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"We Need Short-Term Launches To Keep Driving Growth"

"We Need Short-Term Launches To Keep Driving Growth"

Novartis has completed strategic transactions worth over $70 billion since he took charge as CEO in 2018. In an exclusive interview with Business Today's Joe C. Mathew and P.B. Jayakumar, the second generation Indian American speaks about his vision for Novartis, new launches in India and the growing role of its Hyderabad centre

Dr. Vasant (Vas) Narasimhan, global CEO of Novartis International AG Dr. Vasant (Vas) Narasimhan, global CEO of Novartis International AG

What is the current focus at Novartis?

Right now, the focus is about 80 per cent innovative medicines and 20 per cent generics. It is a good mix of long-term and short-term. We have 15 launches coming up in innovative medicines. That, I think, is the highest in the industry. We got six new drug approvals last year. We have 165 projects in drug development, which will hopefully be the next wave of innovation at Novartis. It's the right balance.

Some of this technology will take longer to evolve. Some of them are near-term RNA interference, and to some extent cell therapy and gene therapy. But in the longer term, we will need these technologies to mature. So this will be a 5-10-year journey. We try to balance as we need short-term launches to keep driving the company's growth.

What are the changes taking place in the company?

We've been on a journey to focus as a medicine company powered by data science and digital technologies. I've successfully integrated a company that's 100 per cent focused on medicines. Its footprint is geographically diverse, and is also present across 10 therapeutic areas and different technology platforms. We continue to have traditional platforms, small molecule and large molecule drugs, but also new platforms like cell and gene therapies. We want to transform to the next level of performance using data science and digital technologies.

The first level means bringing AI and data science into every data-driven decision. Our 12 Digital Lighthouse projects are aimed at scaling up data science in all elements. So, for example, in R&D operations, all 550 clinical trials at Novartis are managed from a central command centre that uses machine learning to predict how the trials will run. Our manufacturing sites use predictive analytics to predict how production supply chains will run. AI makes recommendations to our 10,000 sales representatives about how they should spend their day.

The next level is to find insights from data. For example, one project brings all our clinical trial data from past 10 years into a single data lake and in that we try to identify new patient populations, new drug candidates and drug targets. We also try to supplement with external data. We're taking our image libraries - iX-rays, CT scans, pathologies, PET scans at cellular level - and trying to machine learn to get potential discoveries. Maybe we can find better diagnostics too. For example, we process all retinal images in our library (in association) with Microsoft to find new diagnostic tools. We have another project to look at CT scans of joints to see if we can predict a disease called Ankylosing spondylitis.

The third level, which is aspirational and longer term, is to think of unlocking new science of the human body using AI. This is the hardest because it's more complex. But the idea is that if we feed enough data into the systems, can we understand how cells in our body work, how cancers grow, how the brain degenerates in Alzheimer's disease or other diseases. That will take longer; could take seven to 10 years. We could find completely new medicines or ways to treat diseases

India business is just a fraction of your global revenues. Is it going to be more significant?

The shift we made in 2006 was because we wanted to build a global service centre in Hyderabad. That service centre has now evolved into a full operation centre. All our drug development operations are done out of Hyderabad. Our business service operations are there. India is thus a real operations hub for the whole company.

We are entering a phase in which we launch new products in India. For a long time, India was a market dominated by generic drugs and there was limited opportunity to launch novel medicines. Some things have changed now - the growing middle class and private insurance; greater interest even in government insurance programmes to bring in innovative medicines; and, of course, Ayushman Bharat. We have double-digit growth in India with novel medicines. The future is to launch new novel medicines while continuing to maintain the Hyderabad centre, which is one of the crown jewels of Novartis.

Given the high price of patented medicines, is there a marketing strategy to make drugs affordable in India?

One of Novartis' success stories in India has been our emerging market brands approach, which enables us to use a distinctive brand and distinct product presentation to (differentially) price (innovative medicines) for the Indian market. This was not possible maybe even a decade ago. The heart failure drug, Vyamada (globally sold under the brand name Entresto), reaches over 300,000 patients in India. We have other drugs as well at a similar level. So the key is to have a differential pricing strategy. We also have the Arogya Parivar initiative, which reaches villages at a much grander scale of over 30 million. So we think weve done a good job, bringing in innovation at an affordable price for the private market and insured markets and also the broad scale of people.

But will the same approach work for gene therapy, or other such futuristic medicines?

If you take a 10-year view, yes. For example, monoclonal antibodies were first introduced in the late 1980s, but they probably only came to low and middle income countries in the last five to 10 years. I want that to be much faster in gene therapy; I don't want it to be 25 years. Let's see if we can do it within 10 years. We have to first scale up our own capabilities and manufacturing. Right now we make limited quantities and these products are complex to manufacture. We just don't have supply. Second, we need to build the infrastructure in India or any low and middle income country to be able to take on these therapies. These are complex therapies; you need hospital systems that can handle them. Then you need a rare disease policy in the country; India is working on it. We've been working with India as well, but we need a rare disease framework to be able to treat these kinds of diseases in India. Lastly, well have to come up with access and pricing models. That will be the last stage but will take more time to figure out.

India is second only to China in population. But your presence in China has been much bigger than in India. India is very attractive, but from a scale standpoint, China is 10 times larger in terms of the size of the market in the near term. In China, we have $2.2 billion in sales; we plan to double that. In India, we are less than $400 million in sales; a big difference.

Which business outsourcing segments derive most value from India, from the Hyderabad centre?

We don't think of Hyderabad as a business service outsourcing location; it is an operation centre. We will see investment there in digital and data science, in technology as well as chemistry, where we already have investments in our Genome Valley facility. On clinical trials, in 2019 we had 65 studies across 432 sites in India as part of both global and local trials. We will continue to see double-digit (revenue) growth in India given all of our new medicine launches. Overall, we are very optimistic on India business.

Coronavirus-like outbreaks are more frequent. How can companies respond to such emergencies?

For virus and bacterial outbreaks, you need very long-term investments in basic research and new science. You will find solutions, but we need to keep improving our knowledge to find solutions rapidly. In the case of antimicrobial resistance, we need strong government policies to support people to make these antibiotics. Right now, there aren't great markets for these antibiotics. The cost of bringing a new antibiotic to market is very high from a manufacturing and clinical standpoint. We need to figure out ways to sustain investment in between the outbreaks. Right now there will be a lot of investment because there's an outbreak. But what happens in the five years between this and the next outbreak? The governments should make sustained investments to enable companies to maintain their readiness.

@joecmathew; @pb_pbjayan

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