Latest / The David Rubenstein Show / Vas Narasimhan

Transcript

Vas Narasimhan · The David Rubenstein Show

• 0:02
  Speaker 1: Vos Narasimon is the CEO of Novartist, a major Swiss
• 0:05
  Speaker 1: based pharmaceutical company. Born in the United States the Indian
• 0:09
  Speaker 1: immigrant parents, he was educated at Harvard Medical School, but
• 0:12
  Speaker 1: chose not to practice medicine. Instead, he chose to go
• 0:14
  Speaker 1: into the pharmaceutical industry and is now leading the transformation
• 0:18
  Speaker 1: of Novartists to one of the most important pharmaceutical companies
• 0:21
  Speaker 1: in the world. Had a chance to sit down with
• 0:23
  Speaker 1: Vos in New York recently to talk about this transformation.
• 0:26
  Speaker 1: So many people know the names of the drugs that
• 0:29
  Speaker 1: they use, but they don't know the names of the
• 0:31
  Speaker 1: drug companies or pharmaceutical companies that produce them. So for
• 0:35
  Speaker 1: people who may not know much about Nevardists, tell us
• 0:38
  Speaker 1: what drugs or pharmaceutical products as are produced that people
• 0:41
  Speaker 1: would have heard of.
• 0:42
  Speaker 2: There's a couple of major drugs we have right now,
• 0:44
  Speaker 2: and Trusto is a medicine for heart failure. Another drug
• 0:48
  Speaker 2: Couthentics for a whole range of immunology indications. We have
• 0:51
  Speaker 2: a drug called Kiskali for breast cancer. As you know,
• 0:54
  Speaker 2: these names are not always tying to what the drugs
• 0:57
  Speaker 2: actually do. But yeah, we have a pretty broad portfolio
• 1:00
  Speaker 2: of medicines over fifteen medicines, over a billion dollars of sales.
• 1:03
  Speaker 1: By the way, speaking of their brand names, who comes
• 1:06
  Speaker 1: up with these brand names? Because they there are names
• 1:08
  Speaker 1: that I can't pronounce. Sometimes you don't know what they mean.
• 1:10
  Speaker 1: Do you have a team of people.
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  Speaker 3: That came up.
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  Speaker 4: It's a whole industry.
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  Speaker 2: Maybe private equity even interested to get into it, but
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  Speaker 2: there's a whole industry of people who basically try to
• 1:19
  Speaker 2: find word permutations that might tie to the drug, and
• 1:24
  Speaker 2: then you have to send it to the regulators and
• 1:26
  Speaker 2: they have to be sure that this word will not
• 1:28
  Speaker 2: be confused in any number of different languages for some
• 1:32
  Speaker 2: other medicine or something else.
• 1:33
  Speaker 1: People who don't follow this industry carefully may not recognize it.
• 1:37
  Speaker 1: But the way the industry works, as I understand it
• 1:39
  Speaker 1: is that large pharmaceutical companies either develop internally or through
• 1:44
  Speaker 1: an acquisition a drug or pharmaceutical product that they can sell,
• 1:49
  Speaker 1: and it's patented, and the patents last for seventeen years,
• 1:53
  Speaker 1: seventeen years, seventeen years, and after seventeen years it becomes
• 1:56
  Speaker 1: what's known as a generic, which means that it's not patent.
• 2:00
  Speaker 1: Can get it for presumably a lower price. So is
• 2:03
  Speaker 1: that a good way to make a business? You have
• 2:05
  Speaker 1: you build products in seventeen years they're kind of gone.
• 2:08
  Speaker 2: It's a tough way to make a business, for sure.
