Year Established: 1996
Revenues: $49,414 (-5%)
Pharma Revenues: $30,445 (-4%)
Net Income: $17,794 (+73%)
R&D: $8,935 (-2%)
TOP SELLING DRUGS
|Lucentis||age-related macular degeneration||$2,060||-16%|
|Tasigna||chronic myeloid leukemia||$1,632||7%|
Novartis moved into 2015 having acquired GlaxoSmithKline’s (GSK) oncology products, solidifying its position as a global leader in cancer treatments. The two companies also merged their over-the-counter (OTC) businesses into a joint venture that is one of the world’s largest consumer healthcare companies, 36.5% owned by Novartis. At the same time, Novartis sold its vaccines business, excluding the influenza business, to GSK. The influenza vaccines business was sold to CSL Limited while the animal health business was sold to Eli Lilly.
Altogether Novartis reported sales of $49.4 billion in 2015. The pharmaceuticals division was responsible for $30.4 billion of total revenue followed by the eye care business with $9.8 billion. The generics business brought up the rear with $9.2 billion of revenue.
As this issue went to press, Novartis unveiled plans to restructure its pharmaceuticals division by creating two business units—Novartis Pharmaceuticals and Novartis Oncology. From July 1, 2016 Novartis will continue to have three focused, customer-facing divisions: Innovative Medicines (formerly the Novartis Pharmaceuticals division), which will include the new Novartis Pharmaceuticals and Novartis Oncology business units; Sandoz, the generics and biosimilar division, which includes the retail generics, anti-infectives and biopharmaceuticals franchises; and Alcon, the eye care devices division, which includes the surgical and vision care franchises.
Paul Hudson has been appointed chief executive officer, Novartis Pharmaceuticals, and Bruno Strigini will become chief executive officer, Novartis Oncology. Both will report directly to Joseph Jimenez, chief executive officer, Novartis. With these changes, David Epstein, division head and chief executive officer, Novartis Pharmaceuticals, has decided to leave the company. The new structure reflects the importance of oncology to the company following the integration of the oncology assets acquired from GSK mentioned above.
Growth products lead the charge
In today’s pharmaceutical environment, growth products are a vital component to renew product portfolios, while at the same time helping to offset the impact of patent expirations. Across Novartis’ divisions, its portfolio of growth products continued to support performance in 2015. Sales of growth products increased 17% to $16.6 billion, or 34% of net sales. In the pharma division, sales of growth products increased 33% and accounted for 44% of net sales, up from 36% in 2014.
Pharmaceutical growth products in 2015 included Gilenya ($2.8 billion, +21%), an oral therapy for multiple sclerosis; Tasigna ($1.6 billion, +16%), a treatment for chronic myeloid leukemia; and Afinitor ($1.6 billion, +10%), a treatment for several types of cancer.
In the generics division, sales of biopharmaceuticals, including biosimilar follow-on versions of complex biologic drugs, surged 39% to $772 million globally.
Geographically, efforts to expand in emerging growth markets such as those in Asia, Africa and Latin America continued to deliver results for Novartis, although growth moderated as overall economic activity slowed in China, Brazil, India and elsewhere. Net sales in emerging markets rose 7% to $12.4 billion, led by Turkey, up 14%, and Brazil, up 12%.
To increase efficiency, an ongoing effort begun in 2010 to optimize its global manufacturing network continued to take shape. In 2015, Novartis announced plans to exit Sandoz manufacturing sites in Frankfurt and Gerlingen, Germany, as well as in Turbhe, India. It also closed a pharmaceuticals division facility in Resende, Brazil, divested an Alcon site in Kaysersberg, France, as well as a pharmaceutical site in Taboão da Serra, Brazil, and announced the downsizing of a pharmaceuticals division site in Ringaskiddy, Ireland. To date, 25 sites in Novartis’ continuing operations have been, or are being restructured or divested.
Innovation across the board
Novartis made significant progress in research and development in 2015, with 20 major approvals in key markets and 14 major submissions.
On the cardiovascular front, Novartis had notable success during the year with the approval in the U.S. and EU of Entresto (formerly LCZ696) to treat chronic heart failure with reduced ejection fraction, a condition where the heart muscle does not contract effectively and less oxygen-rich blood is pumped around the body. Entresto is the first new drug in decades to treat this form of heart failure. It is also the only heart failure drug to show a significant mortality benefit in a head-to-head trial against the existing best treatment, enalapril.
In oncology, new cancer drugs gained regulatory approval in 2015. Zykadia, for patients with non-small cell lung cancer, was approved in the EU, a year after its U.S approval. The treatment is from a new class of medicines known as anaplastic lymphoma kinase (ALK) inhibitors.
In September, Novartis received EU approval for Tafinlar + Mekinist, the first combination therapy approved for patients with unresectable or metastatic melanoma with a BRAF V600 mutation—the most aggressive form of skin cancer and one associated with low survival rates. This approval followed two Phase III trials in which the Tafinlar + Mekinist combination showed significant overall survival benefit. The FDA approved the Tafinlar + Mekinist combination in late 2015.
The FDA and the European Commission also approved Novartis’ first-in-class multiple myeloma drug Farydak (panobinostat), shown in trials to boost progression-free survival by about 7.8 months.
The company also reached major development milestones during the year with promising pipeline products, including CTL019 in non-Hodgkin’s lymphoma, a difficult-to-treat disease. CTL019, a personalized cell therapy for cancer, is being developed with the University of Pennsylvania.
