More than two years after Novartis first announced a global restructuring that affected 8,000 positions, the pharma giant says its workforce has settled into the simplified structure befitting its pure-play strategy.
Quarterly engagement results from employees “have been back to pre-restructuring levels,” Novartis CFO Harry Kirsch told reporters on a call after the company released its second-quarter earnings results. Kirsch also credited Novartis’ “strong financial results” over the past year and a half largely to the simplification of operations.
With net sales of $12.5 billion for Q2, the drugmaker is raising its core operating income growth to mid-teens — up from the low double-digit growth previously expected.
During the call, Kirsch also fielded questions about several top drugs in the portfolio.
On new efforts to “evolve” the development organization: The initial restructuring was mostly about commercial teams and “didn’t touch development,” according to Kirsch. Separate and recent cuts to the development group, including the closure of a San Diego facility, are part of some “additional streamlining” now that Novartis has only four therapeutic areas: oncology, immunology, neuroscience and cardiovascular-renal-metabolic. And there’s always the need for a bit of “fine-tuning” in a company of 75,000 people, he added.
On the regulatory path for the myelofibrosis drug from its $2.9 billion MorphoSys buyout: Kirsch said it’s “too early to say” whether Novartis will file pelabresib within this year as planned because the company is still waiting for new data that will likely come around September. The drug had yielded mixed Phase 3 data in November with data cutoff at week 24. In April, STAT reported safety risks tied to the drug. “We assume that we can file, but we have to look at 48-week data to inform us how the safety signals further developed,” he said.
On expanding manufacturing and supply chain radioligand therapies: The shortage of Pluvicto is now behind Novartis and “there is no concern anymore on the supply chain,” Kirsch said. Across the radiopharma space, isotope shortages continue to be a concern, with the likes of Bristol Myers Squibb having to pause a clinical trial. Novartis is bringing on additional capacity through a new site in Indianapolis and expansions planned in China and Japan — which will primarily serve Asian markets. While Pluvicto sales are now a “steady crawl,” the company expects “dynamic growth” once the treatment is approved for earlier-line settings. An FDA filing is on track for the second half of 2024.
On looming generic competition for Entresto, the top-selling heart drug that brought in almost $1.9 billion in Q2: No Entresto generics are expected this year, but Novartis will face loss of exclusivity in the US in mid-2025. The patents in Europe, Japan and other countries will expire later. “This is not a cliff on a very large product,” Kirsch said. “This is basically different geographies going off within a few years, and that allows our growth drivers to replace it.”