• 2:11
  Speaker 2: It means you're on a constant treadmill and you have
• 2:13
  Speaker 2: to constantly have the innovation capacity to have what we
• 2:16
  Speaker 2: call replacement power. You have to replace your sales with
• 2:19
  Speaker 2: the next medicines, the next innovation. So the only winners
• 2:22
  Speaker 2: in the long run are companies that have the R
• 2:25
  Speaker 2: and D firepower, R and D capacity to keep inventing
• 2:28
  Speaker 2: medicines to rejuvenate almost their entire portfolio. So you think
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  Speaker 2: of a company like US forty five billion dollars in
• 2:34
  Speaker 2: sales every year. We can have anywhere from two to
• 2:37
  Speaker 2: eight billion dollars plus going off patent, and we have
• 2:40
  Speaker 2: to generate enough sales to replace that and grow on top.
• 2:45
  Speaker 2: And that's why you have a relatively limited number of
• 2:47
  Speaker 2: very large by pharma companies.
• 2:49
  Speaker 1: When somebody develops a drug or pharmaceutical product in a
• 2:52
  Speaker 1: company like you, do you have a big lab. I
• 2:54
  Speaker 1: assume is it all over the world or you have
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  Speaker 1: it in Switzerland.
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  Speaker 2: We invest about nine and a half billion dollars a
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  Speaker 2: year in our and DA research headquarters are in Cambridge, Massachusetts,
• 3:03
  Speaker 2: and bossles it so on.
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  Speaker 3: So when you get the product and what do you do?
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  Speaker 1: You test it first on animals, and then you test
• 3:10
  Speaker 1: it on small subset of humans and then a large
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  Speaker 1: subset of humans.
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  Speaker 3: Is that how it works?
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  Speaker 2: Roughly, that's how it works, and it's a long journey.
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  Speaker 2: First thing we have to do is we have to
• 3:18
  Speaker 2: discover or find what we call a target in the
• 3:20
  Speaker 2: human body that we want a drug. We think this
• 3:23
  Speaker 2: target has some ability to impact human health and.
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  Speaker 4: A disease we're interested in.
• 3:27
  Speaker 2: Then we have to design a drug to either inhibit
• 3:30
  Speaker 2: or promote that target, and that takes some time. AI
• 3:34
  Speaker 2: might help us do that faster, we'll see. And then
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  Speaker 2: once we have that target drug optimized, we take it
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  Speaker 2: into animals, make sure it doesn't cause any preclinical safety signals,
• 3:43
  Speaker 2: and then we finally move into humans. And from the
• 3:46
  Speaker 2: time we move into humans to when we get it
• 3:48
  Speaker 2: to people, it's usually around nine years.
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  Speaker 1: Last year twenty twenty three, we saw an enormous increase
• 3:54
  Speaker 1: in drugs being taken that reduce your weight, and they
• 3:57
  Speaker 1: seem to work quite well. There are two drug companies
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  Speaker 1: United States and one in Europe that seem to dominate
• 4:02
  Speaker 1: that business.
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  Speaker 3: Are you going to get into that business? And why not?
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  Speaker 3: It seems to be extremely profitable.
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  Speaker 4: It is a business we're interested in.
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  Speaker 2: We're working on really the next wave of medicines because
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  Speaker 2: I think these GLP one medicines that you're talking about
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  Speaker 2: are very well serviced by the current companies. It's a
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  Speaker 2: fascinating story goes back actually to the early nineteen nineties.
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  Speaker 2: It took us almost twenty five years to realize the
• 4:24
  Speaker 2: potent effect that these types of drugs would have on obesity.
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  Speaker 2: But we think there's opportunity to improve on them, and
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  Speaker 2: we hope it'll be It's very early stage within nov Artists,
• 4:33
  Speaker 2: but can we come up with drugs that better preserve muscle,
• 4:35
  Speaker 2: are maybe easier to take and more infrequently taken. One
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  Speaker 2: area of where Novartis is one of the leaders is
• 4:42
  Speaker 2: in what are called small interfering RNA therapies.
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  Speaker 4: It sounds like a fancy.
