Novartis' CEO tells Linda Banks how investing in innovation and parallel development is helping to keep the company at the forefront
Since taking over the chief executive's job from Daniel Vasella in 2010, Joseph Jimenez has wasted no time in bringing his past experience in fast-moving consumer goods to the fore in the pharmaceutical arena. He had been with Novartis under three years when he secured the position and he is making his own mark, emphasising the importance of productivity and costs to positive effect in a difficult market. He has a strong belief in nurturing team spirit, dating back to his days as captain of the university swimming team, and a determination to get the best from colleagues.
In a climate where many blockbusters are losing patent protection, Jimenez stresses that focusing on innovation and delivering new products to patients in need is always the best strategy. "Innovation is the lifeblood of our industry and will fuel future growth. Delivering new treatments that address unmet medical needs is the reason we exist," he says, straightforwardly.
He stresses that the focus on R&D across Novartis' businesses will continue to rejuvenate the company's portfolio. "In 2010, we had 13 key product approvals and 16 major filings in pharma, including Gilenya, Lucentis and Afinitor," he points out. "Recently-launched products are already driving growth. In the first half of this year, these products grew 47 per cent over the first half of 2010. This increase gives me confidence in the transformation of our portfolio."
In addition, he says strategic diversification will be key in the future. Novartis focuses on high-growth areas in healthcare, spanning innovative pharmaceuticals, eye care, generics, consumer health, plus vaccines and diagnostics. These areas provide platforms for growth and balance risk, he states. "Our broad, yet focused, portfolio delivered strong results in Q2, with sales growing 19 per cent. Our generics unit, Sandoz, had a particularly good quarter, with net sales growing 16 per cent in constant currencies versus one year ago. Our new eye-care business Alcon is also driving our growth, with net sales increasing six per cent in Q2."
Global reach in eye care
Explaining the rationale behind the merger with Alcon, Jimenez cites the fact that there is significant unmet medical need in eye care, with more than 160 million people worldwide affected by blindness and preventable eye diseases. There is a growing demand for eye care, owing to the rising prevalence of eye disease, an ageing global population and increased demand for healthcare in emerging markets. "We saw significant opportunity to address this unmet need by combining our two companies' global reach, complementary portfolios and shared commitment to innovation," he states. "Our combined product portfolios span a broad range of eye conditions, allowing us to better meet our patients' changing needs. Our combined research activities will enable us to further build our innovation power to develop new treatments. The acquisition of Alcon made us the global leader in eye care."
Joseph Jimenez has been chief executive officer (CEO) of Novartis since February 1, 2010. He is responsible for leading the company's diversified healthcare portfolio of businesses in innovative pharmaceuticals, eye care, generics, consumer health, vaccines and diagnostics.
Previously, he served as division head, Novartis Pharmaceuticals. Jimenez led the transformation of the pharmaceutical portfolio to balance both mass market and speciality products and significantly increased the percentage of sales from newly launched products. He also worked to realign the division's commercial approach to focus on the individual needs of customers and incorporated more technological tools to better connect with patients and customers.
Jimenez joined Novartis in April 2007 as division head, Novartis Consumer Health.
Prior to joining Novartis, he was president and CEO of the North America business for the H J Heinz Company and president and CEO of Heinz in Europe from 2002 to 2006.
He was a non-executive director of AstraZeneca plc, in the UK, from 2002 to 2007. He was also an adviser for the private equity organisation Blackstone Group in the US.
Jimenez is a member of the board of directors of Colgate-Palmolive.
He graduated with a bachelor's degree from Stanford University in 1982 and with an MBA from the University of California, Berkeley, in 1984.
Alcon is already delivering solid sales growth, with sales up six per cent on a proforma basis in the second quarter. R&D focus is on discovering new treatments for conditions including age-related macular degeneration (AMD), eye allergies, infections, inflammation, dry eye, glaucoma, cataract and refractive errors.
Jimenez sees three particular areas of strength that will guide Novartis' future: innovation, a focused yet diversified portfolio in high growth sectors and a secure position in emerging markets.
