Novartis splits its Pharmaceutical Division into two business units: Novartis Pharmaceuticals and Novartis Oncology.
On May 17, Novartis announced it was splitting its Pharmaceutical Division into two business units: Novartis Pharmaceutical and Novartis Oncology. This reorganization accounts for approximately two-thirds of the company’s $49 billion annual sales.
Some reports claim that the restructure is partly in response to Novartis’ $20 billion asset swap with GlaxoSmithKline last year. During the swap, Novartis acquired several cancer drugs, including Tafinlar (dabrafenib) and Mekinist (trametinib).
However, the restructuring also comes at a time when Novartis needs to increase its company revenue. The company will have to maneuver not only Glivec’s patent expiration in the near future, but it has also had to address the trickle of revenue from Entresto, the company’s new heart failure drug. Introduced in July, Entresto was hard-pressed to gain acceptance in the U.S., with only 11,000 patients using the drug after six months. As a result, “[a]nalysts cut their 2020 sales estimates for Entresto by 35 percent, or $2.1 billion,” according to reports.
Industry analysts, according to an article published in Reuters, also said the division should improve the “transparency of the component parts of the drugmaker’s business and could help convince investors of the value of Novartis’ large oncology operations.”
In a press release, the company said that “[t]he new structure reflects the importance of oncology to Novartis following the successful integration of the oncology assets acquired from GSK.”
There also will be a changing of hands, as Paul Hudson is to be appointed CEO of Novartis Pharmaceuticals and Bruno Strigini is to become the CEO of Novartis Oncology. Both will report to Joseph Jimenez, CEO of Novartis. In this shift, there have also been reports that Novartis’ current head of pharmaceuticals, David Epstein, will be leaving the company after 27 years with Novartis.
According to The Wall Street Journal: “Novartis disclosed Mr. Epstein’s departure as the company announced plans to separate its cancer unit from the rest of the pharmaceuticals business.” Reports say that Epstein will be relocated to the U.S.
“Novartis expects this change to help drive our growth and innovation strategy,” the company said in a press release, “with an increased focus and improved execution for both the Novartis Oncology and Novartis Pharmaceuticals business units.”
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Filed Under: Drug Discovery
