PRE-TAX profits at the Irish arm of pharmaceutical company Novartis last year dropped 89 per cent as the group incurred costs from a redundancy programme at a subsidiary.
Accounts recently filed at Companies Office show that Novartis Ireland Ltd's pre-tax profits dropped from €2.8 million in 2006 to €282,235 last year.
The accounts include an exceptional charge of €2.3 million relating to the closure of Novartis Animal Health Ireland Ltd last June, with redundancy costs of €1.8 million. After paying €485,515 in corporation tax, Novartis Ireland Ltd recorded a loss of €203,280 at year end.
The accounts show that turnover last year increased by 14 per cent to €62.4 million from €54.6 million. Operating profit dropped 10 per cent to €2.5 million from €2.79 million.
The pharmaceutical giant operates in 140 countries, employing almost 100,000, with its global headquarters at Basle in Switzerland. It manufactures pharmaceutical products and specialist animal health medicines to the agricultural, healthcare and industrial sectors.
The accounts show that the group's Irish unit had accumulated profits of €10.3 million at the end of 2007. No dividend was paid last year.
Novartis Ireland Ltd employs 93 people. Employment costs rose 40 per cent last year, according to the accounts to €9.6 million. The accounts show that €195,000 was paid for directors' remuneration for management services.
According to the directors' report, "2007 was a strong year for the group", stating that turnover in the pharmaceutical sector of the group increased by 10 per cent to €53 million.
Sales in the animal health sector rose 13 per cent to €10 million on the back of the introduction of a number of new products and an increase in advertising and promotional spend.
On risks facing the company, the directors state: "A new price agreement between the Department of Health and the Irish Pharmaceutical Association took effect from September 2007 and has led to enforced price cuts of 20 per cent on products with a bioequivalent generic on the market, starting in March 2007, followed by a reduction of 15 per cent 22 months later."
