Novartis Calls the Doctor to Push Breakthrough Drugs ForwardBy and
New CEO to oversee rollout of breakthrough oncology treatments
41-year-old helped develop some of Novartis’s biggest drugs
The last time Novartis AG hired a new chief, the drugmaker went with a guy who spent years at companies that make bleach and ketchup. This time around, the Swiss company chose someone with a deep understanding of treatments for heart failure, cancer, and the infectious diseases that plague poor countries.
On Monday, Novartis said Vas Narasimhan, who rose through its ranks to become global head of drug development, will take the reins. As of February, he’ll replace Joe Jimenez, who had stints at Clorox Co. and ConAgra Foods Inc. before running the North American and then European operations of H.J. Heinz Co.
“Jimenez was the Heinz man, not a specialist in the field,” said Bartjan van Hulten, founder of health-care investment firm Medex Capital Ltd. in London. The appointment of Narasimhan “suggests the company is going to really focus on the drug and innovation part of the business.”
Narasimhan, a 41-year-old American with a medical degree from Harvard, will take over as the pharmaceutical industry grows ever more complex and drugmakers race to develop revolutionary new treatments with vast power and potential. Last week, U.S. authorities approved a radical new therapy from Novartis for treating a deadly form of leukemia, one of a host of drugs under development that rely on a patient’s own immune system to attack tumors.
While Narasimhan oversees those efforts he’ll also need to fix Alcon, a troubled maker of contact lenses and surgical equipment once controlled by Nestle SA, and figure out what to do with a $13.7 billion stake in cross-town rival Roche Holding AG. And he’ll have to ensure that recent scientific breakthroughs by Novartis translate into blockbuster treatments, for instance persuading doctors to embrace the new leukemia drug Kymriah, a one-time treatment that costs $475,000.
“Novartis has been productive in R&D over the last few quarters, but this does not necessarily automatically warrant commercial success,” according to Michael Leuchten, an analyst at UBS Group AG. “The world has changed.”
Jimenez inherited a company that faced patents expiring for some of its biggest drugs, opening the door to cheaper copycat treatments. He navigated the drugmaker through a period that saw both sales and profit shrink even as cutting-edge therapies were being developed. A key new medicine was slow to take off, while others failed to meet expectations. Prices on the knockoff drugs created by its own generics unit were also eroded in the U.S. in recent quarters amid rising competition.
Shares in Novartis have generated 87 percent returns for investors during his tenure, underperforming the broader Bloomberg European pharmaceutical index. The stock rose 0.8 percent to 80.65 Swiss francs as of 11:18 a.m. in Zurich.
Shortly after Jimenez joined Novartis in 2007 -- he ran the drug division before taking over as chief executive officer in February 2010 -- he cloistered himself in his office early every morning with a tutor who schooled the new boss on the science behind the company’s medications.
Narasimhan will need no such tutoring. Born in Pittsburgh and raised there and in New Jersey, he got an M.D. from Harvard Medical School and a master’s in public policy from Harvard’s John F. Kennedy School of Government. He spent time at McKinsey & Co. before joining Novartis in 2005. Last year, the Swiss company promoted him to chief medical officer.
He also brings a commitment to public health, having worked with the Rockefeller Foundation and other groups on projects on drug-resistant tuberculosis in Peru, malaria in Gambia, and Africa’s first HIV treatment program in Botswana.
On Narasimhan’s watch -- and under Jimenez’s stewardship -- Novartis has developed some of its biggest new drugs: psoriasis treatment Cosentyx and breast cancer therapy Kisqali. The incoming CEO also helped develop the world’s first meningitis B vaccine (now controlled by GlaxoSmithKline Plc) and Entresto, the first new treatment for heart failure in 15 years.
“He has a great track record on the pharma side,” said Alexandre Stucki, a portfolio manager with AS Investment Management in Geneva. “It’s probably good that they keep their focus on their main profitable business.”
At the same time, Narasimhan will need to find a way forward for Alcon. Once valued at more than $50 billion, the unit’s operations began souring in 2015 due to a decline in surgical equipment sales in the U.S. and in emerging markets as well as increased competition for some eye treatments. After more than a year of efforts to turn it around, Novartis in January said it was considering all options for Alcon, including a spinoff or initial public offering. Jimenez on Monday said the company will provide details of a strategic review of the division by the end of the year.
Jimenez began reshaping the company in 2014 with a complex series of transactions worth about $30 billion: He swapped most of a vaccines unit for Glaxo’s stable of cancer drugs, and the two companies pooled over-the-counter products like the headache pill Excedrin and Sensodyne toothpaste into a joint venture for consumer health. Eli Lilly & Co. bought the Swiss company’s animal-health business.
Jimenez has already pushed Novartis in futuristic directions: he signed a deal with Proteus Digital Health to develop pills with tiny sensors that alert patients when they fail to take a drug as prescribed. He oversaw deals with Microsoft to outfit Xboxes to analyze movement and walking in people with multiple sclerosis, and with Google to develop contact lenses that can deduce diabetics’ blood-sugar levels from their tears.
Now it will be Narasimhan’s job to bring projects like these to fruition, and find technologies worth exploring next.
“Our goal will be to continue to drive that innovation agenda in a new world where there’s so many more possibilities with new science, data and digital,” Narasimhan said Monday on a call with reporters. That “will continue to be the focus of the company, to translate that innovation into commercial success.”
— With assistance by John Lauerman