On the first of these points, he elaborates: "Our commitment to innovation is a core strength. While peers are cutting spending in research and development (R&D), we are sustaining our high level of investment, devoting more than 20 per cent of pharmaceutical sales to R&D last year. Our research strategy is unique; we focus on the science, not just market potential. Research at Novartis is centred on understanding the science of disease and drug targets and of molecular pathways that may be shared by multiple diseases."
As a result, he believes Novartis has one of the most productive pipelines in the industry and higher success rates than its competitors at every stage of development, from preclinical through to registration. "We lead the industry in new drug approvals – since 2007, we've had 18 NME approvals in the US and EU," he explains.
The second key strength that sets the company apart is its diversified portfolio, which focuses on fast-growing healthcare segments across different geographies, which Jimenez sees as important in enabling it to meet the full spectrum of patient needs.
Third is development of business in high-growth emerging markets, such as China and Russia, which he emphasises is key to the company's future as access to healthcare continues to expand in these areas. "We are already achieving strong growth in emerging markets and continue to expand our presence in these markets to better meet local patient needs," Jimenez states. "Net sales from our top six emerging markets – Brazil, China, India, Russia, South Korea and Turkey – grew 19 per cent, accounting for 10 per cent of our total net sales in the second quarter. We continue to invest in these markets and build our local capabilities. For example, we're building the largest pharmaceutical R&D institute in China and establishing a state-of-the-art manufacturing plant for pharmaceuticals and generics in Russia. We're also collaborating with the federal and local governments in China and Russia to improve healthcare infrastructure and access, and to enhance collaborations on R&D and public health."
Jimenez expands on the strategy to maintain high investment in R&D: "This strategy is paying off, as we have one of the strongest pipelines in the industry. We currently have 147 projects in clinical development, and many of these are potential best-in-class and first-in-class medicines that could significantly advance treatment standards."
Further, he explains that Novartis is one of very few companies to pursue a strategy of parallel development, giving the example of Afinitor, which the company has studied in multiple disease areas simultaneously: "We've been successful in our approach; Afinitor has already been approved to treat renal cell cancer, a rare form of pancreatic tumour, and brain tumours known as SEGAs that are associated with tuberous sclerosis. Afinitor has also been shown to extend time without tumour growth in women with advanced breast cancer – an important breakthrough for patients, as approximately half of all women with advanced breast cancer do not respond to initial treatment with endocrine therapy, and almost all of those who do initially respond develop resistance over time.
"We are committed to continue following the science to develop more innovative drugs with a broad range of indications, as these have the potential to be game changers for rare diseases and patients with unmet needs."
Jimenez is working to ensure that Novartis' businesses are well balanced and complementary, enabling the company to address the full spectrum of healthcare needs around the world.
Generics is another field where Novartis holds a leading position in difficult-to-make generics and biosimilars, which, he says, provide significant potential as the global generics market continues to grow. He expects to see increased demand for high quality generics amid heightened cost-containment pressures worldwide and as products worth more than $142bn go off patent during the next four years. Q2 was the best quarter in several years for Sandoz, driven by biosimilars, strong performance in the US and significant contributions from recently launched products, he points out.
However, discovering and developing innovative pharmaceuticals will always be at the company's core, he says: "We lead the industry with more drug approvals than our competitors. We have a robust pipeline, with 58 planned filings and launches during the next five years. We remain focused on our mission of matching the right patient with the right treatment. Our Molecular Diagnostics unit is developing companion diagnostics and next-generation targeted therapies to help improve patient response rates and treatment efficacy."
As self-care and prevention become more important in markets around the world, the company's consumer health and vaccines & diagnostics businesses are also positioned for growth. Consumer health grew five per cent in Q2, largely due to products like Theraflu and Voltaren. The vaccines & diagnostics business is a leader in 'flu, and Novartis' emerging meningitis and pneumococcal franchises will continue to drive growth, Jimenez continues.
As R&D is fundamental to Novartis' plans, it is no surprise that the company created the specialist Novartis Institutes for BioMedical Research (NIBR) to enhance its research capabilities, advance treatment standards and better meet the needs of patients. Jimenez calls it "our most significant research investment", necessary to help keep Novartis at the forefront of biomedical research.