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  Speaker 2: Word, but really what it allows you to do is
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  Speaker 2: take drugs that you normally would take every single day
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  Speaker 2: and make them drugs you only have to take twice
• 4:53
  Speaker 2: a year. So in cholesterol lowering, we have a medicine
• 4:56
  Speaker 2: that you only have to take twice a year to
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  Speaker 2: lower cholesterol sixty percent. We're working on similar medicines for hypertensions,
• 5:02
  Speaker 2: high blood pressure, other risk factors for cardiovascular disease. And
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  Speaker 2: the idea is can you get to very infrequently dosed
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  Speaker 2: medicines because most people don't stay on the drugs.
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  Speaker 1: As I get older, the drug that I'm most interested
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  Speaker 1: in is one that deals with Alzheimer's or dementia, because
• 5:18
  Speaker 1: I'm always wondering am I going to be getting this disease?
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  Speaker 3: What are you doing in that area?
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  Speaker 2: So we're active and I think what we're really interested
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  Speaker 2: in is again the next wave of what might be
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  Speaker 2: effective therapies for Alzheimer's disease. Today there are two one
• 5:32
  Speaker 2: drug license, another drug coming targeting the plaques in the
• 5:35
  Speaker 2: brain anti amyloid that drugs as they are called.
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  Speaker 4: But we think the next generation.
• 5:39
  Speaker 2: Opportunities are going to be to target other elements that
• 5:42
  Speaker 2: accumulate in the brain. One is called TAO. There are
• 5:45
  Speaker 2: other targets as well. But I would say Alzheimer's is
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  Speaker 2: a really tough space. I mean, one of the things
• 5:49
  Speaker 2: that's very hard is you need to intervene very early
• 5:52
  Speaker 2: because it's a very slowly progressing disease, and identifying which
• 5:57
  Speaker 2: patients to intervene on and then figuring out what to
• 6:00
  Speaker 2: treat them the patients with is really really difficult.
• 6:03
  Speaker 1: On cancer related drugs, there are some cancer related drugs,
• 6:06
  Speaker 1: and I guess you have some as well, but.
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  Speaker 3: They tend to deal with cancer.
• 6:09
  Speaker 1: Once you have cancer, they try to ameliorate the side
• 6:12
  Speaker 1: effects of it or the effects of it. What about
• 6:15
  Speaker 1: something that prevents cancer? Is that realistic in my lifetime?
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  Speaker 2: That is something that's a heavy interest of the field,
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  Speaker 2: and also at our company, we actually just got great
• 6:23
  Speaker 2: data on a breast cancer drug which can be given
• 6:25
  Speaker 2: to women who have had their breast cancer but resected,
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  Speaker 2: but then to prevent it recurring. Now where there's a
• 6:31
  Speaker 2: lot of interest right now is can you identify things
• 6:34
  Speaker 2: in the blood and things are circulating so circulating tumor
• 6:37
  Speaker 2: DNA that would show that the cancer is starting to
• 6:40
  Speaker 2: happen in the body, but well before it would be
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  Speaker 2: detectable in any kind of scan. If we can get
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  Speaker 2: those tests up to an adequate level of precision and
• 6:48
  Speaker 2: start to treat patients well before the cancer shows up,
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  Speaker 2: that would be the big opportunity, but that's still some
• 6:53
  Speaker 2: time away.
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  Speaker 1: So you produce medicines that presumably help people with their
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  Speaker 1: lives the better and live longer and so forth. Why
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  Speaker 1: aren't you a more popular industry? You know, the private
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  Speaker 1: equ industry has its attractors, have no doubt, but the
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  Speaker 1: pharmaceutical industry is not right too far behind us.
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  Speaker 3: Why do people not love you for the drugs you're producing.
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  Speaker 2: Yeah, it's a long story in terms of the history
• 7:14
  Speaker 2: of this industry. Even if you go back to the
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  Speaker 2: seventies or eighties, we were a much more popular sector.
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  Speaker 2: I think one of the things that happened is as
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  Speaker 2: we brought more and more medicines forward and patients got
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  Speaker 2: on more and more therapies. The one thing we weren't
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  Speaker 2: watching carefully enough as an industry was what was happening
• 7:29
  Speaker 2: at the pharmacy counter. There's a lot of focus in
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  Speaker 2: congressional hearings and other places on list prices, but list
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  Speaker 2: prices mean very little in the sector because you have
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  Speaker 2: pharmacy benefit managers, you have retail pharmacies, you have wholesalers.
