Novartis prioritizes the US market, unfazed by falling drug prices

Novartis prioritizes the US market, unfazed by falling drug prices

Written by Ludwig Berger and John Revell

ZURICH (Reuters) – Swiss drug giant Novartis said it will make US growth its top geographic priority, even after laws are passed to curb drug prices in the world’s largest drug market.

As part of an event for investors, the company said Thursday it will adopt a “US first mindset,” increase the share of American patients in clinical trials, build capacity there, and give US employees and executives more say and better career opportunities within the US. organisation.

Novartis said in a statement that Novartis’ ambition is “to organically build its business in the United States to become a top-five player in the United States by 2027.” The company added that it ranked tenth in the US market last year.

However, Novartis said it aims to be among the top three players in China, up from fifth last year among multinational drug companies, while maintaining its leading positions in Germany and Japan.

US President Joe Biden last month signed the Inflation Reduction Act, which allows the government to negotiate the prices of some prescription drugs and set the costs of the government’s health care program.

In 2024, the government will begin negotiating what it will pay for 10 drugs among those that represent the highest spending on Medicare, and it will take effect in 2026.

Among the changes that will take effect soon, price increases will have to be below the rate of inflation and out-of-pocket payments by patients taking pharmaceutical drugs, known as Part D drugs, will be reduced.

“In terms of inflation caps, despite the challenge, we believe it is manageable and (there are) changes to our guidance in terms of managing through inflation caps,” Novartis CEO Vas Narasimhan said at the event.

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He added, “When you look at the Part D repair and how that leads to patient costs … Hopefully over time, you provide some rise in demand.” “If you think about specific categories, like cardiovascular disease, you can see a 3 to 10 percent increase in demand.”

Novartis also announced a strategy based on eight large drug brands as the company reshapes itself after the decision to separate Sandoz, the underperforming generic company.

Its shares were down 0.9% at 0741 GMT, slightly better than the 1% decline in the Stoxx Europe 600 healthcare index.

Novartis said its treatments from Cosentyx, Entresto, Zulgensma, Kiscali, Kisembta, Lakeview, Pluvicto and Simplex hold billions of dollars in sales peaks.

The company said last month that it plans to spin off Sandoz to sharpen its focus on patented drugs. The sub-offer is expected to be completed in the second half of 2023, with Sandoz listing on the SIX Swiss Exchange.

Novartis has also been winding down other companies, spinning off its Alcon (NYSE:) eye care business in 2019 and agreeing last November to sell nearly a third of Roche’s voting stake.

Narasimhan also confirmed Novartis’ previously announced financial goals of 4% annual sales growth through 2027 and a base operating income margin of at least 40%.

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