- Three top Novartis executives, including chief medical officer John Tsai, are leaving the Swiss drugmaker alongside a restructuring that's meant to streamline operations and save at least $1 billion in annual expenses by 2024.
- Under a plan announced Monday, Novartis will merge its pharmaceutical and oncology business units into an "innovative medicines" division responsible for finding and developing prescription drugs. The commercial arms of that division will be organized to focus separately on U.S. and international markets, the company said.
- Additionally, Novartis is combining its technical operations and "customer and technology" divisions into a new operations unit. Some jobs will "likely" be affected by the restructuring, a company spokesperson said in an emailed statement, adding that "it's too early right now to speculate which roles and how many."
Since becoming Novartis' CEO in 2018, Vas Narasimhan has made a series of major moves to overhaul the drugmaker, one of the world's largest.
A month after Narasimhan took over, the company sold its stake in a joint consumer health venture with GlaxoSmithKline for $13 billion. The company later spun out its Alcon eye care unit and in November divested its long-held stake in rival Swiss drugmaker Roche for $21 billion.
Those decisions, along with a pending plan to sell or spin off its generic drug division Sandoz, are meant to simplify Novartis' sprawling business and concentrate its resources around brand-name prescription drugs.
The company is now adding cost cuts and a departmental reorganization to its to-do list. Narasimhan said the restructuring announced Monday will make Novartis more "agile and competitive" as well as boost the margins of its innovative medicines division ahead of 20 planned drug launches by 2026.
While the R&D units of Novartis' prescription drug business will now be under one roof, the sales sides will be split geographically. Marie-France Tschudin will serve as chief commercial officer and head of the international division, while Victor Bulto, currently the head of its U.S. pharmaceuticals unit, will lead the U.S. arm.
Novartis believes realigning the two units in such fashion rids the company of "complexities and redundancies," according to a slide presentation.
"We've only just announced this new organizational structure and a lot of work needs to go on to determine details," Novartis' spokesperson said. Still, they create "more effective and simpler organizations, liberating resources for investments in new capabilities," the spokesperson added.
Novartis also plans to combine dealmaking and portfolio development responsibilities into a single role. Lutz Hegemann, head of Novartis' global health unit, will take on that position while the company searches for someone to fill the job full time.
Currently, Novartis' selling, general and administrative expenses make up about 29% of sales, higher than many of its drugmaker peers. Reducing those costs is a key part of Novartis' plans, and the new initiative is aimed at saving $1 billion annually by 2024 as well as raising the margins for its innovative medicines business to more than 40% in the mid- to long-term, the company said.
Accomplishing those goals will likely impact roles "across the organization," the spokesperson said.
Some shakeups have already begun. Tsai, who has been Novartis' chief medical officer since joining from Amgen in 2018, is leaving the company. So is oncology chief Susanne Schaffert and the head of Novartis' customer and technology unit, Robert Weltevreden. A slide presentation indicated that a large portion of the cost savings would come from "synergies" within Novartis' technical operations unit.
Shreeram Aradhye, a Novartis veteran who was formerly an executive with the recently acquired Dicerna Pharmaceuticals, is returning to the company to become its new chief medical officer.
More details on the plan may be revealed when Novartis reports its first quarter results on April 26.