Alexis Serlin
President and Director General
Novartis
/
View from the Top

Shared Risk Model Leads to Innovation

Wed, 09/07/2016 - 15:44

Q: What is the strategy behind Novartis' restructuring, and what benefits have you already seen?

A: Novartis became a patient centric enterprise while also building a new culture largely focused on innovation and entrepreneurship. Novartis is a large company with a wide portfolio, which called for a business unit partition. This has helped us increase our focus on sub-market segments, increasing our effectiveness in patient servicing. We are strong advocates of improving our outcomes and producing the evidence to back it up. Supplying patients with drugs that are not needed will become an obsolete practice in the industry.

Q: What new drugs and products does Novartis have in the pipeline and what conditions is it focused on?

A: According to international healthcare analysts, our pharma division has one of the most robust pipelines in the industry. Novartis recently received the largest FDA breakthrough designations for molecule development, which is the highest rating any molecule can attain. As such, a large number of innovative drugs will be released by the company in the near future. Novartis will launch a heart failure product in 2016. Our drug will reduce mortality by 20 percent, while hospitalization will be reduced by 21 percent. Heart conditions are the main cause of work absenteeism as they result in death or serious deterioration of the human body. Patients diagnosed with heart failure have a life expectancy of five years, which is less than some cancers. Unfortunately, innovation in this field was absent over the last 10 years until Novartis decided to take the lead.

Novartis follows science and we try to be at the top of the curve in creation. The mapping of the human genome is a perfect example as it defines the type of molecules that will be developed. Novartis has recognized the wide array of diseases that the human body can contract but there are only a few hundreds of molecular expansion mechanisms that a disease can have. Novartis has identified the pathways in which those diseases can penetrate, further developing molecules that can intercept them, which can be later applied to a broad number of conditions.

All pharmaceutical products are either small chemical molecules or biologic components. Novartis is taking the lead in innovation by investing in cellular therapy, for example targeting pediatric refractory leukemia which is a condition unsolved by science. Novartis extracts cells from a child’s body, adapts them to create affinity with the cancer cells, and reinserts them in the patient’s system. The immunological system recognizes its own cells and multiplies them, directly attacking the cancer. Our tests had an almost 100 percent success rate.

Q: Why is Novartis investing US$50 million in research in Mexico, and what will be the benefits to the company and the country?

A: Our science advancements are usually developed in key centers around the world. We are trying to expand our R&D footprint in Mexico. Novartis envisions its Mexican operations partaking in the development of every breakthrough molecule for the company. That is the type of relevance our subsidiary will have worldwide. Coupled with our commitment to the country, COFEPRIS incentives made our decision much easier.

Q: Novartis is one of the few pharma companies using a shared risk business model. What is the reason?

A: This is an integral part of our goal to become health partners of choice for key institutions. Novartis wants to bring predictability to the resources institutions use. Our drugs are so innovative, costs associated with the disease drop. By reducing hospitalization through prevention a large number of institutional resources are spared, largely compensating the medicine cost. The shared risk model allows us to bring predictability to the next level. When pharmacoeconomic models show the benefits of adopting new technologies.

Novartis absorbs the risk. If pre-established outcomes are not achieved we pay the incurred drug costs. If the goal is reached, the costs are absorbed by the institution. So far, Novartis has signed over 10 cooperation agreements with key institutions, making us the fastest growing company in the segments we apply this methodology.