Novartis, Switzerland's largest drugmaker, became the latest pharmaceutical giant to restructure today when it announced 2,500 jobs over the next two years.

The cuts, equal to 2.5 percent of its workforce, will lead to annual savings of $1.6 billion by 2010 are the result of a combination of price pressure on drugs, higher research costs, tighter regulations and more generic competition.

In a statement released in Basel, Switzerland, today, Novartis said it would take a restructuring charge equal to $450 million in the current quarter.

This is the second announcement of job cuts at the pharmaceutical giant in almost as many months. In October, Novartis said it would cut more than 1,200 marketing and sales posts in the US. The move is expected to save $230 million, the company said at the time.

The company's shares have fallen 9 per cent this year, compared with an average fall in the European healthcare sector of 7 per cent.

Novartis has suffered a series of setbacks this year including a delay over safety concerns of the diabetes medicine Galvus, the withdrawal of the irritable bowel treatment Zelnorm, and the failure to win approval for the Prexige painkiller. Competition from generic medicines threatens products including the heart treatment Lotrel and anti-fungal Lamisil.

Denise Anderson, analyst at Landsbanki Kepler, said: “It just shows investors again that the industry is in a very tough situation and that cost savings are required, but not necessarily the answer to all problems.”

Ms Anderson said that the large number of significant patent expiries over the next fiver years was likely to force more drugmakers to make cost cutting moves.

The two major British drugmakers have also announced plans to reduce their workforce this year. In July AstraZeneca announced plans to reduce its workforce by about 11 per cent. GlaxoSmithKline, also based in London, is cutting out jobs in sales, manufacturing and research to save £700 million. While Pfizer, the world's biggest drugmaker, is cutting 10,000 positions.

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