Novartis explains why it canned the cell therapy unit
- Like many of its competitors, Novartis has been "right-sizing" its business in hopes of generating innovation and making up for losses as major drugs like the cancer therapy Gleevec (imatinib) face generic competition.
- Despite its surprise August decision to fold the Cell & Gene Therapies unit back into its broader organization, Novartis said during its third quarter earnings call Tuesday it is on track to file its CAR-T drug CTL019 in pediatric acute lymphoblastic leukemia in early 2017 and in diffuse large B-cell lymphoma (DLBCL) in the second half of 2017.
- Generic competition continued to impact Gleevec in the third quarter, which lost patent protection in the U.S. earlier this year. Sales for the first nine months of the year were $36.2 billion, down 2% year-over-year.
Speculation has swirled about the viability of the Novartis' CAR-T therapy since the big pharma announced its division shake up in August. Novartis had long been considered an innovator and leader in the space, and many industry commentators questioned whether the technology had some major flaws if Novartis was bailing out just prior to reaching the regulatory finish line.
"Now, there was some speculation as to why we integrated the standalone unit into the functions at Novartis and this was done to give the unit the deep capabilities of drug development and global manufacturing, while at the same time, lowering overhead costs, as we start to prepare for the launch," said CEO Joe Jimenez on the October 25 call with analysts about the CAR-T tech.
"So, fully integrating into the oncology unit will help also on the commercial side, as we launch," he added.
Adding to the speculation was the relative youth of the Cell & Gene Therapies unit, which was established less than five years ago. While Novartis has long been a leader in oncology due to Gleevec, the company has fallen behind in other areas as competitors have jumped to market with immunotherapies.
While it has yet to be seen whether the company can recoup the losses from the blockbuster cancer drug, Jimenez indicated the big pharma is doing its best to cut costs and re-focus its portfolio.
"We continue to build a high-performing organization as we integrate some of our global functions across divisions," he said.
"So, for example, in manufacturing, we have started to integrate around technology platforms, and in global drug development, we're integrating the global functions. This work is well under way. While it's going to take some time to see significant savings here, we're already seeing early benefits such as improved transparency, which is enabling us to do a better resource allocation faster, and also, we are seeing a more collaborative culture," said Jimenez.
- Novartis Statement
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