COMPANY PROFILE - Novartis International
Business Sector : Pharmaceuticals
Operating Geography : Switzerland, Global
About Novartis International : Novartis International AG, a Swiss multinational pharmaceutical company based in Basel, Switzerland, it has a history going back more than 150 years. Novartis was formed after joining the pharmaceutical and agrochemical businesses of Ciba-Geigy and Sandoz; when in 1996, Ciba-Geigy merged with Sandoz. Sandoz division offers more than 1000 different types of high quality, affordable products across various therapeutic areas and the division is a global leader in generic medicines and biosimilars. Market capitalisation of the company is $172 billion as per Dec 2016. The company has around 123,000 employees and their products are available in 155 countries as of 2016.
Novartis International Revenue : $ 48.5 billion – for FY ending Dec 2016
Competitive Analysis of Novartis International
|1. Global Healthcare company|
2. Research & Development is main focus of the company’s strategy
3. Strong product portfolio
4. Growing therapy areas
5. Corporate responsibility
|1. Sales is declining
2. Declining growth in Established medicines
3. Anti-infectives business is also declining
|1. Strong demographic and economic trends |
2. Rising demand for biosimilars
3. Great potential of emerging markets
4. Growing medical research
5. Oncology segment
|1. Competition from generics
2. Increasing pressure on healthcare costs
3. Risk for drug prices
4. Challenges with emerging markets
Detailed SWOT Analysis of Novartis International
1. Global Healthcare company: Novartis, a Switzerland based global healthcare company, is established more than 150 years ago. They provide healthcare solutions for evolving patients and societies worldwide. Products are available in 155 countries, reaching 1 billion people globally in 2016. About 0.13 million people of 142 nationalities work. The company showed net sales of 48.5 billion USD and market capitalisation of 172 billion USD
2. Research and development is at the fundamental of the company and centre to the company’s strategy. In the year 2016, with 16 approvals in major markets and 24 applications for marketing approval, they also received 5 breakthrough therapy designations from US Food and Drug Administration (USFDA). In 2016, they filed in the US and EU to market combination of Tafinlar (dabrafenib) and Mekinist (trametinib) as a first-line treatment in lung cancer patients with mutation in BRAF V600.
3. Strong product portfolio: It believes to have up to 12 drugs in pipeline to potentially become blockbusters, with therapy areas like oncology, immunology, neurology, eyecare and biosimilars. Alcon, eyecare division launched two new surgical technologies like Cypass Micro-Stent and NGENUITY 3D Visualisation systems for treating eye disorders. They also reported positive clinical trial results for two important molecules in neuroscience pipeline: BAF312 (siponimod for secondary progressive multiple sclerosis) and AMG 334 (erenumab for episodic migraine prevention.)
4. Growing therapy areas: Novartis progressed beyond target therapies for cancer. It reported pivotal clinical data in CTL019- a personalised cell therapy developed in collaboration with university of Pennsylvania in US in paediatric and young adult patients with B-cell acute lymphoblastic leukemia. The US FDA approved their biosimilar Erelzi (etanercept) to treat multiple inflammatory diseases.
5. Corporate responsibility: Through patient access programs 52 million patients were reached, through health education programs 17 million people were educated. Also, Novartis was recognised in corporate responsibility rankings, where it was ranked 3rd in Access to medicine index.
1. Strong demographic and economic trends: Expected rise in the global population by 2030 is 1 billion people adding to a sum of 8 billion. Millions of people are migrating from rural areas to cities showing changes in lifestyle and diet that can impact human health. The world’s population also continues to age rapidly, with number of people aged 60 or more to increase by 0.5 billion to 1.4 billion people by 2030. These patterns are showing increase in chronic diseases like diabetes and heart disease.
2. Rising demand for biosimilars: The global biosimilar market is expected to be US$ 36 billion worth by 2022, according to a report by consultant Netscribes, showing a great potential in biosimilars. For now, Novartis aims to be selling only 8 biosimilars as compared to 3 by March 2020.
3. Great potential of emerging markets: Pharm-emerging markets have potential of an exponential growth, from holding an 18% market share in 2010 to a 31% share in 2020. Growing wealth, massive population, unhealthy lifestyles, increasing life expectancy, more spending on healthcare are some of the merits in the emerging markets.
4. Growing medical research: Innovation in medical research is fast-tracking, majorly driven by new therapeutic approaches. For eg, the average number of new drugs approved by US FDA from 2012 to 2016 increased extensively 46% compared to the last 5 years. Researches are finding novel ways to treat diseases like gene therapy, RNA based treatments that can intervene in how cells create proteins. Digitalisation in healthcare is also gaining importance. It is also attracting technology firms to pharma industry.
5. Oncology segment: Cancer remains world’s No.2 killer even after recent decreases in cancer deaths. In Europe cancer remains the No. 1 killer. A new wave of cancer treatments harnesses the immune system to fight the disease. Breast cancer is the most common cancer in women, leading to 0.5 million deaths worldwide per year.
|1. Regulatory action on drug prices|
2. Impact of new president election (Donald Trump) in US on pharma and healthcare
3. GST implementation in India
|1. Shift to outcome focused calculations
2. Rising pressure on healthcare costs
|1. Growing and aging populations worldwide|
2. Advantages of social media marketing
|1. Rise of data analytics
2. Rise of Artificial intelligence(AI)
|1. Managing Intellectual property rights(IPR) in pharma||1. Infectious diseases
2. Potential of pharm-emerging markets
3. Growing medical research
Detailed PESTLE Analysis of Novartis International
1. Regulatory action on drug prices: Possibility of regulatory action on drug prices has become a greater risk for the industry. This action could take a variety of forms, including restriction on price increases, provide broad access to treatments and change in Intellectual Property laws.
2. Impact of new president election (Donald Trump) in US on pharma and healthcare: Trump is believed to take aggressive stance on drug price controls, but there is unpredictability to this. Also, he is dissatisfied with Obamacare but a proper plan is unclear. According to recent New York Times reports, the order doesn’t include curbing drug prices, instead drug companies will get more power to charge prices overseas, and they will be allowed to give even fewer discounts to hospitals with poor patients.
3. GST implementation in India: GST implementation in India will result in effective supply chain. It is observed that an efficient SCM can result in an overall deduction of 25-50% in total supply chain costs along with another 25-60% decline in inventory holding. Still, the GST impact on pharma industry is not transparent. But it is a win win situation for both end consumers and industry players. With reduced complexities and overall reduction in cost translated to more profitability and thereby development.
1. Shift to outcome focused calculations: Payers (insurers), governments and healthcare companies shift healthcare systems to focus on providing better health outcomes rather than simply paying for bills. For eg, the European commission has sanctioned value based tender approach for medical devices that allow companies to include health outcomes in their calculations of prices.
2. Rising pressure on healthcare costs: The pressure on healthcare systems has led to governments and payers (health insurers) looking for ways to reduce the rise in spending but still looking for quality care for as many people as possible.
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Novartis International SWOT and PESTLE analysis has been conducted by Rushabh Vikmani and reviewed by senior analysts from Barakaat Consulting.
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