Remains of the Day
What else does Vasella have to prove?
Any fire he may have felt about acquiring cross-town rival Roche and creating Pharma Suisse has likely flickered out. After
laying out $2.1 billion in 2002 to increase Novartis' stake to 33 percent, and reportedly mounting a failed charm offensive
on the secretive Hoffmann-La Roche family, which owns slightly more than 50 percent of the shares, the final nail in the coffin
materialized last month. A shareholder pact, which was to have expired at year's end, preserves the controlling voting rights
among the family. "Nobody really believed Novartis would be able to take over Roche," said Allianz Global Investors' Joerg
De Vries-Hippen in the Financial Times.
Still, the fact remains that the competition between the two firms has driven each to great feats of innovation. In what may
be at once the most unlikely story of the pharma industry in this era, sleepy, cosmopolitan Basel has given rise to the world's
two most dynamic drugmakers.
Vasella also has to solve the conundrum of his biggest-ever deal: a two-step acquisition worth up to $28.2 billion (with a
locked-in share price), in which Novartis is aiming to grab a majority stake in Nestle's Alcon, the vision-care behemoth that
makes a strategic fit with Novartis' Ciba—and would help ease the upcoming patent cliff with OTC cash. But Alcon's stock value
has plummeted, analysts are frowning, and Vasella is likely to face shareholder fury if he proceeds with the deal.
The gee-whiz! factor, encoded in Novartis DNA, looks to be sending the healthcare giant into the orbit information technology.
Two modest examples from the past few months: The first-ever genetic test to ID patients most at risk for side effects associated
with cox-2 inhibitor Prexige, which FDA shot down because of evidence of liver toxicity. And, a little dicier, computer chips
implanted in humans to improve drug compliance.
"Novartis would be the first pharma there—GE, Phillips, and Siemens are the main competitors," says Cliff Kalb. The timing
is right. On the one hand, the Obama administration has dropped billions for healthcare records. On the other, Pfizer, Merck,
and Roche are currently distracted by megamergers.
In 2008, Vasella made $15.1 million, ranking him seventh among pharma CEO packages. But Vasella's views on money are typically
iconoclastic. In a 2002 Fortune interview, after criticizing the tyranny of quarterly earnings and the danger of CEOs believing
their own good press, Vasella offered an anecdote from his own career: "The strange part is, the more [money] I made, the
more I got preoccupied with money. When suddenly I didn't have to think about money as much, I found myself starting to think
increasingly about it. Money corrupts the mind. ... One day the glitter will be gone anyway," he said. "Only once you are
unencumbered by that will you become free to do the right things as leader of your company."
Yes, yes—money corrupts, glory is fleeting, and only through losing your attachment to the things of this world can you find
your authentic self. But we rarely hear such truths—or truisms—from the mouth of the world's leading healthcare conglomerate,
who makes $15 million a year and whose daily schedule is booked solid well into the next decade. Credit four years of psychoanalysis
or what you will, but Vasella is one of a kind. He may take himself very seriously, but he definitely doesn't believe his
own good press.