Novartis Announces Major Restructuring to “Power Next Phase”

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Exactly five months after concluding that it was the right time to “monetize” its investment in a cross-town rival – providing Roche “full strategic flexibility” in the process – Novartis has announced a major restructuring; this time, too, citing financial motives.

 

The Swiss giant – fifth in the global pharma rankings in 2021said in a statement that it will undergo a restructuring that it expects will save the company USD 1 billion by 2024. The new simplified structure and operational setup “is designed to power next phase of innovation, growth and productivity,” according to a company statement.

 

Citing its “ambitions” for the coming decade, the company, led by Vas Narasimhan, will merge its pharmaceuticals and oncology business into one unit, dubbed ‘Innovative Medicines,’ with separate US and international commercial organizations.

 

“We’ve been on a transformation journey, really since 2014, to move from a conglomerate healthcare company to a focused medicines company,” Narasimhan told the Financial Times. “If we could emerge from the coming years with a combination of [being a] top five [company] in the US and number one or in the top three in Europe, China and Japan, we will be a formidable company.”

 

The future of Sandoz, the group’s generics division, remains uncertain after the company announced a strategic review of the business last year.

 

As the Wall Street Journal points out, many Big Pharma players including Pfizer, GlaxoSmithKline and Eli Lilly “in recent years have cut costs and restructured research and other operations, in efforts to hone their focus on the most promising medicines.”

 

The move comes after the company’s oncology business sales lagged behind the rest of pharmaceuticals during 2021. Novartis posted sales of USD 51.6 billion last year. Cardiovascular, renal and metabolism were the fastest growing categories for the group with a 43 percent increase.

 

According to the release, three key executives will leave Novartis in the reorganization: John Tsai (head of drug development and chief medical officer – Narasimhan’s old position), Susanne Schaffert (head of oncology) and Robert Weltevreden (customer and technology solutions).

 

Endpoints News has reported that John Tsai, “who took the development post 4 years ago after Narasimhan was promoted to the top job, is being replaced by Shreeram Aradhye, an RNAi expert who had been at Dicerna for a little less than 2 years.”


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