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  Speaker 2: But what really matters is at the end of the day,
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  Speaker 2: when somebody comes to the pharmacy counter. Can they afford
• 7:46
  Speaker 2: their medicines? And we're starting to address that. Some recent
• 7:49
  Speaker 2: legislation addresses that. We're thinking a lot about it. But
• 7:52
  Speaker 2: that's what we've got to figure out how to solve.
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  Speaker 1: Let's talk about your background. So your parents came from where.
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  Speaker 2: They came from Tumbil Nadu in southern India.
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  Speaker 3: And when did they come to the United States.
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  Speaker 4: They came in the late sixties and early seventies.
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  Speaker 3: And were they educated?
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  Speaker 2: They were they actually, you know, my father was alongside
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  Speaker 2: his brothers were some of the first people in our
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  Speaker 2: family to go to college in India. Father did his
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  Speaker 2: PhD in India. I was able to work his way
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  Speaker 2: up and then it was one of the first people
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  Speaker 2: to come to the United States.
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  Speaker 4: My mother came to Carnegie Mellon. She did a.
• 8:23
  Speaker 2: Degree in nuclear and becoming a nuclear engineer. And yeah,
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  Speaker 2: it was I think a pretty extraordinary story and that
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  Speaker 2: they were able to come from relatively modest beginnings, so
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  Speaker 2: beginning with my grandparents in relatively small places in India
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  Speaker 2: and ultimately find a way to the United States.
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  Speaker 3: So you grew up in the Pittsburgh area.
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  Speaker 4: I grew up a Pittsburgh Steelers fan.
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  Speaker 3: Indeed, And I assume you did well in high.
• 8:45
  Speaker 4: School, did well, did well?
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  Speaker 3: So you went to univer Chicago, went to the University
• 8:49
  Speaker 3: of chicag And why did you go there as opposed
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  Speaker 3: to other good schools.
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  Speaker 4: Well, it's an interesting story.
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  Speaker 2: I actually applied to all of the ivs and applied
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  Speaker 2: to a number of schools, and I didn't get in anywhere. Actually,
• 8:59
  Speaker 2: the one school that I did admit me was a
• 9:02
  Speaker 2: University of Chicago, and it ended up being such an
• 9:04
  Speaker 2: incredible gift in the end, because the University of Chicago,
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  Speaker 2: I would still credit, perhaps more than any other educational experience,
• 9:10
  Speaker 2: taught me how to think, how to synthesize, how to
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  Speaker 2: be relentlessly curious.
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  Speaker 4: It was really positive.
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  Speaker 1: Okay, So Harvard recognized and gets a mistake from before,
• 9:18
  Speaker 1: admitted view to the medical school, right, they did. And
• 9:21
  Speaker 1: so you went to Harvard Medical School. I assume your
• 9:23
  Speaker 1: immigrant parents were saying, great, my son is going to
• 9:25
  Speaker 1: be a doctor. Yes, So when you told them you
• 9:28
  Speaker 1: weren't going to be a practicing doctor, what did they say?
• 9:30
  Speaker 2: They were very confused. They were very very confused. I
• 9:33
  Speaker 2: you know, I had this idea in my mind, I
• 9:35
  Speaker 2: did a lot of work in public health. I had
• 9:36
  Speaker 2: some great mentors at Harvard, and I really wanted to
• 9:39
  Speaker 2: see how could I have a bigger impact beyond an
• 9:42
  Speaker 2: individual patient care, and so I wanted to I first
• 9:46
  Speaker 2: went to the World Health Organization, then I went to McKinsey.
• 9:48
  Speaker 2: But all of this time, I certainly think my parents
• 9:51
  Speaker 2: were assuming I was going to go back and do
• 9:53
  Speaker 2: a residency and become a cardiologist and kind of finish
• 9:56
  Speaker 2: the journey, and it never actually worked out that well.
