Novartis chief: Sometimes you have to kill your R&D darlings

Novartis CEO Joseph Jimenez

Novartis ($NVS) CEO Joseph Jimenez presides over one of the industry's largest R&D budgets, committing about $10 billion a year to drug development. But the American-born executive, in contrast to his predecessor, has made a habit of ditching projects when they start to look futile, a philosophy that trickles down to Novartis' lab work.

In a Bloomberg profile looking at how Jimenez stands out from ex-CEO Daniel Vasella, the 5th-year chief shares a story that illustrates his approach to R&D. In January, at a leadership retreat, Jimenez called upon John Hastewell, head of the company's biologics research center, and handed him the company's first "courage award." The honor was not for a clinical success or daring discovery but rather for admitting defeat on 5 years of RNAi research and scuttling a stalled project, Jimenez told Bloomberg.

"One of the reasons why spending in the pharmaceutical industry is so high is that many scientists keep their products alive far beyond when they should be," Jimenez said. "If you help them feel like it's OK to stop the project, you're going to save hundreds of millions of dollars."

It helps, of course, that Novartis researchers get more funding and autonomy than those at other Big Pharma companies, perhaps making it easier to embrace failure. But Jimenez says the effort is part of a top-down effort to reshape Novartis into a company that is excellent at what it does well and wastes no time on what it does not.

That was the same motivation behind the roughly $30 billion asset swap with GlaxoSmithKline ($GSK) that closed earlier this month, through which Novartis essentially traded its vaccines business for some cancer drugs Jimenez believes are undervalued in what the CEO figures is a win-win deal.

Same goes for those courageously abandoned RNAi assets. Novartis flipped them to Arrowhead Research ($ARWR) this month for $35 million in cash and stock, turning its attention to areas in which it can take the lead.

- read the feature

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