NIBR promotes an open culture to support teamwork and idea sharing. "We have built innovative 'Labs of the Future' for NIBR scientists, which have flexible, open work areas to help foster collaboration. By providing a world-class work environment, we continue to attract and retain the best scientific talent from around the world. In turn, we are better positioned to fulfil our mission of discovering new therapies and helping patients in need," explains Jimenez.
Jimenez stresses that patients are at the heart of company philosophy and they are behind every decision that the company makes. This is demonstrated by the fact that rare disease research is central to its approach to drug discovery. Through a policy of following the science and unmet need - not market potential - Novartis has become a leader in developing therapies for rare and neglected diseases.
To ensure all patients have access to its innovative therapies, including those who cannot afford treatment, Novartis has created several access programmes. In 2010, these access-to-medicines programmes reached a total of 85 million patients in need, a contribution valued at $1.5bn, or three per cent of the company's net sales.
Jimenez enthuses: "One great example of our far-reaching programmes is Coartem, our antimalarial drug, which we provide without profit in the developing world. Since 2001, we've supplied more than 400 million Coartem treatments without profit, helping to save an estimated one million lives, including many children."
There are also global direct-to-patient access programmes for Gleevec and Tasigna, life-saving therapies for chronic myeloid leukemia and gastrointestinal stromal tumours. These programmes, managed in collaboration with the Max Foundation, include different payment models based on the patient's ability to pay. Through the programmes, Gleevec and Tasigna were supplied to more than 42,000 patients in need during 2010. In addition, there is a patient assistance programme for Gilenya, a breakthrough oral therapy for multiple sclerosis, allowing patients experiencing financial hardship who have no third-party medical coverage to receive Gilenya at no cost.
Talking globally, Jimenez sees huge opportunities for growth in emerging markets, especially as their economies expand and demand for healthcare rises. Emerging market economies are growing much faster than established markets, and the World Bank predicts they will account for nearly half of global economic growth in 2011. The elderly population is growing rapidly in these countries, too, driving a shift in disease profiles with a rising prevalence of both infectious and chronic diseases. As a result, governments are devoting more resources to improving healthcare access and quality, and these emerging healthcare markets are experiencing double-digit growth, significantly outpacing developed markets.
We choose our site locations based on the quality and availability of local talent, support of the local government and a culture that is supportive of R&D and innovation
That is why Novartis is expanding its presence in high-growth emerging markets, like China and Russia. Jimenez gives some examples of specific projects: "We are investing $1bn to build the largest pharmaceutical R&D institute in China, which will focus on stem cells, epigenetics, hepatitis and infection-based cancers, which are endemic in the region.
"We also recently broke ground for a manufacturing plant in Russia that will produce innovative pharmaceuticals and generics for Russian patients. The plant is just part of our $500m investment in Russia during the next five years, which will also include R&D partnerships and public health development."
However, despite vaunting the benefits of emerging economies, Jimenez still sees Europe as an attractive environment for the healthcare industry. "We choose our site locations based on the quality and availability of local talent, support of the local government, and a culture that is supportive of R&D and innovation," he continues, and for all of these reasons, he believes Europe maintains a strong position.
The company's global headquarters are in Switzerland, he explains, because of the highly-skilled workforce and scientific talent, outstanding universities and research centres, robust economy, plus the country's position as a world leader in innovation.
Turning to his personal successes, Jimenez says his proudest achievement as CEO to date has been steering the company to bring innovation to patients in need, sometimes for very small patient populations. "In Q2 alone, we had four major approvals and two major filings, including Afinitor, Arcapta Neohaler, Lucentis, Menveo and INC424. These novel treatments and new indications give promise to patients suffering from disease worldwide and make me proud of our group's consistent focus on research and innovation.
"We're committed to advancing the treatment standards, developing novel, disease-modifying therapies and driving the gold standard of innovation. The 2010 approval and launch of Gilenya, our breakthrough oral therapy for multiple sclerosis, has changed the paradigm of treatment for MS and provides patients with new flexibility.
"I'm always touched when I hear stories of how our medicines have helped transform the lives of patients. One MS patient wrote to thank us for developing Gilenya and said we had 'made things possible again' for her, by providing treatment in a once-daily pill."
Clearly, Jimenez believes that a policy of consolidation while increasing investment in R&D is the best formula to keep the company swimming well ahead of the tide.
Linda Banks is editor of PME
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