• 9:59
  Speaker 1: For a while, you were, I guess, a protege of
• 10:02
  Speaker 1: Paul Farmer, the famous doctor who was at Harvard for
• 10:06
  Speaker 1: a while, among other places. And you then did other
• 10:10
  Speaker 1: things to help people in India. You went back working
• 10:12
  Speaker 1: with street children in India.
• 10:14
  Speaker 4: That's right.
• 10:15
  Speaker 1: So did your parents say, you have a Harvard Medical
• 10:17
  Speaker 1: School degree and you're making no money in India is
• 10:21
  Speaker 1: a great country, but why don't you go practice medicine?
• 10:23
  Speaker 2: Say that my father would ask, I worked so hard
• 10:26
  Speaker 2: to get out of these places, why are you working
• 10:29
  Speaker 2: so hard to go back to them? Was certainly a
• 10:31
  Speaker 2: confusion he had in his mind. But overall my parents
• 10:34
  Speaker 2: were very supportive of this public health goal.
• 10:37
  Speaker 1: I had okay, So you ultimately came to McKenzie after
• 10:40
  Speaker 1: some public health work and why did you not stay
• 10:43
  Speaker 1: at McKenzie.
• 10:44
  Speaker 2: Yeah, McKenzie was a great training ground for a physician
• 10:47
  Speaker 2: who didn't know anything about a P and L, a
• 10:49
  Speaker 2: balance sheet, knew nothing about M and A or evaluation.
• 10:52
  Speaker 2: I learned a lot very quickly, but I just felt
• 10:54
  Speaker 2: like it was a little bit detached from the real action.
• 10:57
  Speaker 2: And I had an opportunity presented to me to join
• 11:00
  Speaker 2: Novartists Pharmaceuticals to really try to look at our R
• 11:03
  Speaker 2: and D strategy at Novartists at the time, and it
• 11:06
  Speaker 2: was a little bit of a whim sort of a
• 11:08
  Speaker 2: gamble to try to see how that would work out.
• 11:10
  Speaker 4: I would have never imagined it would have unfolded the
• 11:12
  Speaker 4: way it did, but it was really great.
• 11:14
  Speaker 1: So you work your way up and then at the
• 11:16
  Speaker 1: age of forty, somebody at Nevarda says, we have a
• 11:19
  Speaker 1: forty year old who didn't go to business school, is
• 11:23
  Speaker 1: not from Switzerland, and he's a medical doctor who's never
• 11:27
  Speaker 1: practiced medicine.
• 11:28
  Speaker 3: Let's make him the CEO. It's right, So were you're surprised?
• 11:32
  Speaker 4: I was shocked.
• 11:32
  Speaker 2: I was shocked when they first asked me that to
• 11:35
  Speaker 2: even be part of it. I mean I had been
• 11:36
  Speaker 2: a head of drug development. I had the opportunity to
• 11:38
  Speaker 2: do so many different roles at Novartists in developing vaccines.
• 11:42
  Speaker 4: I worked in our vaccines.
• 11:43
  Speaker 2: Division, leading a little bit of our generics unit, working
• 11:47
  Speaker 2: in drug development for many, many years. And I think
• 11:50
  Speaker 2: part of the reason they were interested is because I
• 11:52
  Speaker 2: had gotten a background in R and D. But I
• 11:55
  Speaker 2: think it was also not only my age, but also
• 11:58
  Speaker 2: the fact that I think no other major pharmaceutical company
• 12:01
  Speaker 2: had an R and D head, our development head as
• 12:04
  Speaker 2: their CEO.
• 12:05
  Speaker 1: Your strategy has been different than the strategy you inherited,
• 12:08
  Speaker 1: and the artist was in many different areas. They had
• 12:11
  Speaker 1: a generic drug business and you sold that. Yes, so
• 12:14
  Speaker 1: why did you get out of that business? It seems
• 12:15
  Speaker 1: to be a recently profitable business.
• 12:17
  Speaker 4: Yeah.
