Headquarters: Basel, Switzerland
Year Established: 1996
Revenues: $48,518 (-2%)
Pharma Revenues: $32,562 (-2%)
Net Income: $11,314 (-6%)
R&D: $9,039 (+1%)
TOP SELLING DRUGS
|Lucentis||age-related macular degeneration||$1,835||-11%|
|Tasigna||chronic myeloid leukemia||$1,739||7%|
|Cosentyx||Psoriasis, ankylosing spondylitis and psoriatic arthritis||$1,128||nm|
|Exjade||chronic iron overload||$956||4%|
Novartis slipped to number two with flat revenues in 2016 compared to 2015. However, at $48.5 billion the Basel, Switzerland-based drug maker is still a Big Pharma giant.
The major drivers behind the company’s falling revenues have included adjustments for changes to its businesses, including its acquisition of GlaxoSmithKline’s (GSK) Oncology business and its divestiture of its Vaccines and Consumer Healthcare divisions to GSK in March 2015.
Novartis started divesting its business segments in 2014. Its Animal Health business was divested to Eli Lilly, while it divested parts of its Vaccines business and its Consumer Healthcare business to GSK. It also divested its Influenza Vaccines business to CSL Group. It acquired GSK’s oncology business in March 2015.
To reflect these changes and the importance of oncology to the company following the integration of the oncology assets acquired from GSK, during the year Novartis restructured its Pharmaceuticals Division by creating two business units—Novartis Pharmaceuticals and Novartis Oncology. Both units form the Innovative Medicines Division and consists of products for therapeutic areas including oncology, cardio-metabolic, immunology and dermatology, retinal, respiratory, neuroscience, and established medicines. The Innovative Medicines segment reported a fall of 2% to $32.6 billion in 2016, representing 67% of total company revenue.
Sandoz is Novartis’ generics and biosimilars division, which includes the retail generics, anti-infectives and biopharmaceuticals franchises. It is the number two generic medicines provider worldwide, and it’s number one in differentiated generics, including products that are difficult to develop and manufacture. In 2016, Sandoz contributed nearly 30% of total revenue at $10.14 billion, marking a 2% increase over the previous year. Alcon, the company’s eye care unit, makes up the remaining $5.76 billion of 2016 revenue.
Upping biosimilar stakes
Sandoz’s revenue drivers are biopharmaceuticals, including biosimilars and Glatopa. The segment’s growth was reported across all regions worldwide. In U.S. markets, its reported revenue for 2016 was $3.7 billion, a 1% rise. European markets reported a 7% rise in revenue to $4.4 billion, driven by strong sales in the region. Canadian and Latin American markets reported a rise of 9% during the year.
The global sales of biopharmaceuticals rose 31% to $1 billion in 2016. These sales included revenue from biosimilars, biopharmaceutical contract manufacturing, and Glatopa. The growth came mainly from the three in-market biosimilars—Omnitrope (somatropin), Binocrit (epoetin alfa), and Zarzio/Zarxio (filgrastim)—along with the strong performance of Glatopa in U.S. markets.
Glatopa (glatiramer acetate) injection is the first generic version of Teva Pharmaceutical’s Copaxone 20mg used for the treatment of relapsing forms of multiple sclerosis. The segment’s anti-infective franchise reported a fall of 2% in revenue at a constant exchange rate at $1.4 billion in 2016.
Also on the biosimilar front, Sandoz during the year acquired from Pfizer the rights for the development and commercialization of PF-06438179 (biosimilar infliximab) in the 28 countries that form the European Economic Area (EEA). Infliximab is a tumor necrosis factor alpha (TNF-alpha) inhibitor used to treat a range of autoimmune diseases including rheumatoid arthritis (RA) and psoriasis.
Sandoz also advanced its biosimilars program with EMA acceptance of regulatory submission for its biosimilar to Amgen’s EU-licensed Neulasta (pegfilgrastim)—a long-acting recombinant human granulocyte colony-stimulating factor (G-CSF). Sandoz is seeking approval for the same indication as the reference product.
Novartis and Bristol-Myers Squibb (BMS) entered into a clinical research collaboration to investigate the safety, tolerability, and efficacy of Mekinist (trametinib) in combination with Opdivo (nivolumab) and Opdivo + Yervoy (ipilimumab) regimen as a potential treatment option for metastatic colorectal cancer. BMS will conduct the study, which is expected to establish recommended dose regimens and the preliminary anti-tumor activity of the combination therapies. Both companies will evaluate the results to determine optimal approaches and potential clinical development of these combinations.
