A wave of restructuring has swept across the life sciences, and Big Pharma has not been immune.Novartis announced its Corporate Restructuring On Monday, the pharma giant expected the move to save at least $1 billion a year over the next two years.
Along with the restructuring, Novartis also announced the departure of several key executives, most notably John Tsai, who has been Novartis’ global drug development and chief medical officer since 2018. When Tsai leaves next month, he will be replaced by Novartis veteran Sheeram Adradhye. Most recently served as Chief Medical Officer of Dicerna Pharmaceuticals.
Novartis divides its business into two reporting segments: Innovative Medicines, which includes its patent-protected prescription drugs, and its Sandoz division, which covers generics and biosimilars. That’s down from five operating divisions seven years ago. Innovative Medicines is by far the largest segment, with 2021 revenue of nearly $42 billion, while Sandoz has sales of $9.6 billion.Sandoz is currently in strategic review This could lead to a spin-off or sale of the business.
CEO Vas Narasimhan said on a conference call Monday that Novartis has been on a “transition journey from an integrated healthcare company to a pharma-focused company” since 2014. In 2015, Novartis Sell Transferred its animal health division to Eli Lilly, which merged it with the Elanco division, which is now a separate, publicly traded animal health company.Novartis’ Alcon Eye Care Division I say close As an independent company in 2019. The pharma giant continued to pour money into business development, spending about $31 billion on deals to strengthen its portfolio of innovative drugs, according to investor presentations. Novartis restocks its coffers by selling its stake in rival Roche for about $21 billion.
In the field of innovative medicines, pharmaceuticals and oncology are divided into different business units, each with its own leader. no longer. Pharmaceuticals and Oncology are being merged into one unit. However, the unit will have separate U.S. and international business organizations, which the company says will improve business focus, competitiveness and synergies. However, Novartis said Susanne Schaffert, president of Novartis Oncology, would be leaving the company.
Novartis is consolidating its corporate, R&D strategy and business development into a single corporate function, which will be led by a new executive role – Chief Strategy and Growth Officer. Lutz Hegemann, currently president of Novartis’ global health business, will take up the new role on an interim basis, while Novartis is looking for a permanent candidate. This part of the reorganization was accompanied by the integration of some corporate functions. The Technical Operations and Customer and Technical Solutions divisions will be merged. With this change in the company, Robert Weltevreden, President of Clients and Technology Solutions, will be leaving Novartis.
Novartis’ restructuring comes as several major pharmaceutical companies implement their own corporate streamlining efforts. In 2020, Pfizer divested its generic and older drugs Merged with Mylan to form a new company called Viatris. last year, Merck spins off its legacy products into a separate company, Organon. Last fall, Johnson & Johnson announced the spin-off of its consumer health business into a separate company. The rest of the business is focused on pharmaceuticals and medical devices.Meanwhile, GlaxoSmithKline is preparing to spin off its consumer health unit this summer as An independent company called Haleon. The company’s portfolio will include assets acquired from Pfizer and Novartis. In each case, pharma giants are separating older legacy products and streamlining remaining operations to focus on developing and selling innovative (and more profitable) new medicines.
Eliminating corporate bloat is a key part of Novartis’ restructuring. In an investor presentation, Novartis said its selling, general and administrative expenses accounted for 29% of sales, higher than the 25% median of the 15 peer pharma rankings. In this ranking, Novartis tied for 11th place. According to investors, the impact of SG&A savings will be minimal this year due to energy costs and inflationary pressures in the supply chain. But by 2024, when the changes are fully in place, the company expects to save at least $1 billion a year. The company said the savings will primarily come from operational efficiencies, eliminating marketing and sales duplication and streamlining general and administrative expenses.
The Novartis pipeline currently has more than 20 assets and is expected to make regulatory decisions within the next four years. The company also noted that recent drug approvals will help revenue: Cholesterol-lowering drug Leqvio approved in Decembergiving competition to products from Amgen and Regeneron Pharmaceuticals; late last month, FDA approves radiopharmaceutical Pluvicto to treat advanced prostate cancer cases. Novartis said it expects to complete its review of Sandoz by the end of this year. The company is scheduled to report its financial results for the first quarter of 2022 on April 26.
Photo: Adrian Moser/Bloomberg via Getty Images
