Novartis unveils long-term strategy to grow in a dynamically changing healthcare environment

Cornerstone of Novartis strategy is focus on innovation through most productive R&D program in the industry

19-Nov-2010 - Switzerland

Novartis presented a strategic overview of the company's diversified healthcare portfolio which creates the potential for future sustainable growth. The company's focused healthcare portfolio across key growth segments in healthcare provides Novartis a leading position in the respective market segments.

"Novartis has leading businesses in fast growing segments of healthcare, and by focusing on our strategic priorities we are well positioned to succeed in a rapidly changing healthcare environment," said Joseph Jimenez, CEO of Novartis. "Novartis remains committed to the core strategy of focused diversification in high-growth healthcare segments. We are leveraging our core competencies in scientific discovery and development to continue driving innovation, growth and productivity across the businesses."

While healthcare is expected to remain a growth industry well into the future, it also is a rapidly and dramatically changing environment, creating new opportunities and challenges. The aging population and increasing rates of obesity are leading to increased demand for healthcare. However, downward pricing pressures and healthcare reforms will also force companies to adapt their approach to reimbursement and build broader portfolios that can deliver on diverse healthcare needs.

The execution of the strategy is built on four elements; firstly the diversified healthcare portfolio provides a robust growth platform through focus on key healthcare growth sectors - Pharmaceuticals, Eye Care, Sandoz, Consumer Health and Vaccines and Diagnostics; Novartis' industry leading innovation has generated an "innovation premium" to market growth and this is expected to continue with the current pipeline; a greater emphasis on productivity should generate improved profitability leading to strong cash flow returns. Cash flow is expected to drive re-investment for future growth and shareholder returns.

Novartis expects to invest in innovation at the high end of the industry over the next five years, at a time when peers are cutting spending in research and development. In addition, the Group plans to strengthen its commercial position in fast growing emerging markets and develop significant businesses in China, Russia, Brazil and India.

The company expects to continue investments to scale up its businesses for long-term growth, especially in emerging markets, and plans to do so through freeing up working capital as well as increase productivity which will provide the basis to reinvest into innovation and gain greater operating leverage.

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