Novartis to Split Pharmaceuticals Division into Two -- Update

By Anne Steele 

Novartis AG said its head of pharmaceuticals, David Epstein, is to leave the company amid a restructuring that will split his role in two.

The Basel, Switzerland-based drug giant said Mr. Epstein, who is American, had decided to leave the company "to explore new challenges from the U.S." Chief Executive Joe Jimenez said Mr. Epstein had "steered our pharmaceuticals division through a period of excellence in innovation, execution and improved financial results."

Novartis disclosed Mr. Epstein's departure as the company announced plans to separate its cancer unit from the rest of the pharmaceuticals business.

Bruno Strigini, who already leads the oncology business, will report directly to Mr. Jimenez as of July 1. The rest of the pharmaceuticals business, which sells treatments for ailments from heart failure to multiple sclerosis, will be led by Paul Hudson, currently AstraZeneca PLC's head of North America. All changes are effective from July 1.

The reorganization comes as Novartis battles falling sales of blockbuster cancer drug Gleevec, which lost exclusivity earlier this year. One of the recently launched drugs it is depending on to help replace that lost revenue, Entresto for heart failure, has had a disappointing start due to doctors' hesitation to switch stable patients onto a new medicine and delays in securing reimbursement from health insurers in the U.S.

It also closely follows a restructuring of eye-care unit Alcon, which is struggling amid increased competition in the lens-implant market and the entry of cheaper copycats of some ophthalmic drugs. That move, announced in January, shifted Alcon's drugs into the pharmaceuticals division, leaving behind surgical equipment and vision-care products, such as contact lenses. It also involved the departure of Jeff George as CEO of that division.

The company said the restructuring reflected the importance of the oncology business following the integration of the cancer drugs Novartis acquired from GlaxoSmithKline PLC following a $20 billion asset-swap deal between the two companies. That deal, which closed in the first quarter of 2015, involved Novartis trading its vaccines for Glaxo's cancer franchise.

A Novartis spokesman said the cancer business was around the same size as the rest of the pharmaceuticals division combined but operated on a different business model. He added that the restructuring would simplify decision-making at that unit.

Novartis's most prominent research program is for a cutting-edge approach involving the re-engineering of patients' immune cells to make them more powerful at fighting cancer. The company is aiming to win regulatory approval for the approach in the U.S. by 2017.

Novartis shares, which have lost 23% of their value over the past 12 months, slid 9 cents to $75.54 in afternoon trading in New York.

--Anne Steele contributed to this article.

Write to Denise Roland at [e-mail]

(END) Dow Jones Newswires

May 17, 2016 14:56 ET (18:56 GMT)

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