Novartis CEO touts 25 potential—and diverse—blockbuster launches. But is its portfolio too scattered?

Just over a year into his reign as Novartis CEO, Vas Narasimhan proudly spotlighted 25 potential blockbuster launches coming down the pipeline. But that figure also begs the question: Is the company dabbling in too many different therapeutic areas and platforms?

That’s the query Citi analyst Andrew Baum posed to Narasimhan at the company’s Thursday management event in Boston. Novartis works in more therapeutic areas than any of its peers, Baum noted. Where does it strike the balance between breadth and focus?

But though Narasimhan figures the company's inventory of 10 therapeutic areas is enough, it's also not too many, the CEO said. "I’m not looking to increase this number beyond 10," he said during his introductory speech, citing numbers quoted by Evaluate Pharma. If the company did tap into new fields, it might exit others, he added. "However, I do fundamentally believe if you’re over-exposed to just two or three therapeutic areas, you can win in the short run, but you can’t win in the long run."

Novartis' commitment to therapeutic diversity follows years of work paring back its business units and zeroing in on pharma. Under Narasimhan, it spun off Alcon into a separate company selling only surgical and vision care products and sold its share of a consumer health joint venture with GlaxoSmithKline. Before that, it hived off animal health to Eli Lilly and traded its vaccines business for GSK's oncology portfolio, unraveling former CEO Daniel Vasella’s years-long quest to diversify its operations.

The company itself bundles its remaining medicines programs in 46 diseases into six therapeutic areas, not 10. That includes oncology—a separate business unit that got a huge bump-up in 2014 with the GlaxoSmithKline oncology-for-vaccines deal—and ophthalmology, recently beefed up with several ex-Alcon drugs before that unit went off on its own earlier this year. The remaining four? Neuroscience; immunology, hepatology and dermatology; respiratory; and cardio-metabolic.

Because of the company's broad set of interests, it doesn't depend on one key drug for growth. For example, the dermatology med Cosentyx, which dethroned Gilenya in the first quarter to become the company’s best-selling product, represents less than 8% of Novartis’ total sales. And that, according to Narasimhan, is a good thing.

Nor is Novartis overstretching itself across those six fields or only scratching the surface within any of them, he contends.

"What we’re quite excited about is that we have an anchor asset in every one of these areas that’s a significant medicine that allows us to build commercial scale and medical scale in the countries where we operate around the world," he said. "And then behind those lead assets we have a deep pipeline."

"What we are always looking to do is find places where we can build scale," he added. "If we get into renal diseases, we can’t be there with just one asset. It’s got to be where can build out a portfolio."

Just look at the dozen potential blockbusters it’s launching now and through 2021: They're spread across those six fields.

For example, in neuroscience, there’s Mayzent, which just rolled out to treat secondary progressive multiple sclerosis. In ophthalmology, the company's revving up brolucizumab for wet age-related macular degeneration. The PI3K inhibitor alpelisib, a candidate for HR+/HER2- breast cancer, is on tap from the oncology pipeline, while the respiratory division boasts asthma prospect QVM149, which just beat GSK’s Advair in a phase 2 trial. Finally, in hematology, Novartis is prepping crizanlizumab for sickle cell disease.

Novartis, in Narasimhan’s own words, is also "building a diversified company across platforms." Instead of focusing on small molecules and traditional biologics only, it's also selling the CAR-T cell therapy Kymriah and hoping to win FDA approval for its spinal muscular atrophy gene therapy, Zolgensma, in the next few days. Its radiotherapy Lu-PSMA-617 for metastatic castration-resistant prostate cancer could also eventually join the blockbuster club.

As Narasimhan sees it, being one of the first to debut on those three platforms is important for the Swiss drugmaker’s portfolio-diversification strategy.

First-mover advantage isn't just about capturing market share, the CEO figures. "[T]here’s so much know-how you get in actually launching the product, figuring out the manufacturing [and] the supply chain," he said.

Right now, Novartis is working with stem cell transplantation centers around the world. With gene therapy, it's aiming to improve on first-generation production technology in-house and build knowledge ahead of its rollout in the field, Narasimhan said. And in radiotherapy, "once you build the distribution network, it’s very hard [for competitors] to catch up," he added.

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