

Novartis is cutting research staff despite posting $13.1 billion in quarterly revenue and seeing its top drugs grow by double digits. The reason reveals a massive shift in how Big Pharma thinks about where innovation should come from.
When a company posts $13.1 billion in quarterly revenue, you don't usually expect pink slips in the research lab. Yet that's exactly what's happening at Novartis.
In mid-May, the Swiss pharma giant confirmed it was cutting a "select number" of employees from its Biomedical Research organization. The company won't say how many people, exactly, are losing their jobs.
The weird part? Novartis isn't struggling. Its top drugs are growing like crazy. So what gives?
Novartis' Q1 2026 results tell a split-screen story. On one side, the company's priority drugs are crushing it. Kisqali, its breast cancer therapy, grew 55% year over year. Pluvicto, a radioligand cancer treatment, surged 70%. Scemblix, for leukemia, was up 79%.
On the other side, the walls are closing in. Entresto, the blockbuster heart failure drug that was once Novartis' crown jewel, saw its sales crater 46% after U.S. generics flooded the market. That single product dragged the whole quarter down. Core earnings per share missed analyst expectations, landing at $1.99 versus the $2.11 Wall Street wanted. Core operating margin dropped nearly five percentage points to 37.3%.
Think of it like a restaurant where the new seasonal menu is a hit, but the signature dish just got copied by every fast-casual chain in town. Revenue looks okay on the surface. Underneath, the economics are shifting fast.
The research layoffs aren't random. They're part of a deliberate strategy that Novartis has been telegraphing for years: shrink the number of internal bets, double down on the ones that matter.
Novartis has narrowed its entire R&D focus to four therapeutic areas: oncology, cardiovascular-renal-metabolic disease, immunology, and neuroscience. Anything that doesn't fit neatly into those buckets faces a much higher bar. Older products, legacy manufacturing sites, and therapeutic areas like dermatology and some ophthalmology programs appear to be sliding off the priority list.
The Wehr, Germany manufacturing plant? Closing by 2028, with roughly 220 jobs gone. The San Diego technical research site on Campus Point Drive? Phased exit, around 100 employees affected. Multiple waves of cuts at the East Hanover, New Jersey headquarters have also been significant.

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Meanwhile, Novartis' Biomedical Research organization still employs about 5,720 people. So these cuts aren't gutting the place. They're more like a gardener trimming back branches so the strongest ones get more sunlight.
If Novartis is cutting internal discovery staff, where does the innovation come from? Increasingly, from the outside.
This is the bigger story behind the layoffs. Novartis is betting that it can source early-stage innovation more efficiently by partnering with biotechs, licensing clinical-stage assets, and making targeted acquisitions. In February 2025, it grabbed Anthos Therapeutics for $925 million to pick up abelacimab, a next-generation blood thinner for atrial fibrillation patients. That deal deepened its cardiovascular portfolio without requiring years of internal discovery work.
Even more telling: Novartis announced a staggering $23 billion, five-year U.S. investment plan in April 2025. Seven new facilities. Four manufacturing plants. A $1.1 billion R&D hub in San Diego. New radioligand therapy sites in Florida and Texas. End-to-end U.S. manufacturing for siRNA (a type of RNA-based medicine that silences disease-causing genes).
The message is clear. Novartis wants to build things and make things in the U.S. It wants world-class manufacturing for cutting-edge drug types: radioligand therapies, RNA medicines, biologics, cell and gene therapies. What it wants less of is a sprawling internal discovery operation that places dozens of exploratory bets across every disease imaginable.
Zoom out, and you'll see the same playbook running across Big Pharma. Pfizer is leaning harder on deal-driven pipeline replenishment. Roche is tightening procurement discipline on R&D spending. The whole sector is converging on a single philosophy: focus internally, source innovation externally, manage costs aggressively.
The reasons are stacking up. Patent cliffs are hitting multiple blockbusters simultaneously. Interest rates squeezed biotech funding for years, making startups cheaper to acquire. U.S. drug pricing pressure adds urgency to every margin calculation. And AI-driven tools are making it easier to evaluate external assets quickly.
For small biotechs, this trend cuts both ways. On one hand, Big Pharma's appetite for deals has never been stronger; if you have a clinical-stage asset in oncology, neuroscience, or cardiovascular disease, your phone should be ringing. On the other hand, the talent flooding out of places like Novartis is creating a deeper hiring pool for startups willing to build.
Analysts aren't panicking. The research cuts are incremental, not existential, and they fit a restructuring story that Novartis has been telling since 2022. Most sell-side models won't change much based on a "select number" of biomedical research layoffs.
The real test comes later. Novartis has reaffirmed its 2026 guidance: low single-digit sales growth, low single-digit decline in core operating income. The company is essentially telling investors that 2026 is a transition year; the generic erosion (especially from Entresto) hits hardest in the first half, and the growth drugs should carry more of the load by year's end.
If those growth brands keep their trajectories, this strategy will look smart. If any of them stumble, or if the pipeline thins because too many early programs got cut, the calculus changes entirely.
Novartis isn't firing scientists because it's broke. It's firing scientists because it thinks it can get better science from the outside. That's a massive bet on a model where Big Pharma becomes less of a discovery engine and more of a development, manufacturing, and commercialization machine.
It's also a bet that the biotech ecosystem will keep producing innovations worth buying. Given how many small companies are struggling for funding right now, that assumption seems reasonable. But ecosystems are fragile things. Cut enough branches, from enough trees, across enough companies, and eventually you might find there's less growing than you expected.
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