|Global head of development Timothy Wright|
The big spender - Novartis
2012: $9.33 billion
Change: Down 3%
As a percentage of sales: 16.4%
Head of development: Timothy Wright
Based on core numbers, Novartis ($NVS) continues its reign as the biggest R&D spender in the pharma industry. But while several of its rivals are still very much focused on the big game in the blockbuster herd, CEO Joe Jimenez has championed the company's niche-busting strategy in pursuit of a new wave of top-earning drugs.
Like many other developers, Novartis has found that there's big money to be found in small patient populations. And it takes plenty of shots on goal, with the deep pockets needed to back one of the biggest pipelines in the business. Last year the company counted 17 significant approvals, but the highlights--including an OK for Afinitor for breast cancer, and one for Jakafi for myelofibrosis in the EU--underscore how the company likes to hit a goal and then widen the game. The added Afinitor approval last summer for breast cancer by itself was worth an extra billion dollars a year in revenue, some analysts believe. The MS drug Gilenya has grown into blockbuster territory with $1.2 billion in 2012 sales. Just weeks ago Novartis investigators said that it might be useful in combating colitis-associated cancer cases.
Novartis has spread its net far and wide, including rare diseases. It's been beavering away on the vaccines front as well. But for all the activity, Novartis also scored only one novel drug approval in the U.S. last year. Signifor (pasireotide) was approved for Cushing's disease at the end of last year.
As befits a Big Pharma player like Novartis, the company has multiple trials to look to. There are 200 projects in clinical development, including 138 in pharmaceuticals. And in the next two years Novartis says it anticipates 24 pivotal study readouts, up to 20 filings and 18 potential approvals.
This year marks a key watershed for Novartis. Two of its top drugs, Diovan and Femara, face growing generic competition, threatening to help hack off $3.5 billion in revenue this year, a painful reversal. But Novartis is vowing to make up the difference with growing sales.
"The definition of a blockbuster is changing," Jimenez told Fortune magazine recently. But the revenue they generate has not. Given the way Novartis excels at the short game of adding new markets, they have earned some credence among investors fretting over the future of Big Pharma.
"A high level of productivity in R&D is our future," Jimenez told reporters last summer. "That's key for Novartis' growth track record."
Aside from the broad pronouncements and big numbers, though, Novartis has never been particularly forthcoming about its late-stage R&D pearls. As pressure on the revenue side builds, though, the pharma giant may have to drop some of that guarded Swiss attitude and start opening up, like its neighbors at Roche. Novartis may be many things, but it's not a bank. Secrecy will win no points in the brave new world pharma finds itself in.
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