Innovation Agents: Joe Jimenez, CEO Of Novartis

As CEO of Novartis, Europe's second largest drug company, the former competitive swimmer Joe Jimenez won't rest until he snags the top spot. The key: innovative products, expansion into new markets, and good old-fashioned team building.

As a teenager, Joe Jimenez spent four hours a day, seven days a week in the pool training for swim meets. Now, the 51-year old CEO of Novartis, Europe’s second-largest drug maker, says he never lost that competitive mindset. "Training so hard also gave me a strong desire to win, and to continue to push myself," he tells Fast Company

It shows. Though he spent years launching and marketing consumer goods at the likes of H.J. Heinz and Clorox, Jimenez jumped into the deep end to run a $50 billion pharmaceutical company based in Basel, Switzerland. Since taking the helm in 2007, Jimenez stuck with three goals: to extend the company’s lead in innovation, turn innovation into growth, and drive productivity into improving margins. 

jimenezSo far, it’s working. Novartis has been consistently one of the highest-performing pharmaceutical stocks, and the company just reported a double-digit rise in net profits for its second quarter. Following its acquisition of Alcon, Novartis is the world leader in eye care. The company is also investing $1 billion for an R&D facility in China and $500 million in Russia to build a new manufacturing plant for pharma and generics. In an exclusive interview with Fast Company, Jimenez discusses how he’s used innovation as a path to market leadership.

How did your experience in consumer packaged goods help you make the transition to pharmaceuticals?

My time working in the consumer packaged goods industry taught me to pay close attention to the market environment, how it is changing, and how to stay ahead of these changes. It also reinforced the importance of customer insights and adapting to changing needs. 

Coming from outside the industry also gave me a fresh perspective and an advantage as I didn’t get stuck in the way things had been typically done. When I first came to Novartis, I saw a lot of flaws in how slowly the industry moved. I made it a priority to speed up decision making and change our business model to get closer to patients and customers. This will be key to winning in today’s shifting health care market.

Which do you think has the most potential to be a game changer: innovative drugs to treat rare diseases with wider applications, or expansion into markets such as China and Russia?

Innovation will always be the biggest game changer. Developing innovative drugs that address unmet medical needs of patients is our main purpose.

A good example of this is Afinitor, which we studied simultaneously in multiple disease areas that might share the same pathway. This has been successful, as Afinitor has been approved to treat multiple diseases, including renal-cell cancer, a rare form of pancreatic tumor, and brain tumors known as SEGAs that are associated with tuberous sclerosis. Afinitor has also shown potential in treating metastatic breast cancer. 

Few other companies are pursuing this strategy of parallel development to the same degree. By following the science and developing innovative drugs with a broad range of indications, we are better able to develop novel treatments, which are game changers for rare diseases and those with unmet needs.

We also see huge growth opportunities in emerging markets like China and Russia, which are growing quickly, while more developed markets like the U.S. and Europe begin to slow down. We are investing $1 billion to build the largest pharmaceutical R&D institute in China, which will focus on stem cells and epigenetics research, to find new treatments for hepatitis and virally induced cancers that are endemic in the region. We are also expanding our presence in Russia, where we just broke ground for a new state-of-the art pharmaceutical manufacturing plant.

When you took over as CEO, the WSJ reported that you were an avid reader of the Cafepharma message board. Do you use other social media, and why do you think the online conversation is valuable to a chief executive?

I read a variety of publications and websites; however, I would not consider myself an avid reader of Cafepharma. I like to get my news from many sources so I can obtain different insights and perspectives. I find social media a great way to be part of a dialogue. That is why I started my own blog for Novartis associates. I started blogging when I was head of our pharmaceuticals division, and I still write about once a week. 

With a company our size—we have more than 100,000 associates in 140 countries around the world—I realized blogging is one way for me to regularly communicate with them, and for them to channel feedback to me. I like asking associates to post comments and ask me questions after each of my blog posts. It is a great way to start a conversation and stay in touch with teams I may only get to see once or twice a year.

As the U.S. health care debate still rages (and the cost of prescription drugs is still too high for many on maintenance medications) what do you see is the role and responsibility of a pharmaceutical company to work with insurers and health care practitioners to bring positive change?

As a health care company, I see our responsibility as discovering and developing new medicines that address patients’ unmet medical needs. We at Novartis are supportive of reforms in the U.S., and around the world, which expand access and coverage to all citizens.

While it is ultimately the responsibility of governments to ensure patients have access to health care, we have created several access programs to help ensure that patients have access to our treatments, even those who cannot afford them. For example, we developed a Patient Assistance Program for Gilenya, our breakthrough oral therapy for multiple sclerosis, where patients experiencing financial hardship who have no third-party coverage may receive Gilenya at no cost. We also established the first global direct-to-patient access program for Gleevec and Tasigna, our life-saving therapies for chronic myeloid leukemia. 

This program, in collaboration with the Max Foundation, has different payment models based on the patient’s ability to pay, and it provided Gleevec and Tasigna to 42,000 patients in need around the world in 2010. In total, our access to medicines programs reached a total of 85 million patients in need in 2010, a contribution valued at $1.5 billion, or 3 percent of net sales.

Novartis will lose the patents of the heart drug Diovan as well as cancer drug Femara this year. What is going to be the next big thing for the company? What are the implications for the pharmaceutical industry in general?

We have been preparing for this for some time, and we expect to grow through this period, because of our commitment to innovation, and the number of new product and new indication launches we have lined up. We have been focusing on building a broad and diverse health care portfolio spanning pharmaceuticals, eye care, generics, vaccines, and diagnostics, and consumer health. 

Our recently launched products are driving our growth across our businesses, and in Q2 increased sales 46 percent over the previous-year quarter. Our generics business Sandoz is another key growth driver for us, especially amid growing cost containment pressures. In Q2, Sandoz delivered 16 percent sales growth in constant currencies.

The industry is at a turning point. Over the next four years, products worth more than $142 billion are expected to lose their patents. By focusing on our core competencies, discovering new medicines and helping patients, the pharmaceutical industry will grow through this patent expiration period. I think there is a potential that you will see us separate from the rest of the pack after this patent cycle passes because our broad portfolio and pipeline of new medications provides us with the opportunity for sustained, dynamic growth.

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