There is a fascinating article in a recently published, special edition of Forbes detailing efforts by Novartis to become the leading force in cancer therapeutics. The article begins with a powerful and poignant story in which a breakthrough therapy brings a new lease on life to a young girl (as well as numerous other individuals who were involved in an early-stage trial).
Applauding Medical Breakthroughs:
No one, with a shred of compassion, would find anything but joy in the revelation that great strides are being made in treating previously devastating cancers; and there need to be incentives in place for corporations to pursue such work – since our economy is not driven by altruism. But there are troubling aspects to this story as well…as evidenced by comments made to Forbes by Novartis CEO, Joseph Jimenez.
Separating Science from Sales:
As Forbes notes, cancer drugs currently account for just under 20 percent of Novartis’ total sales – bringing in $11.2 billion annually. Now, according to Mr. Jimenez, “He’s ‘doubling down’ on the cancer business” – an expression I would normally reserve for a bet at the blackjack table.
Where’s the proof? “In April he did a deal that essentially traded Novartis’ unprofitable vaccine and consumer businesses and up to $9 billion in cash to GlaxoSmithKline in return for Glaxo’s cancer drugs, which currently generate $1.6 billion sales but which Jimenez says include three pills he can turn into $1 billion sellers.”
From Consumer Goods to Cancer Cures:
From a profit-making perspective, Mr. Jimenez strategy to become the leading force in the emerging field of personalized medicine seems astute. He is, after all, a “Marketer by trade who, until he came to Novartis in 2007, managed brands like Clorox and Peter Pan Peanut Butter before running the North America business for Heinz, the ketchupmaker.”
But we are not talking about whitening our clothes, satisfying a sweet tooth, or putting a topping on a burger. We’re talking about life and death stakes for millions of cancer patients in the future.
As Mr. Jimenez executes his market strategy and potentially gains increasing clout in controlling what may prove to be true cures for cancer, what will prevent Novartis from leveraging its power over the lives of cancer patients by raising the prices of newly developed products to the very edge of what the market can bear…and is there a precedent for concern?
Reasons for Concern:
Novartis already produces a “miracle drug” known as Gleevec. It has made a life and death difference for some patients. Forbes notes, “Patients stay on it for years, and it is so valuable that Novartis has quadrupled its annual price from $24,000 per year in 20001 to more than $90,000 today.” The article goes on to state: “What the marketers thought was a $400 million drug, Jimenez notes, is now a $4.6 billion one…”
What will Novartis do in the future…what is morally right or what the market will bear? Mr. Jimenez, I’m truly grateful for the research you are funding, but wonder who will be whispering in your ear, “Are we doing the right thing for both our shareholders and our patients?