Novartis Plunges 3% Amid Layoffs and Sector-Wide Cost-Cutting Frenzy: What’s Next for Pharma Giants?

Summary
• Novartis (NVS) trades at $123.93, down 2.95% intraday after opening at $123.80
• Swiss media reports of CEO Vas Narasimhan’s affair and 58 layoffs in New Jersey spark volatility
• Sector peers like Merck and Novo Nordisk unveil $3B+ annual cost-cutting plans
• Options chain shows aggressive put buying at $120 strike ahead of Sept. 19 expiration

Novartis faces a perfect storm of internal turmoil and sector-wide efficiency drives. With layoffs, regulatory scrutiny, and a bearish technical setup, the stock’s sharp decline reflects broader pharma sector pressures. Traders are now parsing options activity and key support levels to gauge next steps.

Layoffs, Leadership Scandals, and Sector-Wide Cost-Cutting Fuel NVS Sell-Off
The 3% intraday drop in Novartis stems from a confluence of factors: 58 layoffs in New Jersey under its efficiency drive, internal media reports of CEO Vas Narasimhan’s affair, and sector-wide cost-cutting announcements. Merck’s $3B annual savings plan and Novo Nordisk’s new CEO appointment signal a broader industry shift toward austerity. Meanwhile, Novartis’ own restructuring efforts—including reshoring manufacturing—add operational uncertainty. The stock’s breakdown below the 30-day moving average ($123.395) and Bollinger Band lower bound ($122.98) confirms technical bearishness.

Pharma Sector in Retreat: J&J Holds Steady as Peers Cut Costs
The pharmaceutical sector faces a crossroads as Novartis’ decline mirrors broader cost-cutting trends. Johnson & Johnson (JNJ), the sector’s leader, remains resilient with a -0.07% intraday move, contrasting Novartis’ 3% drop. Merck and Novo Nordisk’s recent $3B and $2B+ savings plans, respectively, highlight sector-wide pressure to trim expenses. While J&J’s stability suggests strong fundamentals, Novartis’ operational overhauls—including layoffs and manufacturing reshoring—signal deeper structural challenges.

Bearish Setup: Put Options and ETFs to Capitalize on NVS Volatility
• 200-day MA: $111.48 (well below current price)
• RSI: 53.68 (neutral, but declining)
• MACD: 2.08 (bullish) vs. signal line 2.28 (bearish divergence)
• Bollinger Bands: Price at 123.93 (near lower band 122.98)

Novartis’ technicals suggest a short-term bearish bias despite long-term bullish fundamentals. Key support at $122.98 and resistance at $126.48 define the immediate range. The options chain reveals aggressive put buying at the $120 strike (NVS20250919P120) and $125 put (NVS20251017P125), both with high leverage ratios and liquidity. These contracts offer asymmetric payoffs if the stock breaks below critical levels.

• NVS20250919P120 (Put):
- Code: NVS20250919P120
- Strike: $120
- Expiry: 2025-09-19
- IV: 21.05% (moderate)
- LVR: 412.93% (high)
- Delta: -0.148 (moderate bearish)
- Theta: -0.032 (moderate time decay)
- Gamma: 0.0599 (high sensitivity)
- Turnover: 21,674 (liquid)
- Payoff (5% down): $1.17 per contract
- Why it stands out: High leverage and liquidity make this ideal for a short-term bearish bet ahead of the Sept. 19 expiry.

• NVS20251017P125 (Put):
- Code: NVS20251017P125
- Strike: $125
- Expiry: 2025-10-17
- IV: 18.37% (reasonable)
- LVR: 36.65% (moderate)
- Delta: -0.542 (strong bearish)
- Theta: -0.017 (low time decay)
- Gamma: 0.0553 (high sensitivity)
- Turnover: 17,807 (liquid)
- Payoff (5% down): $1.13 per contract
- Why it stands out: Strong delta and gamma position this for a mid-term bearish play if the stock tests the 200D MA.

Trading opinion: Aggressive bears should target NVS20250919P120 for a Sept. 19 expiry play. If the stock breaks below $122.98, NVS20251017P125 offers a longer-dated hedge.

Backtest Novartis Stock Performance
Here is the back-test result for the “-3 % intraday plunge” strategy on Novartis (NVS) from 2022-01-03 to 2025-09-12. Key metrics and full visual output are available below.Insight: The strategy delivered a modest positive return with controlled drawdown, indicating that sharp one-day sell-offs in NVS often create short-term rebound opportunities when paired with disciplined exits.

Pharma Sector at a Crossroads: NVS Needs $122.98 Support to Avoid Further Selloff
Novartis’ 3% intraday drop reflects both internal restructuring and sector-wide cost-cutting pressures. While the stock’s long-term bullish setup (Kline pattern) remains intact, short-term bearish momentum—confirmed by the breakdown below Bollinger Bands and bearish MACD divergence—demands caution. Key levels to watch: $122.98 (lower band) and $126.48 (30D support). Sector leader Johnson & Johnson’s -0.07% move suggests broader pharma sector fragility. Traders should prioritize liquidity-rich puts like NVS20250919P120 and monitor the 200D MA ($111.48) as a critical long-term floor. Action: Buy NVS20250919P120 if $122.98 breaks; watch J&J’s stability for sector clues.