Novartis CEO Joe Jimenez will step down on February 1 and hand over to drug development chief Vas Narasimhan to decide the fate of $50 billion in assets and make good on a pledge to return the Swiss company to sales growth.
Jimenez, who will have been at the helm for eight years when he retires, has hived off animal health, vaccines and over-the-counter drugs businesses at Novartis to focus on generally more profitable prescription medicines, particularly in cancer.
But sales have been hit as top-selling drugs such as blood cancer treatment Gleevec have lost patent protection, while eye business Alcon has lagged expectations and generics arm Sandoz has faced intense pressure on prices in the United States.
Novartis got a boost last week, when the United States approved its $475,000-per-patient Kymriah treatment for young people with B-cell acute lymphoblastic leukemia, one of a series of new drugs it expects to revive sales growth starting next year.
Jimenez, 57, said on Monday now was a good time to move on.
“I really believe a leader has to be in place at the beginning of that growth phase to see it through,” he told reporters on a call. “And that wouldn’t be me, given that I’m already eight years into my tenure.”
Narasimhan, 41, is among a new generation of youthful leaders at Novartis, including head researcher Jay Bradner at the Novartis Institutes For Biomedical Research.
Together, they have sought to improve the company’s way of moving drugs from the laboratory into commercial products, something they acknowledge has not always worked efficiently.
“That’s going to continue to be the focus of the company: To translate that innovation into commercial success,” said Narasimhan, a US citizen.
Analysts said Narasimhan’s skills as a Harvard-trained medical doctor and former McKinsey consultant may be the blend Novartis needs to balance research and business.
“The appointment … brings deep medical and commercial knowledge plus strong communication, and we expect this fresh start to be taken very well by the markets,” said David Evans, a Kepler Cheuvreux analyst.
But there will be plenty in Narasimhan’s in-tray.
His appointment comes as Novartis is reviewing Alcon for a possible sale that could bring in $25-$35 billion.
He must also decide what to do with its $10 billion stake in its over-the-counter (OTC) drugs venture with GlaxoSmithKline. Novartis faces a deadline of March 2018 to decide whether to exercise a sell option for its 36.5 percent stake.
Narasimhan will have to weigh up too what to so with Novartis’s $14 billion stake in cross-town rival Roche, which the company has said could be sold.
Novartis shares have lagged the Stoxx European Health Care Index by around 9 percent during Jimenez’s tenure. At 1025 GMT, they were down 0.9 percent at 80.10 Swiss francs.
Having held various roles at Novartis since 2005, Narasimhan became global head of drug development and chief medical officer in 2016.
Jimenez said his departure would not affect a strategic review of Alcon, with an update due by year’s end.
“We’re going to consider all options ranging from keeping the business up to a capital markets exit,” he said. “There really is no change, so don’t read anything into it.”
He also hailed last week’s US approval of Kymriah, the first so-called CAR-T therapy to win the U.S. Food and Drug Administration’s blessing.
“We started this five years ago, it was a big bet, a lot of people thought we were crazy and it’s paying off,” Jimenez said. “We have big plans.”