In immunology and dermatology, in early 2015, Novartis received approval in the U.S. and EU for Cosentyx to treat moderate to severe plaque psoriasis. Cosentyx is the first approved human monoclonal antibody that selectively binds to circulating interleukin-17A, which plays an important role in driving the body’s immune response in several disorders. In total, 50 countries have approved Cosentyx for the treatment of moderate-to-severe plaque psoriasis. In November, Cosentyx was approved in Europe for the treatment of psoriatic arthritis and ankylosing spondylitis. Novaartis received FDA approval in January 2016.
For biosimilars, Sandoz received FDA approval in March for Zarxio (filgrastim), the first biosimilar approved in the U.S. under the new biosimilar pathway created in the Biologics Price Competition and Innovation Act of 2009. The drug, which stimulates white blood cell production in some cancer patients undergoing chemotherapy, is called Zarzio in Europe and is a biosimilar to Neupogen from Amgen. The FDA and the European Medicines Agency accepted an application for etanercept, a biosimilar to Amgen’s Enbrel for several autoimmune diseases, including rheumatoid arthritis and psoriatic arthritis. The FDA also accepted an application for pegfilgrastim, a biosimilar to Amgen’s Neulasta, used against infections in patients receiving chemotherapy.
Expanding the pipeline
In June 2015 Novartis expanded its neuroscience portfolio with novel angiotensin II type 2 receptor antagonist for the treatment of chronic pain when it acquired Spinifex Pharmaceuticals, a U.S. and Australian privately held development stage company, focused on developing a peripheral approach to treat neuropathic pain.
Novartis bought Melbourne-based Spinifex for $312 million. The acquisition is centered on Spinifex’s lead candidate EMA401, a novel angiotensin II type 2 (AT2) receptor antagonist, being developed as a potential first-in-class oral treatment for chronic pain, particularly neuropathic pain, without central nervous system (CNS) side effects.
Positive results from Spinifex’s Phase II clinical trial of EMA401 in PHN, a painful condition that develops in some people following herpes zoster (shingles), have been published. Novartis will continue the development of EMA401 and is planning to initiate Phase IIb clinical trials in patients with PHN or PDN. Novartis also intends to build on these two key indications and pursue a broad peripheral neuropathic pain (PNP) label for EMA401.
In October 2015 Novartis broadened its immuno-oncology pipeline with the acquisition of Admune Therapeutics and licensing agreements with XOMA and Palobiofarma.
With four candidates currently in clinical trials and five more agents expected to enter the clinic by the end of 2016, Novartis has rapidly built a robust portfolio of programs focused on stimulating the body’s immune system to combat cancers that includes novel checkpoint inhibitors, chimeric antigen receptor T-cell (CART) technology, myeloid cell targeting agents, and STING agonists. Currently Novartis’ myeloid cell targeting program (MCS-110) and checkpoint inhibitors targeting PD-1 (PDR001), LAG-3 (LAG525), are in Phase I clinical trials. The CART program (CTL019) is in Phase II clinical trials. The anti-TIM-3 program (MGB453) is expected to enter the clinic by the end of 2015 and a STING agonist (MIW815), through collaboration with Aduro Biotech, and GITR agonist are progressing toward first-in-human clinical trials in 2016.
The acquisition of Admune adds an IL-15 agonist program currently in Phase I clinical trials for metastatic cancer. The licensing agreement with Palobiofarma gives Novartis development and commercialization rights to PBF-509, an adenosine receptor antagonist currently in Phase I clinical trials for non-small cell lung cancer. The agreement with XOMA gives Novartis development and commercialization rights to XOMA’s TGF-beta antibody programs. All three programs will be explored as monotherapies and in combination with therapies in Novartis’ immuno-oncology and targeted therapy portfolios.
In preclinical studies, IL-15 therapies have been shown to activate CD8+, CD4+ memory T cells and Natural Killer (NK) cells that play a critical role in stimulating the immune system. Adenosine and TGFß both drive immune suppression in the tumor microenvironment, which allows cancer cells to escape immune surveillance, making inhibition of these two pathways an attractive next-generation immuno-oncology approach.
Aims to advance Alzheimer’s and migraine programs
During the year Novartis and Amgen entered a collaboration in the areas of Alzheimer’s disease and migraine using Novartis’ differentiated and genetically validated Alzheimer’s program directed at genetically predisposed individuals at risk. The collaboration also allows Amgen to focus on the commercialization of its migraine programs in the U.S., Canada and Japan, while leveraging Novartis’ commercial capabilities in neuroscience throughout Europe and other markets.
The agreement combines each company’s BACE (beta-site APP-cleaving enzyme-1) programs targeting Alzheimer’s disease into a global co-commercialization and co-development arrangement. Novartis’ Phase 1/2a BACE inhibitor (CNP520) will be the lead molecule and each company’s preclinical BACE inhibitor programs will be potential follow-ons.
Amgen is responsible for upfront and milestone payments, and will be responsible for disproportional R&D costs for an agreed-upon period followed by a 50/50 cost and profit share arrangement. Amgen was the first company to clone the BACE gene and subsequent genetic validation of the BACE target has been confirmed by Amgen subsidiary deCODE Genetics.
Novartis receives global co-development rights and commercial rights outside of the U.S., Canada and Japan to investigative molecules in Amgen’s migraine portfolio. This includes AMG 334 in Phase III and AMG 301 in Phase I, as well as an option to commercialize an additional early-stage Amgen molecule. Novartis will fund disproportional amounts of global R&D expenses for the migraine programs and pay Amgen royalties on sales.