Novartis reshuffles its $9B R&D operation to save $1B a year

Novartis CMO Vas Narasimhan

Swiss pharma giant Novartis ($NVS) is changing up its massive R&D organization in hopes of squeezing out some savings while betting big on new medicines.

In tandem with its annual financial results, the company said it promoted former head of development Vas Narasimhan to the newly created position of chief medical officer, tasking him with overseeing the company's roughly $9 billion drug development operation. In that role, Narasimhan will join the executive committee and work alongside incoming R&D chief Jay Bradner, an award-winning Harvard University oncologist who will take over for Mark Fishman as head of the Novartis Institutes for BioMedical Research in March.

The idea, according to Novartis, is to better coordinate its wide-ranging, disparate development arm by putting one person at the helm, improving "resource allocation, technology and standards across divisions," the company said. Novartis is also consolidating its medical policy, safety and pharmacovigilance divisions under Narasimhan.

The move is part of an over-arching strategy to make the company more efficient, Novartis said, an effort that includes consolidating manufacturing and shaking up generics to save $1 billion a year starting in 2020. Novartis expects to record restructuring costs of $1.4 billion spread over 5 years.

With those savings, Novartis said it plans to further invest in its R&D division, whose annual budget dipped about 2% in 2015 to $9 billion.

Novartis' research operation had a big year in 2015, winning approval for a pair of expected blockbusters in the heart failure therapy Entresto and psoriasis treatment Cosentyx, plus picking up the first ever FDA nod for a biosimilar with a version of Amgen's ($AMGN) Neupogen.

- read the statement
- check out Novartis' results (PDF)

Read more on