CEO Vas Narasimhan seeks to transform the Swiss multinational into a cutting-edge pharmaceuticals firm that embraces digital healthcare technology.
In less than two years since assuming the top executive role, Narasimhan has been taking substantive actions to remake Novartis. This includes offloading non-core assets, making acquisitions to add more advanced medicines to the company’s portfolio, and collaborating on digital healthcare initiatives. Narasimhan says he is focusing on “transformative innovation” and claims to have a pipeline of 25 blockbuster drugs.
Divesting unwanted assets was a top priority for the CEO early on. Within two months of Narasimhan taking the helm, Novartis agreed to have GlaxoSmithKline buy up its share in a joint consumer healthcare venture between the two companies for $13 billion. Familiar, low-margin OTC products clearly do not align with Narasimhan’s vision. Acknowledging that the move helped declutter Novartis’s portfolio, analysts expressed concern that the group was too vague on its plans for the cash. Their questions were soon answered by a series of “bolt-on” acquisitions.
Novartis purchased dry-eye drug Xiidra from Takeda for up to $5.3 billion. The buying spree has also included Endocyte, a small biopharma firm, for $2.1 billion, and gene-therapy firm AveXis for $8.7 billion. The latest deal, announced on November 24, is the $9.7 billion acquisition of American biopharma firm the Medicines Company, which has a promising cardiac drug that targets bad cholesterol and requires only two annual shots.
Although most of the pharmaceutical industry has been relatively slow to adopt the technologies that have disrupted so many sectors, the “new Novartis” is intent on developing its digital health capabilities, using big data and other technologies to improve productivity and offer new services, The Economist reports. In December Novartis announced a collaboration with Amazon Web Services (AWS) to build an enterprise-wide data and analytics platform to transform its manufacturing, supply chain and delivery operations.
Bertrand Bodson, Chief Digital Officer at Novartis, suggested that manufacturing is only the starting point. “Using data science and digital technologies to reimagine the way we manufacture medicines is not only at the heart of our transformation, but also core to our ambition to bring innovative medicines to patients faster,” Bodson said.
Novartis is working on using big data to become more adept at drug development; for example in clinical trials, it could be used to identify subgroups of patients who will respond better to particular treatments, significantly lowering costs through greater specificity. The pharmaceutical industry giant is also opening digital health labs. The first, called the Novartis Biome, opened in San Francisco in October 2018, positioning the company to work with healthcare technology start-ups.