Off the Cuff

Novartis CEO is a quick study—and he had to be

Joseph Jimenez thrives on competition, and that’s a good thing, because he’s now working in an industry that has never faced such fierce competition as it does today.

“The industry is really in a state of flux,” said Jimenez, the CEO of Novartis, the Swiss pharmaceutical giant.  “On the one hand, you have increasing demand around the world; we have the aging population and we have increased chronic illness in emerging markets.  At the same time, you have financial systems around the world and payers that are trying to contain costs.”

Jimenez had been with Novartis for about three years as head of the company’s consumer health division – the group in charge of the company’s over-the-counter business with drugs like Excedrin and Theraflu –when he was asked to lead the company’s pharmaceutical division.
Before coming to Novartis, Jimenez had made his professional reputation as a consumer guy: He had been at Clorox, ConAgra and was even a top exec at the ketchup king H.J. Heinz Co. Naming him to lead the pharmaceutical division was an unusual choice and raised many eyebrows within and without Novartis’s Basel headquarters.

“I was not a physician, and I wasn't a scientist,” he said. But he was determined.

He took a crash course on the pharmaceutical business, being tutored two hours a day, every day, for a year.

“We went over every drug in the company’s portfolio in great detail. We talked about the biology of the disease each one was intended to treat. We discussed the mechanism of action of various drugs—how and why they worked,” he said.

Many in-house and industry skeptics were soon won over by Jimenez’s newfound expertise and ease in speaking the pharma-lingo.

“What that did is it enabled me to be able to speak to the physicians and to the scientists in the company in a way that helped them understand that even while I wasn't a scientist, I was able to understand the elements of the therapies that we were developing,” Jimenez said.

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His quick study of the company and of the industry has proven to be exactly what was needed at Novartis.

The company was spending too much time developing drugs and was losing some of its blockbuster drugs – its bread and butter – to generics.  The trend was going to cost the company billions of dollars.

“The industry is at a turning point. Over the next four years, products worth more than $142 billion are expected to lose their patents,” Jimenez told “Fast Company.”

He had to act fast.

Since taking over as CEO in 2010, he has made more investments in R&D than his competitors have. He has slashed spending and cut thousands of jobs. He’s dropped divisions where he didn’t see a future and has invested in areas where he sees growth.

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His vision for the next “blockbuster” drugs is that they’ll be drugs for fewer people. As he explains it, by developing drugs that target a disease that affect only a few, scientists will then be able to follow the “molecular pathway” from that small, unusual disease to possibly treat a disease that affects more people.

In detective work, they follow the money—in drug development, they follow the molecule. The theory is start small, grow big. The investment is less, the turnaround is faster.

He’s moving beyond Western Europe and the U.S., and going into growth areas like Russia and China. “In China there are more people with diabetes than actually live in Germany,” he said. 

Under Jimenez’s leadership, Novartis is investing $1 billion to build the largest pharmaceutical R&D facility in China and $500 million in St. Petersburg, Russia, to build a new manufacturing plant.

Looking even further into the future, he sees a fundamental change for his company and for the entire industry from selling pills to selling patient outcomes. And that is perhaps his greatest challenge.

“We're going have to shift from what has been a transactional approach where we're essentially selling a little white pill, to an outcomes-based approach where we're helping the healthcare system deliver a positive patient outcome. And this keeps me up at night.”

The way he envisions things, companies like Novartis will help with diagnosis, treatment, patient compliance—and all the problems they can entail.

But while the former college swimmer may have felt like a fish out of water when he first took over the pharmaceutical behemoth but for the most part, Wall Street likes what he’s done.

Even though earnings have been flat to lower during his tenure, Novartis has fared better than many analysts had expected and has been consistently one of the highest-performing pharmaceutical stocks.

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