IMS Company Profiles - Report Buyer

IMS COM PANY PRO FILES NOVARTIS
it does not con trol. Dr Vasella notes that CIBA Vi sion is the world’s sec ond-larg est con tact lens care com -
pany, while Alcon is not in volved in the con tact lens busi ness. Also, Novartis sells two drugs for age-re -
lated macular de gen er a tion, an area in which Alcon has no in volve ment, and Alcon has sur gi cal,
consumer and prescription products in areas where CIBA Vision does not operate.
In Au gust 2008, Natixis Bleichroeder an a lysts noted, “Alcon is the world leader in oph thal mol ogy, a
fast-grow ing mar ket where ge neric risk is more con tained and where syn er gies with Novartis’ oph thal -
mol ogy busi ness should be sub stan tial.” An a lysts at Bernstein Re search (Au gust 2008) noted that
Novartis will hit a real “pat ent ex piry cliff” in 2011-12. In 2012, its ma jor drug Diovan (sales of around $5
bil lion in 2007) will lose ex clu siv ity, which will be a se vere blow to the com pany. Look ing at the Alcon deal,
they com mented, “While the deal was felt by many as ex pen sive, such is the case with nearly all as sets
for sale in the cur rent phar ma ceu ti cal en vi ron ment. As the ‘cliff’ draws near we think as set prices could
con tinue to rise as more com pa nies be come more des per ate; the ac qui si tion price on Alcon may well
have risen higher as time elapsed.”
Re gional Strat egy
• Emerg ing Mar kets Tar geted
Al though the US re mains an im por tant mar ket for Novartis, pro vid ing 31% of sales in 2008 (34% in
2007), it has be come in creas ingly dif fi cult over re cent times, with tough ge neric com pe ti tion and an in -
creas ingly con ser va tive reg u la tory en vi ron ment. Al though growth re turned to the US mar ket in the sec -
ond half of 2008, it did not coun ter the neg a tive growth in the first half of the year and the re sult was a
1.6% drop in sales for the full year to $12,861 mil lion, com pared to sales from con tin u ing op er a tions of
$13,074 mil lion in 2007. In com par i son, for 2008 Novartis re ported solid growth in Eu rope, Latin Amer -
ica, Ja pan and emerg ing mar kets, with China and Rus sia both de liv er ing more than 30% growth. Over all
growth out side the USA amounted to 14.4% and sales out side the US represented 69% of total sales or
$28,598 million.
Novartis is re struc tur ing it US salesforce and mak ing cut backs, with 550 rep po si tions be gin ning in Jan u -
ary 2009. The new struc ture will have five pri mary care-fo cused re gional op er at ing units and one na -
tional spe cialty phar ma ceu ti cal business unit.
Novartis has been tak ing steps to in crease its pres ence in seven key emerg ing mar kets (Brazil, China, In -
dia, Mex ico, Rus sia, South Ko rea and Tur key), and in other emerg ing mar kets. In 2008, Jo seph Jimenez,
Head of Pharmaceuticals, noted “you are go ing to see us shift our cen ter of grav ity to ward some of the
faster-grow ing mar kets, sig nif i cantly ex pand the size of our sales forces and step up clin i cal de vel op ment
ac tiv i ties in an ef fort to take busi nesses al ready grow ing rap idly to even higher lev els.” By 2020 Novartis
ex pects the emerg ing mar kets to ac count for 20% of the com pany’s to tal global pre scrip tion drug sales,
an in crease from 8% at pres ent. In the seven pri or ity coun tries, Brazil, China, In dia, Mex ico, Rus sia,
South Ko rea and Tur key, sales in 2008 rose 18% in lo cal cur rency terms to $4.3 bil lion. Emerg ing mar -
kets across the world gen er ated net sales growth of 13% in lo cal cur rency terms to $10 bil lion, stand ing
at about 24% of total net sales, compared to 22% in 2007.
An other ma jor stra te gic aim for Novartis is that of boost ing its ac tiv i ties in grow ing Asian mar kets.
Novartis has con sid er ably strength ened its sales force in Ja pan in re cent years and it is among the top 10
drug com pa nies in that mar ket. An im por tant launch in Ja pan was that of Diovan (launched in No vem ber
2000), which is now the num ber two prod uct in the AIIA class in that mar ket, be hind Blopress. The an gio -
ten sin II in hib i tor class has grown strongly in Ja pan in re cent years, as these newer prod ucts have taken
mar ket share from older ther a pies. In July 2008, Mr Hiroyuki Mitani, Pres i dent and CEO of Novartis
Pharma KK, stated that 2008 is an im por tant year for Novartis in Ja pan as it pre pares for the launch of
seven or eight new prod ucts from 2009. In Jan u ary 2009, Novartis re ported that four drugs had re ceived
ap proval in Ja pan: the can cer treat ment Tasigna (nilotinib); the asthma treat ment Xolair (omalizumab);
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