• 12:18
  Speaker 2: As you know, when we have these conglomerates, you have
• 12:21
  Speaker 2: to ask is there value in the conglomerate? Is their
• 12:24
  Speaker 2: value in building all these different businesses together? And then
• 12:27
  Speaker 2: the question is what are we really great at? And
• 12:29
  Speaker 2: when I came into the role as CEO, I looked
• 12:30
  Speaker 2: we were in consumer health, we were in I care devices,
• 12:33
  Speaker 2: we were in generics. We had a broad range, broad portfolio,
• 12:37
  Speaker 2: and I think what our company's really great at is
• 12:39
  Speaker 2: discovering these novel breakthroughs and then getting access to over
• 12:43
  Speaker 2: two hundred and eighty million patients, which is our reach today,
• 12:46
  Speaker 2: largest we believe of any pharma company to all of
• 12:49
  Speaker 2: these patients. And so in order to do that well,
• 12:52
  Speaker 2: I didn't think we could allocate capital successfully across all
• 12:55
  Speaker 2: of these different businesses. So we spun al Con, the
• 12:58
  Speaker 2: largest public market spin in recent memory in Europe. We
• 13:02
  Speaker 2: spun out Sandos, We sold our consumer health business. It's
• 13:05
  Speaker 2: about one hundred and thirty billion dollars of transactions. Later,
• 13:08
  Speaker 2: we come out as a pure play medicines company, which
• 13:10
  Speaker 2: I think we're a best positioned for the long run.
• 13:12
  Speaker 1: Soh you're the CEO and you go to the board
• 13:14
  Speaker 1: and say, you know, we've been in the generics business,
• 13:16
  Speaker 1: we're in the consumer drug business, and we're going to
• 13:17
  Speaker 1: get out of all these except we're going to be
• 13:19
  Speaker 1: in the one business that we were now in. Did
• 13:21
  Speaker 1: they say, you know, you weren't qualified to make that
• 13:23
  Speaker 1: judgment or what did they say?
• 13:25
  Speaker 4: Well?
• 13:25
  Speaker 2: I think they went along, and I think they generally
• 13:28
  Speaker 2: were aligned. But I think it also was a step
• 13:29
  Speaker 2: wise journey. I mean, first we did consumer health and
• 13:32
  Speaker 2: we saw how that went, and then two years a
• 13:34
  Speaker 2: year later we did al Con, Then the pandemic came,
• 13:37
  Speaker 2: then we did did Santos. Because I think the fear
• 13:40
  Speaker 2: comes back from what we discussed earlier. When you have
• 13:42
  Speaker 2: a business in innovative medicines and you have these patent cliffs,
• 13:46
  Speaker 2: if you have these other businesses which are much more stable,
• 13:48
  Speaker 2: there's a feeling like you can offset your risk. You
• 13:51
  Speaker 2: have stable businesses and you have this one business where
• 13:54
  Speaker 2: you face these cliffs every fifteen to seventeen years.
• 13:58
  Speaker 4: I take the view that the only way you're going
• 13:59
  Speaker 4: to generate.
• 14:00
  Speaker 2: Enough medicines to keep growing as you focus your capital
• 14:03
  Speaker 2: on innovation.
• 14:04
  Speaker 1: So last week, as we're talking now, last week you
• 14:06
  Speaker 1: made another acquisition, I think for roughly five billion dollars.
• 14:09
  Speaker 1: You bought a company that is dealing with blood cancer.
• 14:12
  Speaker 1: So why was that a good acquisition? And how does
• 14:15
  Speaker 1: it as long does it take you to make an
• 14:17
  Speaker 1: assessment of whether an acquisition is good or not? And
• 14:19
  Speaker 1: do you come up with the ideas yourself, or does
• 14:20
  Speaker 1: some investment banker come along and tell you it's a
• 14:22
  Speaker 1: great idea.
• 14:23
  Speaker 4: We limit our use of investment bankers. In general.
