Novartis will start doing more fundamental research work in India: Vas Narasimhan

We had 10 positive phase three readouts last year—one of the highest we believe in our history. We have also been able to pioneer some of the big areas of medicine in cell therapy, small interfering RNAs and radioligand therapy. So, in all three of those areas, we were first among the first.

Q. And how is India helping Novartis?

It’s been an evolving role. We call it [Hyderabad centre] a corporate centre, meaning that it is involved in every single element of the core operations of Novartis. India touches our programmes nearly in every single dimension. The one area historically we did not have in India was basic science research. But we’ve now decided to start doing that as well. We will start doing more fundamental research work in India because, simply, the talent now is at a level where we can do that successfully.

Also read: Novartis: Innovating for the world, from India

Q. What areas of research will you be focusing on?

Most of it will be in chemistry and pharmacokinetic (PK) science. And then the question is at what point could you bring discovery sciences, which is real fundamental research? But it’s a start to even bring PK sciences and chemical sciences into the country. And then we’ll build from there, hopefully over time.

You have also been on an acquiring spree. Are you looking at India for acquisitions?

We acquire innovative biotech companies, most of them sub-$1 billion. Last year, we did about 15 deals and 13 of them were under a billion. India’s market is primarily generics, and we spun out our generics business last year. So, there wouldn’t be acquisition space in India for us.

Q. India also doesn’t feature in your core markets. Do you see that changing?

When you look at the market sizes for us, our global sales were in the order of $46 billion last year. Novartis’s sales in the US exceed $16 billion, Europe at $10 billion, China is $4 billion plus, and Japan at $2 billion plus. India’s innovative medicines are between $200 and $300 million. So, it’s just a factor lower now. That said, the potential is very large.

Q. How is the pipeline looking for Novartis now, considering some drugs will go off-patent?

We’ve committed to five percent growth between 2023 and 2027 and lined up 12 launches in the next two years. I think of it as two groups. One, we have these medicines that are in our traditional therapeutic areas which will grow. And then the real opportunity is in these technology platforms. If you look at the history of our industry, for the first 80 years, much of the work was with small molecule chemistry. Then came injections, which are antibodies or proteins. Now we have new classes of medicines, cell therapy, radioligand, RNA therapeutics, and gene editing.

 The question is which of these will become the medicines we look back on to say ‘this is the next pillar’ of our industry. For me, the most important thing for Novartis is to make strategic bets in those and we are leading in three of them.

Q. You are a doctor by training. Does that make you look at business from a different lens?

It creates a different lens. As somebody who came up from the R&D side, I focus more on innovation and science. When I started, I was the CEO of a large conglomerate. Now we’re a pure-play company, where our lifeblood is discovering, developing and getting these medicines to patients. So, I think that’s very well aligned.

If you look at the last six or eight quarters, we’ve been consistent at beating expectations. It is by delivering the quarters that you earn the right to invest in the next decade. The reality of the drug industry is you have ups and downs. But on average, when we look at the last 20 years, our returns on R&D are well above our cost of capital. What happens is, you’ll have a few hugely successful drugs, and then you’ll have a few years where you don’t have many successes, and you must have the patience and wisdom to accept that you will have rough patches.