2017 revenue: $50.14 billion
2016 revenue: $49.44 billion
Headquarters: Basel, Switzerland
A couple of years ago, Alcon was the problem child at Novartis. The eye care division had a surgical unit that was struggling, amid other woes, and the company was considering jettisoning it entirely. But in 2017, the top line turned around, growing 4%—and setting it up for a profitable sale or spinoff if the time comes.
Now, the problem is Sandoz, the once steady and reliable, if not exciting, performer. Intense generics pricing pressure in the U.S. has dragged down the entire “simple generics” portfolio, and its biosimilars haven’t yet had their chance to take on the full growth burden. Retail copycat drugs slid 2% for the year to $8.4 billion, while the biologics piece of Sandoz grew 13% to $1.14 billion.
Across the board in the Sandoz unit? A 1% decline, 2% at constant currencies. And Sandoz is expecting U.S. prices to continue to drop through 2018. Word is, Novartis is now weighing a sale—not of the entire Sandoz unit, just the embattled, commoditized generics—and some top Indian drugmakers are in the race to buy some assets, including Sandoz' dermatology business in the U.S.
So it's a good thing the branded pharma division’s newer launches delivered in 2017—mostly. The psoriasis drug Cosentyx ginned up 82% growth to $2.1 billion, remaining one of the fastest launches Novartis has ever fielded. The heart failure drug Entresto, expected early on to be another speedy rollout, finally gained steam to hit its goals for the year at $506 million—a whopping 195% over 2016.
Tafinlar and Mekinist, the cancer duo acquired in Novartis’ big asset swap with GlaxoSmithKline, brought in $873 million, and the Promacta/Revolade franchise, $867 million. On the laggard side was a fellow oncology drug, Kisqali, which rolled out in breast cancer against Pfizer’s Ibrance, with a big head start and blockbuster sales already.
Even so, the newer drugs offset the continued decline of Gleevec, the blood cancer drug that went generic last year. It still brought in almost $2 billion, down 42%.
Those numbers are significant, of course, but two other pieces of news are more important for Novartis’ future. First, CEO Joe Jimenez is now former CEO, having stepped down after eight years at the helm. In his shoes now stands Vas Narasimhan, formerly the company’s chief development and medical officer.
Second, the company landed a historic approval with its CAR-T cell therapy Kymriah, the first of its kind—and ahead of head-to-head rival Kite Pharma, now owned by Gilead Sciences. It’s early days for that launch—and some market-watchers are less than impressed—but given the intensive nature of administration, and the drug’s $475,000 price, it’s a complicated rollout.
A third big move: Jimenez in August appointed Novartis' first chief digital officer, Bertrand Bodson, to come up with a companywide digital strategy, from drug discovery to patient relations. It was an outgrowth of Jimenez’ longtime interest in marrying drugs and digital—consider the patient-monitoring deal struck with Qualcomm—and it led right into Narasimhan’s ambitions for digital transformation, one of the top three goals he’s set for the company.
During his presentation after the company’s fourth-quarter earnings release, Narasimhan said he’s looking for Novartis to “pivot to become a data-centric, digitally powered company.” In addition to delivering “breakthrough innovation” on the drug side, of course.
Since then, Narasimhan elevated the company's ethics and compliance officer, Shannon Klinger, to an executive-level post, to zero in on training employees around the world to follow the rules. With scandals in various global offices—and a new uproar at press time about Novartis' $1.2 million contract with President Donald Trump's lawyer Michael Cohen—Klinger has a big job ahead.
Back on the financial side, the company laid out guidance for 2018 sales growth in the low- to mid-single digits. Its new-drug hopes already suffered a setback with the FDA’s rejection of Sandoz' generic Advair, but Kymriah quickly won a new indication for broader use in lymphoma. Siponimod, the new multiple sclerosis drug aiming for a first-ever approval in secondary progressive disease, is on track for a filing in the first half, and its CGRP migraine drug is expected to go to the FDA this year, too.
Then there’s brolucizumab, the wet AMD drug that could be a tough rival for Regeneron and Bayer’s always-growing Eylea. With a filing this year, Novartis anticipates rolling that one out in 2019.
Also in 2019? A decision on selling, spinning off or launching an IPO for Alcon. The strategic review Novartis started last January will be wrapped up by then, and the growth it’s delivered lately makes it a better deal. Keeping it is also an option.