• 14:26
  Speaker 2: What we try to look at is in the therapeutic
• 14:28
  Speaker 2: areas we're in. So we're in blood cancers. We've been
• 14:30
  Speaker 2: in blood cancers for over twenty years. Some of the
• 14:33
  Speaker 2: most pioneering drugs and blood cancers have come from our
• 14:35
  Speaker 2: research labs, and we say, if this is an area
• 14:38
  Speaker 2: we're in we have deep understanding, therefore this makes sense
• 14:41
  Speaker 2: to actually add another medicine to that portfolio, and so we.
• 14:45
  Speaker 4: Make that assessment.
• 14:46
  Speaker 2: If it's a good strategic fit, in this case a
• 14:48
  Speaker 2: good financial fit, we'll make the bet. One of the
• 14:51
  Speaker 2: things we've tried to be much more disciplined on is
• 14:54
  Speaker 2: to try to go at the lower end of the
• 14:56
  Speaker 2: range to under five billion dollars for acquisitions and really
• 15:00
  Speaker 2: ensure that they're in areas we have deep understanding. Generally,
• 15:02
  Speaker 2: when we've gone too far away from our core, the
• 15:05
  Speaker 2: value creation hasn't been there.
• 15:07
  Speaker 1: In twenty twenty three, AI burst onto the scene. Everybody
• 15:10
  Speaker 1: is now excited about AI. How is AI affecting your
• 15:14
  Speaker 1: company and do you think it's going to help your company?
• 15:17
  Speaker 2: I think a it's going to have a big impact,
• 15:19
  Speaker 2: but I think it's going to take more time than
• 15:21
  Speaker 2: most people expect. I think first in productivity areas, AI
• 15:25
  Speaker 2: has media applications, and I feel like in productivity we
• 15:28
  Speaker 2: can use AI for document management, document generations, not really
• 15:32
  Speaker 2: sexy areas, but things that really tractable in our sector.
• 15:35
  Speaker 2: Most uniquely, the big question is can you speed up
• 15:38
  Speaker 2: or increase the efficiency of drug R and D? And
• 15:41
  Speaker 2: there we're doing a couple of things, working on clinical
• 15:43
  Speaker 2: trials and optimizing our clinical trials. But the big bets
• 15:46
  Speaker 2: we've made are with Palenteer, Microsoft Research Labs, Google deep Mind,
• 15:52
  Speaker 2: and a few other partners to say, could you really
• 15:54
  Speaker 2: discover novel drugs that maybe weren't discoverable without AI? Can
• 15:58
  Speaker 2: you optimize drugs much more quickly? And this is all
• 16:01
  Speaker 2: building on the pioneering work that Google Deep Minded on
• 16:04
  Speaker 2: a technology called Alpha fold. There's a huge opportunity here,
• 16:08
  Speaker 2: But I think we also have to acknowledge that we
• 16:09
  Speaker 2: only understand about five to ten percent of what is
• 16:12
  Speaker 2: going on in the human body. So to expect AI
• 16:15
  Speaker 2: to use that five to ten percent to extrapolate and
• 16:17
  Speaker 2: come up with big discoveries is going to take time.
• 16:20
  Speaker 1: So other than AI, what medical technologies do you think
• 16:23
  Speaker 1: are coming along that in the next one, two or
• 16:25
  Speaker 1: three years are likely to change what you do or
• 16:28
  Speaker 1: change the medical world.
• 16:29
  Speaker 4: I think a couple of things.
• 16:30
  Speaker 2: One RNA therapeutics as I mentioned earlier in the broadcast,
• 16:34
  Speaker 2: or RNA therapeutics sRNAs.
• 16:36
  Speaker 4: These are really coming to life now.
• 16:37
  Speaker 2: What this allows you to do is treat diseases that
• 16:40
  Speaker 2: were not treatable or treat them with very infrequent drug dosing.
• 16:44
  Speaker 2: And if you could imagine if we could take on
• 16:45
  Speaker 2: blood pressure and cholesterol with once year dosing, hugely transformative.
• 16:49
  Speaker 4: Another one is sell therapy for immune diseases.
