Magazine
#7 Novartis
Lichtstrasse 35
CH-4056, Basel
Switzerland
Tel: (41) 61324 1111
Fax: (41) 61324 8001
www.novartis.com
| Headcount | 90,924 (49,308 in Pharma) |
|
| Year Established | 1996 | |
| PharmA Revenues | $20,262 | +10% |
| Total Revenues | $32,212 | +14% |
| Net Income | $6,141 | +10% |
| R&D Budget | $4,846 | +19% |
| Drugs Approved/Launched | |
| Drug | Indication |
| exjade | chronic iron overload |
| omnitrope | human growth |
| femara | hormone-sensitive breast cancer |
| xolair* | severe allergic asthma |
| * In EU | |
| Drugs Pending Approval | |
| Drug | Indication |
| LDT600 | hepatitis B |
| comtan* | Parkinson’s disease |
| exelon | dementia related to Parkinson’s disease |
| foradil | asthma |
| certican | prevention of organ rejection |
| aclasta | Paget’s disease |
| prexige | osteoarthritis, acute pain |
| xolair | allergic asthma |
| exforge | hypertension |
| * In Japan | |
| Drugs in Phase IIb and Beyond | |
| Drug | Indication |
| diovan/starlix | type 2 diabetes, cardiovascular morbidity and mortality |
| lotrel accomplish | high-risk hypertension |
| galvus | type 2 diabetes |
| rasilez | hypertension |
| exforge | hypertension |
| lbm642 | dyslipidemia |
| gleevec | glioblastoma multiforme, solid tumors |
| ptk787 | colorectal cancer, solid tumors |
| epo906 | solid tumors |
| amn107 | chronic myeloid leukemia |
| pkc412 | acute myeloid leukemia |
| som230 | acromegaly, GEP5, neuroendocrine tumors, Cushing’s disease |
| lbq707 | solid tumors |
| rad001 | solid tumors |
| exelon | dementia |
| lic477 | bipolar disorder |
| lamisil | fungal infection of the scalp in children |
| qab149 | asthma/COPD |
| nva237 | COPD |
| ldc300 | hepatitis B |
| rsv604 | respiratory syncytial virus |
| visudyne | AMD |
| sandostatin LAR | diabetic retinopathy |
| lucentis | AMD |
| opc759 | dry eye |
| elidel | dry eye |
| ptk787 | AMD |
| aclasta | osteoporosis, rheumatoid arthritis |
| zelnorm | dyspepsia |
| smc021 | osteoporosis |
| aae581 | osteoporosis |
| IC51 | Japanese Encephalitis virus |
| Top Selling Drugs | |||
| Drug | Indication | Sales | (+/- %) |
| diovan | hypertension | $3,676 | 19% |
| gleevec | chronic myeloid leukemia | $2,170 | 33% |
| zometa | bone metastasis | $1,224 | 14% |
| lamisil group | fungal infections | $1,133 | -2% |
| lotrel | hypertension | $1,075 | 17% |
| neoral | immunosuppression | $953 | -6% |
| sandostatin group | acromegaly | $896 | 8% |
| lescol | cholesterol | $767 | 1% |
| voltaren | rheumatoid arthritis | $689 | 8% |
| trileptal | epilepsy | $615 | 19% |
| femara | breast cancer | $536 | 39% |
Account for 68% of total pharma sales, up from 65% in 2004.
PROFILE
Novartis committed more than $13 billion to acquisitions in 2005, but it still hasn’t acquired its neighbor Roche. Instead, Novartis expanded its generic business and made a big bet on vaccines.
Novartis’s generics unit took a large step with the June and July 2005 acquisitions of Hexal AG and Eon Labs (initiated in February 2005) for a combined $8.3 billion. The new companies added $1.4 billion to the Sandoz generic unit, leading to sales growth of 54% to $4.7 billion. Novartis accounts for Sandoz separately from its branded Pharmaceuticals division. If taken together, Novartis would rank #4 on the this list.
| THE LOWE DOWN Novartis has been talking a lot in recent years about a new approach to drug discovery, which is apparently taking place at their renovated candy factory in Cambridge. From the outside, it’s hard to make out just what this is all about, although, oddly enough, in the press releases it always seems to get tied somehow to Gleevec. It’s hard to see how a company can make a strategy out of the improbable phrase “blockbuster orphan drug,” though. And time and chance happen to them, too. It must have been unpleasant to be gearing up for a great big COX-2 launch just when flames started spewing out of Vioxx. But I still have a quote from the CEO, Daniel Vasella, up on my wall from a few years ago. “If you don’t spend big money and take big risks,” he told an interviewer, “you shouldn’t be in the pharmaceutical industry.” I’ve always liked that attitude, and it’s hard to bet against a company that has it. Novartis is making big efforts in an awful lot of therapeutic areas — oncology, cardiovascular, diabetes, vaccines. They certainly have the cash to do it. Some of these, you’d think, are going to end up paying off. —Derek Lowe |
The company is pushing its hypertension franchise with the applications for Exforge (a combo drug of Diovan and Pfizer’s Norvasc) and Rasilez, a renin inhibitor that treats high blood pressure in diabetics. The latter, filed with the FDA in April 2006, is projected by analysts to reach billion-dollar status before the end of the decade, which should help ameliorate Diovan’s 2012 patent expiration.
Novartis is also going after the diabetes market with Galvus, a once-daily oral treatment for type 2 diabetes. Analysts project that the drug, filed in March, could hit $2.1 billion in sales by 2012, as it competes with Merck’s Januvia.
The biggest drug approval news for Novartis came from the generic division, which received clearance in the U.S. and EU for Omnitrope, which is not a biogeneric, but a ‘follow-on version of a previously approved recombinant biotechnology drug.’ That approval may open the door to a new era of follow-on biologics, as more of the pioneer biodrugs show their age.
| ACQUISITIONS Target: Chiron Corp. Price: $5.4 billion Announced: May 2006 Target: NeuTec Pharma Price: $569 million Announced: June 2006 |
More Vax
In September 2005, Novartis bid to acquire beleaguered biopharma/vaccine/blood testing company Chiron for approximately $5.1 billion, a sum representing the 58% of shares that Novartis didn’t already own. The deal finally closed at $5.4 billion, giving Novartis a position in the vaccines field, a $10.8 billion market that analysts project will grow at an annual 20% clip in the next five years.
To ready the way for the Chiron integration, Novartis launched a vaccines and diagnostics business. Dr. Joerg Reinhardt, who was global head of Pharma Development, was tapped to become chief executive officer of the new division. Chiron’s biopharmaceutical products will be folded into the Pharmaceuticals division.
In May 2006, Novartis won a five-year, $220 million contract from the Department of Health and Human Services to develop a cell-culture derived flu vaccine. The funding will also help fund a new manufacturing facility for the vaccine, leading to reports that Novartis is looking for an eastern U.S. site to build a $400 million, 800-person manufacturing site.
Acquire from Strength
I’m interested in seeing how the company’s diversification works. While the generic business is producing significant revenues, the margin of operating income from that unit is about half of what the Pharmaceuticals division generates. The company also expanded its Consumer Health unit in July 2005 by acquiring Bristol-Myers Squibb’s OTC portfolio for $660 million.
None of these deals are panicked reactions to pipeline failures or product recalls. Rather, Novartis is dealing from a position of strength. The pipeline remains strong, even though the Pharmaceuticals division hasn’t had any large-scale product launches this year. It’s clear that vaccines are a major part of the company’s strategy; we’ll see if Novartis is capable of making real strides in a market not known for big profits (and well known for liability issues, antiquated manufacturing techniques, lawsuits, and price controls).
