Novartis unveils ‘US-first’ strategy ahead of Sandoz spinoff

Weeks after announcing the spinoff of generics arm Sandoz, Vas Narasimhan paints a picture of the new, slimmer Novartis — with a “US-first mindset,” he said at an investor event on Thursday.

The CEO unveiled ambitious plans to become a top-five player in the US by 2027 at Novartis’ “Meet the Management” event in Basel, Switzerland, which means ramping up clinical trials in the states and “building capability and talent, among other things.” The company’s also shooting for a top-three ranking in China.

It’s all part of what Narasimhan calls a “pure-play” strategy. He began the major restructuring back in April, cutting out $1 billion in costs and letting go some key execs while combining the pharmaceuticals and oncology units under one roof. At the end of last month, after struggling with the decision for more than three years, Narasimhan finally decided to let go of Sandoz in the second half of next year, when it will find its own home on the SIX Swiss Exchange.

Harry Kirsch

Looking ahead, Narasimhan is putting the focus on three newer platforms: cell and gene therapy, radioligand therapy and xRNA.

“With over 50 projects in exploratory to early clinical development, Novartis is well positioned to lead the industry in developing these platforms and expand our business presence,” the company said.

Upon releasing Q2 results back in July, CFO Harry Kirsch noted that the company has “quite significant bolt-on M&A firepower,” though that “obviously depends on the opportunities we find.” Just last week, the company touted a $300 million initiative to bolster its capacity for “early technical development of biologics,” split across three European facilities.

On Thursday, the company confirmed to Endpoints News in an email that it’s “after bolt-on M&A to strengthen our mainly five therapeutic areas, and we constantly scan market for opportunities in the sub 4bn range.”

Narasimhan also noted billion-dollar peak sales potential for eight key drugs: Cosentyx, Entresto, Zolgensma, Kisqali, Kesimpta, Leqvio, Pluvicto and Scemblix. Novartis has boasted a $5 billion-plus peak sales potential for Entresto in particular, though more than a dozen generic rivals may seek approval as early as next year. Novartis recently petitioned the FDA (for a second time) not to approve Entresto generics, citing potential label discrepancies.

Narasimhan’s renewed focus to become a top US player comes just after the birth of new legislation allowing Medicare negotiations and cost caps for seniors.

Before the legislation had passed, Narasimhan told investors on the Q2 call that there were “good and bad elements to the package.”

“Clearly, Part D reform is needed. Capping out of patient — patient of pockets will be, I think, a positive step; enable patients to fill their prescriptions and also enable from our sector, demand to be supported,” he said. “But of course, there are onerous elements as well, which we think go too far and don’t support long-term innovation, will have detrimental effects to the long-term outlook for the industry, particularly the negotiation elements.”

On Thursday, the company told Endpoints in an email:

With our strong presence in Europe and many emerging markets, we do not expect a significant impact on our business in the near term. However, the bill will stifle future innovation and may impact our US business in the mid to longer term. We continue to analyze the potential impact.

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