How Novartis Plans to Avoid the 'Patent Cliff'

Novartis Chief Executive Officer Joseph Jimenez had worked in the pharmaceutical industry only four years before taking the helm of the Swiss drug giant in February 2010. Yet his brief tenure in the business hasn’t kept him from crafting a bold solution to a problem that’s long stumped drug industry veterans: how to manage the so-called patent cliff when lucrative medicines lose patent protection. Veteran executives at some companies, such as Sanofi, are acquiring smaller rivals with more promising drug pipelines. Others, such as managers at Pfizer, are cutting back on expensive research and development to save cash. But Jimenez, only 13 months away from the U.S. patent expiration of his company’s best-selling drug, Diovan, doesn’t feel pressed to do either. Instead, he’s targeting administrative costs while aggressively promoting medicines in emerging markets and cranking out new drugs from his own labs.

The longtime consumer-products executive is betting Novartis can maintain a third of the $6.1 billion in annual sales of Diovan, a hypertension drug, by focusing on sales in emerging markets. That may seem like a big drop, but it’s smaller than the post-patent nose dives suffered by former blockbusters such as Pfizer’s Norvasc hypertension pill and Merck’s cholesterol drug, Zocor. “We can get through the Diovan patent expiration if things go to plan,” says Jimenez. “The market hasn’t digested that fully.”