Allergan entered into a clinical trial agreement with Novartis to conduct a Phase IIb study, using Allergan’s cenicriviroc (CVC) and Novartis’ lead FXR agonist for the treatment of non-alcoholic steatohepatitis (NASH). The study will assess the safety, efficacy and tolerability of this multi-therapy treatment approach for NASH. CVC is a once-daily, oral, Phase III ready potent immunomodulator that blocks two chemokine receptors, CCR2 and CCR5, which are involved in inflammatory and fibrogenic pathways.
Novartis is developing Farnesoid X receptor (FXR) agonists for the treatment of chronic liver diseases, including NASH. The most advanced investigational compound is a potent, non-bile acid FXR agonist, which recently received Fast Track designation from the FDA and is in a Phase II clinical trial. As part of this agreement, Novartis and Allergan will conduct a Phase IIb clinical trial to assess the safety, efficacy and tolerability of a multi-therapy treatment for NASH.
Novartis also entered a $225 million cardiovascular deal with Ionis Pharmaceuticals to develop and commercialize AKCEA-APO(a)-L Rx and AKCEA-APOCIII-L Rx, novel potential therapies to treat cardiovascular disease. The partnership allows the companies to move more rapidly to Phase III cardiovascular outcomes studies. Ionis and its subsidiary Akcea plan to conduct a Phase II dose-ranging study for each drug, to choose the optimal dose and evaluate alternative dose schedules, such as monthly dosing, for the Phase III study. Following the successful completion of each Phase II dose-ranging study, and prior to initiation of the Phase III study, Novartis will be able to exercise its option to license and commercialize each drug.
Bolstering the immuno-oncology pipeline
At the start of 2015 Novartis launched a new immuno-oncology research team led by cancer vaccine pioneer Glenn Dranoff. In a short period of time, the team built a broad portfolio of clinical and pre-clinical programs focused on stimulating the body’s immune system to combat cancers through targeting critical regulatory steps in the anti-tumor immune response.
Today the company’s immuno-oncology portfolio includes novel checkpoint inhibitors, chimeric antigen receptor T-cell (CART) technology, myeloid cell targeting agents, the T-cell stimulating factor IL-15, STING agonists that enhance immune recognition of cancers, and adenosine receptor antagonists and TGF-beta blocking antibodies that overcome immunosuppression in the tumor microenvironment.
During the year, Novartis made a series of acquisitions and strategic collaborations between itself and biotech companies that have helped bolster its immuno-oncology pipeline. It continued to grow the pipeline through a collaboration and licensing agreement with Surface Oncology that gave Novartis access to four preclinical programs that target regulatory T cell populations, inhibitory cytokines, and immunosuppressive metabolites in the tumor microenvironment.
Novartis also added bispecific antibodies to its immuno-oncology portfolio through a collaboration and licensing agreement with Xencor. Traditional monoclonal antibodies target and bind to a single antigen. Bispecific antibodies are engineered to recognize and target two different antigens, which makes them potentially more effective in targeting complex diseases. A T-cell engaging bispecific antibody is able to bind an antigen on a tumor cell with one arm and engage T-cells capable of their destruction with the other.
Novartis has the right to develop four additional bispecific antibodies and to use other Xencor proprietary antibody engineering technology for up to ten additional biotherapeutic programs across the Novartis R&D portfolio. In addition, the companies will collaborate to co-develop Xencor’s two bispecific T-cell engaging antibodies targeting CD3xCD123 and CD3xCD20 for the treatment of acute myeloid leukemia and B-cell malignancies.
Novartis also signed an exclusive option, collaboration and license agreement with Conatus Pharmaceuticals, a biotech focused on the development of novel medicines to treat liver disease. This agreement enables Novartis and Conatus to jointly develop emricasan, an investigational, first-in-class, oral, pan-caspase inhibitor for the treatment of NASH with advanced fibrosis (scarring) and cirrhosis. This collaboration has the potential to expand treatment options for people in various stages of fatty liver disease, where no approved medicines currently exist.
In terms of new drug approvals, two of Novartis’ drugs for which regulatory decisions are expected soon include LEE011, an investigational drug in combination with letrozole for the treatment of HR+/HER2- advanced breast cancer, and PKC412, an investigational drug for the treatment of acute myeloid leukemia. Both drugs have been granted priority review designations by the FDA. Other regulatory decisions are expected for biosimilars.
Novartis is also going to submit new drug applications for CTL019, an investigational drug for the treatment of acute lymphoblastic leukemia in children, and AMG334, an investigational drug for the treatment of migraines, developed in partnership with Amgen.
During the year Novartis’ Cosentyx (secukinumab) was approved by the FDA for two new indications, active ankylosing spondylitis (AS) and active psoriatic arthritis (PsA). Both are life-long, painful and debilitating inflammatory diseases that affect the joints and/or spine. Cosentyx is now the first and only interleukin-17A (IL-17A) antagonist approved for AS, as well as moderate to severe plaque psoriasis and PsA, which impacts as many as 30% of patients with psoriasis.