Novartis Sticking With UK, Sees Lower US Prices
In presenting the company’s financial results for the second quarter of 2016, Joe Jimenez, CEO of Swiss drugmaker Novartis, took the opportunity to add comment on crucial issues facing the global pharmaceuticals sector to his remarks on the company’s financial.
The world's biggest maker of prescription drugs will continue to invest in Britain, despite the country's decision to leave the EU, Jimenez told journalists on a conference call. “The UK is an important market for us,” he said, remarking that, “there are many countries in Europe, namely Switzerland, which are not in the EU, and we continue to invest in those countries as well as in the EU.”
Jimenez said he sees “very large areas of unmet medical need and the innovation Novartis brings can help patients in the UK." In contrast to remarks by associations representing UK-based drugmakers, the Novartis CEO commented that he expects the European Medicines Agency (EMA) to continue approving new medicines in an “orderly” manner, even as it prepares to leave London for an unknown destination on the continent.
The UK’s BioIndustry Association (BIA), a trade group representing bioscience companies, said earlier that moving the EMA “would lead to disruption, expense and significant regulatory burdens as a new system is developed.” Others in the drugs sector have said they feared a Brexit would undermine future investment, research and jobs in the country.
On the other side of the Atlantic, the US presidential election – in which candidates have called for an end to what they see as excessive prices – has begun to cast a long shadow on the global pharmaceutical industry, and Jimenez acknowledged that drugmakers expect to see increased pressure on prices in the industry’s biggest and most profitable market.
In response, he said, the industry will need to restructure in preparation for new pricing models, no matter which party wins the election. He added that the Swiss company is planning for an environment “in which there are no price increases in the US.”
Speaking to the British newspaper Financial Times (FT), Jimenez said US price pressures will also have global repercussions, including in Europe, where prices are already falling. Pharmaceutical companies that fail to adapt “will be in trouble,” he said.
Separately, Jimenez confirmed to the FT recent rumors that Novartis is looking for an opportunity to sell its $14 billion stake in compatriot drugmaker Roche. He suggested that a deal is not imminent, but will be made when the company sees an opportunity to redeploy the funds. Novartis acquired the stake when the two drugmakers were weighing a broader alliance.
After reporting second-quarter net sales in constant currencies flat at $12.5 billion and core operating profit down 4% to $3.3 billion, Novartis has forecast full-year 2016 sales on a level with 2015. Core operating income is expected to be either in line with last year or down slightly.