FiercePharma | Tracy Staton
Remember
how Novartis CEO Joe Jimenez vowed to improve the Swiss
drugmaker's margins? Would have been there and done that, if the company's
recent spate of deals had been done last year--by 2.5 percentage points,
Novartis now says.
The margin improvements were among a
constellation of developments Novartis talked up for investors at an event in
Basel Wednesday. "We have shaped this company in a way that positions us
incredibly well for next 10 years," Jimenez said (as quoted by Reuters).
Of course margins weren't the only
driver for the $25 billion dealfest that gave GlaxoSmithKline's cancer
portfolio to Novartis in exchange for the latter's vaccines business, tossed
Novartis' animal health unit to Eli Lilly, and set up a consumer-health joint
venture between Novartis and GSK. The new structure also cuts away distractions
to focus Novartis more tightly on three key areas: branded drugs, eye care
products, and generics.
The Novartis overhaul is one among
many in the pharma business these days, with Pfizer, Merck, GlaxoSmithKline,
AstraZeneca and Sanofi all either hiving off business units or selling
less-promising product portfolios--or both. The Novartis-GSK-Lilly transactions
together amount to the biggest set of makeovers yet.
"[W]e have shaped Novartis to
win in a future world in which innovation and scale are expected to be critical
to meet demand," Jimenez said in a statement. Once the deals are done,
"The new Novartis will be more focused, more profitable, with the
potential to grow faster."
The
Sandoz generics business can help Novartis
gin up more growth in emerging markets, Jimenez figures; it already has a 28%
share in those countries, which is "twice as high as the equivalent figure
for its closest global competitor," the company said in a statement. Plus,
bringing GSK's cancer drugs under its pharma umbrella can help offset any sales
erosion once the blood cancer treatment Gleevec goes off patent in 2016.
That doesn't mean Jimenez is
completely happy with the businesses he has left. The Alcon eye care unit isn't growing fast
enough, he said at the event, so he's pushing to ramp up sales without
sacrificing profits. Plus, he intends to slash costs associated with
back-office functions--currently about $6 billion--by consolidating business
services into one internal unit.
He is happy, however, with the
company's $16 billion stake in Roche, he said, to the perennial question of
whether Novartis plans to unload that stock. Once again, Jimenez said Novartis
doesn't plan to sell out of Roche. At least not now.