Novartis CEO: Here Are 3 Things Big Pharma Must Do To Survive
Novartis CEO Joseph Jimenez has consistently argued that the industry needs to make big changes in order to survive in the long run, like redefining blockbusters and getting paid for positive outcomes instead of just transactions.
His own company just came face to face with one of the industry's big threats, weaker patents and generic competition. Gleevec, a flagship cancer drug, was denied patent protection in India by the country's Supreme Court. Those sorts of rulings are a huge risk when research and development costs can reach billions of dollars.
In an interview with Fortune's Geoff Colvin, Jimenez outlined a long term vision for his company and industry:
Completely change how drugs get developed
In the past, drugs were developed for the biggest populations, people with things like heart disease or diabetes. It's getting harder and harder to improve on what's there and create the next blockbuster.
Novartis has been trying a very different strategy. Instead of targeting giant populations, it targets rare diseases with a small, very similar population. That lets scientists figure out the molecular pathway by which the disease works and how to interrupt it.
From there, they can expand to other diseases that are affected by the same pathway. Novartis' Afintor, for example, was developed for kidney cancer. Now, after expanded testing, it was approved for breast cancer.
"That together will make it a blockbuster," Jimenez said.
Finding new uses for existing drugs isn't new. Doing it systematically, scientifically, and aggressively is.
Large research budgets still exist. But the pressure for results is higher than ever.
Moving beyond Europe and the US
This is essential as Europe struggles out of its economic woes, and the US cuts health care spending. Jimenez mentions China and Russia as huge growth opportunities.
And in the long run, he's looking to Africa, and he won't be alone.
"We have to start building infrastructure now in sub-Saharan Africa, countries like Nigeria and Kenya, because those economies are growing at 6% to 7% per year. Their health care infrastructures are in their infancy," Jimenez says.
In 5-15 years, as these countries grow a middle class, they'll need to be a core part of pharmaceutical company's business.
But these markets come with problems. Most patients in these countries pay for medicines out of pocket, so companies can't charge very much relative to the government and insurance-backed western countries.
Patents are a big issue as well. After the Gleevec ruling in India, Novartis is seriously considering if and how it will bring new drugs to the country.
The Wall Street Journal talked to Novartis spokesman Eric Althoff about the ruling, who said that "if innovation is rewarded, there is clear business case to move forward. If it isn't rewarded and protected, there isn't."
These markets are going to be hugely important, but the amount of economic and legal uncertainty makes entering them a difficult balancing act.
"You're seeing technology explode," Jimenez says, particularly when it comes to oncology. The ability to sequence human genomes more quickly and deeply, and analyze the information better has a huge amount of potential.
The wealth of data "will allow new areas of discovery that have never been possible before," Jimenez says.
The challenge is going to be the leap from all of that promise to actual medicines, by, for example, figuring out how to target the specific mutations that cause cancers. The companies that succeed will need to get better at mining data and combining IT and research instead of keeping them in separate silos.
The idea of all drug discovery coming from people in white coats sitting at a bench or from doctors is going to have to change.