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New Novartis chief Narasimhan sees growth, but risks, ahead

January 24, 2018
Life sciences

Novartis CEO Joe Jimenez passed the microphone to his replacement, Vas Narasimhan, M.D., during Wednesday’s fourth-quarter earnings call, and investors got a peek at the incoming chief’s priority list. The public bullet-point list, that is: heavy on the generalities, light on nitty-gritty details. But he did tell investors what keeps him up at night, so to speak.

For the most part, Narasimhan’s goals aren’t all that different from Novartis’ previous aims, and as Bernstein analyst Tim Anderson wrote after the call, the company “remains a ‘blocking and tackling’ story”—in other words, execution is key.

That means kicking Kymriah, its revolutionary CAR-T drug, into gear, particularly with a new, larger indication in diffuse large B-cell lymphoma, expected this year, where it’ll compete head to head with Gilead’s newly acquired Kite Pharma division. It means keeping recent launches Cosentyx and Entresto on their upward slopes. And it means dealing with early generics of its top seller, the $3 billion multiple sclerosis drug Gilenya; pricing challenges and biosimilar launches at Sandoz; pushing new data and tech initiatives across the company; jacking up growth in oncology, partly with new immunotherapy efforts, and more.

Maintaining the impressive growth turned in by Cosentyx, the company’s star immunology drug, will be one way to help offset the billions of dollars likely to be lost when Gilenya gets its cheaper rivals. Novartis pharma chief Paul Hudson figures two new Cosentyx indications are underappreciated—including ankylosing spondylitis—and that the drug could end up with $1 billion-plus in sales for all four. That’s up from about $2.1 billion in full-year 2017 sales reported on Wednesday.

Same for Entresto, which has finally found its stride, delivering $507 million in sales last year, up from $170 million in 2016. Better payer coverage, finally, helped fuel that growth, plus a commercial push that delivered a quarter-over-quarter boost of almost $60 million. If the drug can win a new indication in heart failure with preserved ejection fraction, the sales opportunity bursts wide open, Hudson said, partly because of the relationships Novartis has built with cardiologists over the course of Entresto’s initial launch.

“In terms of executing with that indication, we’re much more confident than we have been,” Hudson said during the call. “We think we can do more with it, when we get it, than we thought we could previously.”

It also means Novartis has to do some heavy lifting with Kisqali, the breast cancer drug approved last year to great fanfare only to falter in competing with Pfizer’s first-to-market and fast-growing rival, Ibrance. Making that happen is one of the challenges that Narasimhan counted among his top three as incoming CEO.

“We need it to perform towards where we have hoped,” Narasimhan said, adding that he expects some support from two trials: Mona Leesa-7 in premenopausal women, which reported out last year, and Mona Leesa-3, expected this year. “We’re also not as far behind Pfizer in the EU, and that should help us pick up sales on Kisqali,” he said.

On Sandoz, “we have a couple of binary events … that we need to go our way,” Narasimhan admitted as another worry. Those would be launching Copaxone 40 mg, the long-acting version of Teva’s blockbuster multiple sclerosis drug, developed with partner Momenta; and generic Advair, which will likely hit the market with multiple generics. The timing on those is “difficult to predict,” he said.

The generics unit has two more big tasks: dealing with ongoing price erosion and commoditization of oral generics in the U.S. and getting biosimilars to market stateside, too. In Europe, the copycat biologics have taken off fast, but patent issues and fierce brand competition have hindered U.S. launches so far. Sales in that unit slipped again in the fourth quarter, to $2.6 billion, partly thanks to a 17% hit in the U.S., where biosimilars aren’t yet contributing much and oral generics are on a downward slide.

Narasimhan’s continuing Jimenez’s focus on margins, aiming for mid-30s, like many of Novartis’ Big Pharma peers, from 31% for 2017. Some of that growth will come from the top line, he predicted, and some from cost control, including savings derived from technology-fueled productivity gains.

And here we come to his really broad goals: stepping up the company’s use of data and digital technologies to save money, make R&D more productive and make the commercial organization more effective. Machine learning and artificial intelligence—terms that no one can avoid when talking tech these days—will in the long run transform drug research, the new CEO said. Experts say the key words there are “long run,” so don’t look for anything immediate.

And then there’s another popular word: culture. Narasimhan ticked off a few goals there, including attracting the best young talent. That effort appears to already be in the offing. Recently we noticed a change on the drugmaker’s website: The home page features a lab scientist on the young side, with a trendy beard and a gauge in his ear. Recruiting millennials, maybe?

By Tracy Staton

Source: Fierce Pharma

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