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Underscoring its increasing emphasis on oncology, Novartis is splitting its prescription drug business into two organizations and hired Paul Hudson, who heads North American operations for AstraZeneca, to lead the pharmaceutical business. The newly created oncology unit, meanwhile, will be run by Bruno Strigini, who already runs the cancer-drug business.

The move comes a year after Novartis purchased a portfolio of oncology medicines from GlaxoSmithKline as part of an asset swap. But Novartis is also contending with declining sales of its Gleevec cancer medicine, which has been a blockbuster product, and disappointing sales of its new treatment for heart failure called Entresto. Both doctors and insurers have failed to embrace the drug.

The changes at the top take effect July 1. Both Hudson and Strigini will report to Novartis Chief Executive Joe Jimenez. And as part of the overhaul, David Epstein, who headed the Novartis oncology business for six years, is leaving the company. One Wall Street analyst is not surprised by the reorganization.


“News that David Epstein is leaving Novartis, as the company reorganizes the branded pharmaceuticals division, is not terribly surprising,” wrote Sanford Bernstein analyst Tim Anderson in an investor note. “Over the years, the company has been like a revolving door when it comes to senior managers departing, below the CEO level, that is.  We have wondered if this has contributed to periodic shortfalls at the company, because of a lack of continuity.”



“The structural changes that Novartis is putting in place … is not terribly unusual. And it doesn’t appear to be very different from how the division had effectively been organized anyway,” Anderson added. “At some companies, oncology is treated as a distinct entity because of its complexity relative to other therapeutic areas … We don’t think a ‘split,’ (such as a spinoff), or anything else similarly dramatic, is in the works.”

The drug maker continues to describe a three-legged strategy that rests on pharmaceuticals, the Sandoz generic drugs division, and the Alcon eye care division. Alcon, however, has also had difficulty. The business has been struggling among increased competition for lens implants and certain medicines. Earlier this year, Alcon was reorganized and Jeff George, the executive who headed the division, also departed.

Indeed, as Anderson noted, there have been several departures. Among them was Christi Shaw, who headed US operations and the US pharma biz. Ameet Nathwani, who was global head of medical affairs, recently left to join Sanofi. And Eric Cornut, the chief ethics officer, is leaving just as Novartis fights allegations in the US and abroad that sales reps bribed doctors.

“As an investment, Novartis has been out of favor since late 2015, driven by Alcon and Entresto performance issues.” Anderson concluded, “Novartis is a ‘show me’ story.”