Novartis AG CEO Attempts to Rebuild as Seven Execs Jump Ship in the Space of Five Months
May 24, 2016
By Alex Keown, BioSpace.com Breaking News Staff
BASEL, Switzerland – Novartis AG has seen a number of high profile executives depart the company since the beginning of the year and more C-suite-level employees are planning to exit as well, Reuters reported this morning.
The dip in share price overnight was nothing new for the company, which has seen share prices decline 25 percent in value since July of 2015. While Joe Jimenez, chief executive officer of Novartis is focused on shoring up the company’s pipeline and address some core issues and challenges facing the company, the departure of some top executives reflect “ongoing problems, as well as longer-term management instability,” Reuters reported this morning.
"Key positions are changing rapidly right now, in a situation where you probably prefer to have more stability," Vontobel analyst Stefan Schneider told Reuters in an interview.
One of the highest profile departures happened last week when David Epstein, who had been the head of the pharmaceuticals division, announced he was leaving Novartis after the company split its pharmaceuticals division into two separate business units—one focused on drug development and the other dedicated to treatments for cancer. Epstein’s departure comes less than a month after Christi Shaw, head of Novartis’s U.S. operations, stepped down citing personal reasons. Shaw, who served as head of U.S. Novartis Corporation and ovartis Pharmaceutical Corporation since 2014, will be replaced by two people, Fabrice Chouraqui and Tom Kendris. Another departure was Jeff George, who stepped down from the helm of Novartis’ eye-care company, Alcon , in January. Following George’s departure, Novartis tapped former Hospira executive Michael Ball to help turn that division around after the company again fell short of earnings expectations.
While Novartis handled those departures, several more executives are planning to leave the company, Reuters said. In July Eric Cornut, the chief ethics officer, will leave the company while the company is facing federal allegations the company hosted about 80,000 “sham” events in which the U.S. government maintains the drug company “wined and dined” doctors to prescribe the company’s cardiovascular drugs.
Another looming departure is Mark Fishman, director of the Boston-based Novartis Institute for Biomedical Research. Fishman is retiring and Reuters reported William Sellars, the head of oncology research, is will also retire this year.
The departures and how they will impact the future of Novartis is something Jimenez will have to address with investors later this week on a conference call. Jimenez will also certainly discuss the company’s pipeline as it now faces generic challenges to Gleevec, its blood cancer drug that lost patent protection in the United States. The company is also hoping to see good news from its new heart medicine Entresto. Since its approval by the U.S. Food and Drug Administration in July, sales of Entresto has been sluggish in part due to reimbursement issues. Analysts predict the drug could generate $5 billion in annual revenue by 2020, however earlier this year Epstein predicted Entresto sales for 2016 would only be around $200 million, Reuters reported. That could change though, since Express Scripts, the country’s largest pharmacy benefits manager, added Entresto to its preferred formulary for 2016.
During the call, Jimenez will certainly be able to tout the success of Phase III data for LEE011 (ribociclib), a cyclin dependent kinase inhibitor (CDK4/6), in combination with letrozole, for advanced breast cancer. Last week, an independent Data Monitoring Committee recommended an early halt to the late-stage trial due to clinically meaningful improvement.
Beginning in July, Novartis said the company will continue to have three focused, customer-facing divisions: Innovative Medicines (formerly the Novartis Pharmaceuticals division), which will include the Novartis Pharmaceuticals and Novartis Oncology business units; Sandoz, the generics and biosimilar division, which includes the Retail Generics, Anti-Infectives and Biopharmaceuticals franchises; and Alcon, the eye care devices division, which includes the Surgical and Vision Care franchises. The divisions will be supported by Novartis Institutes for BioMedical Research, Global Drug Development and Novartis Operations, which includes Technical Operations and Novartis Business Services.