technical requirements were adopted for machinery.

“This standardisation enabled us to negotiate better prices from our supplier and will help reduce future costs related to such things as commissioning new equipment and maintenance,” said the report.

It said Novartis Business Solutions was created in July 2014 to consolidate support services across six areas including procurement.

Joseph Jimenez, CEO of Novartis, said: “2014 was a transformational year for Novartis. We delivered solid sales growth with margin expansion, strengthened innovation, and advanced our quality and productivity agendas. I’m confident that we are positioned for future success.”

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