Novartis aims to focus on the development of specialty medicines in a new long-term strategy to boost profitability in a rapidly changing healthcare environment.
Novartis plans to bolster its portfolio through launches of new medicines, with the expectation that by 2015, its pharma specialty and oncology portfolio will generate 75 per cent of sales.
Describing how an ageing population and higher rates of obesity are driving the demand for healthcare, the Swiss drug major said that economic pressures and healthcare reforms are forcing companies to adapt their approach to reimbursement and build portfolios that cater for a wider variety of needs.
“Novartis remains committed to the core strategy of focused diversification in high-growth healthcare segments,” said CEO Joseph Jimenez. “We are leveraging our core competencies in scientific discovery and development to continue driving innovation, growth and productivity across the business.”
The plan fits with Novartis’ recent focus on new products which, according to its most recent set of financials, generated 20 per cent of its sales in Q3. The firm said it plans to make 30 more new regulatory submissions by the end of 2012 including Gilenya for relapsing forms of multiple sclerosis, AIN457 for psoriasis and SOM230 for Cushing’s disease.
With plans also underway to make further savings in procurement and simplifying its general and administrative areas, Novartis hopes these efforts will offset expected loss of revenue as key drugs, including the blockbuster blood pressure drug Diovan, lose patent protection over the next few years.
“With the pharmaceuticals portfolio shifting to a greater percentage of specialty care business, Novartis will continue to optimise its marketing and sales spending by re-allocating resources geographically as well as simplifying current processes,” the firm said.
The drugmaker now sees an opportunity to capitalise in ‘pharmerging’ markets and is currently planning to establish itself in fast-growing markets such as China, Russia, Brazil and India.
No job cuts
Novartis’ announcement follows media speculation that it is planning an extensive round of job cuts, most notably in the Der Sonntag newspaper which reported that the firm plan to axe several thousand positions and close of manufacturing plants.
Novartis spokesman Eric Althhoff denied this, telling Bloomberg: “We’re not planning a massive initiative as announced by Roche, but will continue to increase our productivity to adjust to the evolving market and our portfolio.”
Swiss rival Roche announced plans to reduce its global workforce by as many as 4,800 as part of a cost cutting drive unveiled last week.