No Ordinary Joe - Pharmaceutical Executive


No Ordinary Joe
It's been a year since consumer-marketing master Joe Jimenez took over the top spot at Novartis Pharma. How's he faring?

Pharmaceutical Executive

We've started a few pilot tests in highly restrictive markets in the US where we have significantly reduced the number of sales reps but built up cross-functional teams—with a managing director and finance, sales, health economics, marketing, some medical—at the headquarter level of payers and healthcare providers. We're interacting now with those customers at a different level than before.

When we found our customers, we started interacting with them and understanding what their needs were. For example, in Massachusetts one of the large physician groups was interested in helping people understand more about hypertension. We made an agreement that we would jointly screen patients for high blood pressure at a local health and fitness expo.

Collaborating with providers and payers at the headquarter level has actually unlocked some of the restrictions—in terms of access—to the physicians. Despite the reduction of field sales reps in those markets, our business is actually performing better than it is in the rest of the US. And our sales reps in those markets have a much higher level of satisfaction because now there's access to the customers at a different level.

Novartis' diversification strategy is a hot topic in the industry. Analysts are wondering how far the company will go. Are you using J&J as a model?

No. I think that everything Novartis does will be science-based. For example, I don't think we'll expand into consumer healthcare products that are not based in science. Our overall strategy is to be focused in vaccines and diagnostics, in consumer health, and elements of consumer health that led to the [ophthalmology specialist] Alcon acquisition. The unreimbursed portion of over-the-counter drugs obviously provides a level of diversification that leverages the knowledge of the company in healthcare, but also mitigates some of the risk of reimbursement and other pressures the pharmaceutical side is facing. Vaccines fit into that strategy. Right now, it's a relatively small business, but if you look at vaccine growth around the world—it's in the mid-teens—it could be a nice engine.

Like every other Big Pharma, Novartis is tackling patent expirations. Can the company fill the holes with licensing and technology—and with new initiatives?

The first thing that I did when I got to the pharmaceutical division was look at the Diovan patent expiration that's coming in 2012. As you know, Diovan is a $5 billion drug globally. I immediately went to work identifying ways to invest today in order to offset the Diovan patent expiration.

There are a couple of areas that can help us do that. The first is our oncology franchise. If you look at the success of our late-stage pipeline, there are ways to accelerate development. For example, [there is] concurrent development of multiple indications for molecules like RAD001 [Afinitor], which we are filing this year for renal cell cancer—but which also looks very promising for breast and non-small cell lung cancer, and for neuroendocrine tumors.

The second big area to leverage is emerging markets. There are four major markets—China, Russia, Turkey, and South Korea—where we have scale, and we can expect those businesses to grow over 20 percent annually. With the right level of investment today we can generate significant growth in the 2011 to 2013 period when Diovan comes off patent.

A third big area is the payoff from our drug development restructuring, in terms of our general pipeline. We have formed these eight-person, cross-functional teams, and really challenged them to crash their time lines and look at what they can take out. That will accelerate growth in the critical period. So it is going to mean more investment, but it's absolutely doable.

Emerging markets are an interesting topic. They appear to be showing rapid growth, but some critics say those markets aren't organized enough in terms of infrastructure to really deliver solid prescription growth. Do you think that's true?

We picked four countries very carefully. When I came in, we had 40 countries we called "emerging markets." One of the first things I did was separate the big, well-organized markets from the rest, so we have additional focus on those countries. Our pharmaceutical business in China, Russia, Turkey, and South Korea is getting the kind of growth that can drive sales. If we went to other markets that some people call "emerging," like India, we would not get that benefit.

What are your biggest concerns for the company? What keeps you awake at night?

The biggest concern is that this is an industry that's changing rapidly. But the pharmaceutical industry is a good place to be. It is fundamentally going to be a growth industry over the next 20 years. When you look at how societies are going to have to cope with over a billion people who are over 65 by the year 2030, and you compare that with the capability that has been developed at companies like Novartis around discovering and developing new drugs that can mitigate the cost, there is a very strong match.

But there are short-term issues—pricing pressure, tougher regulatory—where we need to change the way that we operate. For example, on downward pricing pressure, we have to improve health economics and outcomes research in a way that it allows us to show payers that our therapies are mitigating the cost of overall healthcare. Don't think about prescription drugs as increasing the cost.

The thing that keeps me up at night is my ability to help move this aircraft carrier called Novartis Pharma quickly enough to adapt to that changing environment because adapting to those changes is not easy.

Joseph Jimenez was named CEO of Novartis Pharmaceuticals in October 2007. In that position, he is charged with expanding the company's global branding efforts and speeding up drug development and marketing. For shouldering that task, the former collegiate all-American swimmer, now a father of three, pocketed $3.8 million in 2007.


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