Novartis to prioritise U.S. market, unfazed by drug pricing pushback

The logo of Swiss pharmaceutical company Novartis is seen at the company’s plant in the northern Swiss town of Stein October 23, 2017. REUTERS/Arnd Wiegmann/File photo

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ZURICH, Sept 22 (Reuters) – Swiss pharmaceutical giant Novartis (NOVN.S) he said he would make growth in the United States his top geographic priority, even after laws were passed to control drug prices in the world’s largest pharmaceutical market.

As part of an investor event, the company said Thursday it would adopt a “putting America first mindset.”

Novartis’ aspiration is to “organically build its US business to become one of the top five players in the US by 2027,” it said in a statement. It ranked 10th in the US market last year, the company added.

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Still, Novartis said it aimed to be one of the top three players in China, up from fifth place last year among multinational pharmaceutical companies, while holding leading positions in Germany and Japan.

US President Joe Biden last month signed the Inflation Reduction Act, which authorizes the government to negotiate the prices of some prescription drugs and limit the costs of the state health program Medicare. read more

In 2024, the government will begin negotiating what it will pay for 10 drugs that are among the biggest spenders under Medicare, which goes into effect in 2026.

Among the changes that will take effect sooner, price increases will have to be below the rate of inflation and patients’ out-of-pocket payments for pharmacy drugs, known as Part D drugs, will be reduced.

“On inflation caps, while challenging, we believe it is manageable and (there is) no change in our guidance regarding management through inflation caps,” said Novartis CEO Vas Narasimhan, at the event.

“When you look at Part D reform and how it’s limiting costs for patients … hopefully, over time, you’re increasing demand,” he added. “If you think about certain categories, like cardiovascular disease, you could see a 3 to 10 percent increase in demand.”

Novartis also announced a strategy based on eight major drug brands as the company reshuffles after a decision to spin off Sandoz, its underperforming generics business.

Its shares fell 0.9% at 0741 GMT, slightly better than the 1% drop in the STOXX Europe 600 Health Care. (.SXDP) index.

Novartis said its Cosentyx, Entresto, Zolgensma, Kisqali, Kesimpta, Leqvio, Pluvicto and Scemblix therapies had a maximum multi-million dollar sales potential.

Last month, the company said it planned to spin off Sandoz to sharpen its focus on proprietary prescription drugs. The spin-off is expected to be completed in the second half of 2023, with Sandoz listed on the SIX Swiss Exchange. read more

Novartis has also been cutting other businesses, spinning off its Alcon eyecare business in 2019 and last November agreeing to sell a nearly one-third voting stake in Roche. (ROG.S).

Narasimhan also confirmed Novartis’s previously set financial targets of 4% annual sales growth through 2027 and a core operating income margin of at least 40%.

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Edited by Jason Neely and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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