Tough medicine

26 January 2010 By Alexander Smith

Joe Jimenez has a big todo list at the Swiss drugs group. Shortterm, he must resolve the impasse with minorities at Alcon and raise $16 bln to pay for Nestle’s stake in the eye care firm. The strategic challenge is even greater: maintaining growth as blockbuster patents expire.

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Novartis named Joe Jimenez as chief executive on Jan. 26. Jimenez takes over on Feb. 1 from Daniel Vasella, who is splitting the roles of chief executive and chairman after 14 years as CEO. Novartis is shedding several senior positions and slimming down its executive committee, with former AstraZeneca finance director and Goldman Sachs banker Jon Symonds becoming chief financial officer. The drugs group has also proposed including a consultative vote on compensation to he held at least every three years in its articles of association.

The group agreed to buy 52 percent of eye care group Alcon earlier this month from the world's largest food group Nestle. It is paying Nestle $180 per share. Alcon independent directors have rejected an offer to buy out minority shareholders for 2.8 Novartis shares per Alcon share as "grossly inadequate" and vowed to fight the move. The share offer values Alcon shares at $152. Novartis expects the deal to close in the second half of 2010.

The Swiss drugs group reported a 54 percent rise in fourthquarter net profit to $2.3 billion, helped by sales of its H1N1 swine flu vaccines.

Jimenez said he was happy with the current line up of new drugs and spread of the business into areas such as emerging markets and eye care, which could all help offset lost sales of topselling blood pressure drug Diovan when it loses patent protection in 2012.

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