Novartis Plans New Organizational Structure; Targets Cost-Savings of $1 Bn

Novartis has announced a new organizational structure and operating model with the aim of achieving cost savings of $1 billion by 2024 and changes in its executive leadership to support the new structure.

The company plans to integrate its Pharmaceuticals and Oncology business units into an Innovative business to create two separate commercial organizations—Innovative Medicines US and Innovative Medicines International. The two units will have full profit and loss responsibility across all therapeutic areas and ownership of customer experience, marketing and sales, and market access for their respective markets. The new model will support the company’s core therapeutic areas in cardiovascular, hematology, solid tumors, immunology and neuroscience.

Marie-France Tschudin, currently President, Novartis Pharmaceuticals, will become President, Innovative Medicines International and Chief Commercial Officer. In her capacity as Chief Commercial Officer, she will oversee global marketing, medical affairs, and value and access across all therapeutic areas. Victor Bulto, currently Head of US Pharmaceuticals, will become President, Innovative Medicines US. They will both report to Novartis CEO Vas Narasimhan, effective immediately (as reported on April 4, 2022).

Novartis will also create a new Strategy & Growth function combining corporate strategy, R&D portfolio strategy, and business development. This new function will be led by a Chief Strategy & Growth Officer, who will become a member of Novartis’ Executive Committee and report to the CEO. The search is currently underway for this new leader, and in the interim the function will be led by Lutz Hegemann, M.D., Ph.D., President, Global Health.

Additionally, the company will combine its Technical Operations and Customer & Technology Solutions units to create a new Operations unit. This new unit will provide an operational backbone to accelerate multiple technology transformation initiatives, create digital solutions at scale, and increase productivity. Effective immediately (as reported on April 4, 2022), Steffen Lang, currently Global Head of Novartis Technical Operations, will become President, Operations and report to Novartis CEO Vas Narasimhan. In addition, all general and administrative  functions—Finance, People & Organization, Ethics, Risk & Compliance, Legal, and Communications & Engagement—will be integrated on global and country levels.

The company also announced changes to its global drug-development leadership. Novartis has appointed Shreeram Aradhye, M.D., as President, Global Drug Development and Chief Medical Officer, effective May 16, 2022. Dr. Aradhye, who is returning to Novartis, was most recently Executive Vice President and Chief Medical Officer at Dicerna Pharmaceuticals, where he led the development of multiple clinical stage RNAi assets. Previously, he was Chief Development Officer at Axcella Health. During his 20-year tenure at Novartis, he held several global leadership roles, including as development head for the company’s Neuroscience franchise and Global Head of Medical Affairs for the Pharmaceuticals business unit. He will report to Novartis CEO Vas Narasimhan and join the Executive Committee of Novartis.

With the changes in organizational structure and operating model, John Tsai, M.D., currently the President of Global Drug Development and Chief Medical Officer at Novartis, has decided to pursue opportunities outside Novartis, effective May 15, 2022.

Novartis expects value creation through these operational improvements and to achieve a least 4% sales growth (compound average annual growth rate in 2020–2026) and margins in the high 30s in its Innovative Medicines business in the medium term and 40%+ in the mid- to long-term.

Source: Novartis