• 16:53
  Speaker 2: We've seen extraordinary results in early phase studies that if
• 16:56
  Speaker 2: you can reset somebody's immune system there are autoimmune disease
• 16:59
  Speaker 2: actually goes away, and we'll see if this is sustains.
• 17:03
  Speaker 2: But these are some of the most impressive results that
• 17:05
  Speaker 2: we've ever seen in early stage clinical studies. And then
• 17:09
  Speaker 2: the last is we're very big in an area of
• 17:11
  Speaker 2: cancer called radio ligend therapy. This is the idea that
• 17:14
  Speaker 2: can you bring nuclear particles right next to a cancer
• 17:17
  Speaker 2: in the body and deliver the radiation very locally, and
• 17:21
  Speaker 2: this has the opportunity to treat a whole range of
• 17:23
  Speaker 2: solid tumors in ways that we couldn't afford.
• 17:25
  Speaker 3: What do you do to kind of lower your global
• 17:27
  Speaker 3: footprint carbon footprint? What do you do?
• 17:29
  Speaker 2: Our big topic on sustainability is much more on access
• 17:33
  Speaker 2: to medicines, and so we have a big effort on
• 17:35
  Speaker 2: global access to medicines, trying to make sure our innovations
• 17:38
  Speaker 2: are accessible. The work we do in areas like malaria,
• 17:41
  Speaker 2: on leprosy, sickle cell disease to ensure populations around the
• 17:46
  Speaker 2: world can get access to these medicines.
• 17:48
  Speaker 3: How do you pay for that?
• 17:49
  Speaker 2: So it's all part of our sustainability efforts and we
• 17:51
  Speaker 2: view it as part of our core mission to deliver
• 17:54
  Speaker 2: these global health therapies to patients around the globe. So
• 17:57
  Speaker 2: we have a huge effort in global health R and
• 17:59
  Speaker 2: DST two hundred and fifty million dollars actually in trying
• 18:02
  Speaker 2: to discover the next wave of medicines to treat these
• 18:05
  Speaker 2: global health conditions.
• 18:06
  Speaker 3: What about DEID We're on a good track here.
• 18:10
  Speaker 2: We've actually about forty eight percent women in management media
• 18:13
  Speaker 2: and pay for women and of artists is higher than
• 18:15
  Speaker 2: for men.
• 18:16
  Speaker 4: So we have more work to do at the upper
• 18:18
  Speaker 4: levels of the company. But we're overall doing really well.
• 18:20
  Speaker 1: I think, what skill set do you think somebody should
• 18:23
  Speaker 1: develop in order to rise up to be a CEO?
• 18:26
  Speaker 2: I think the biggest thing I think about is curiosity,
• 18:28
  Speaker 2: just relentless, relentless curiosity. I think whatever position I was
• 18:32
  Speaker 2: put in at Novartis, it was usually a place where
• 18:34
  Speaker 2: I didn't know anything, had to learn teach myself, be
• 18:37
  Speaker 2: relentlessly curious and then apply it and having experiences in
• 18:41
  Speaker 2: a range of different parts of the business world is
• 18:44
  Speaker 2: going to be a huge success.
• 18:45
  Speaker 3: How many employees does Novardis have now?
• 18:48
  Speaker 4: Seventy six thousand.
• 18:49
  Speaker 3: Seventy six thousand.
• 18:50
  Speaker 1: It's a lot of employees, so you frequently get a
• 18:53
  Speaker 1: chance to meet them in some organizations somewhere or some meeting.
• 18:56
  Speaker 3: How do you deal with all those employees?
• 18:57
  Speaker 2: I think the most valuable thing I find in my
• 19:00
  Speaker 2: job is to go around the world and meet these
• 19:02
  Speaker 2: meet our people, be able to have town halls and interactions.
• 19:06
  Speaker 2: It used to be before we spun off all these
• 19:07
  Speaker 2: businesses one hundred and thirty five thousand people, so we've
• 19:10
  Speaker 2: definitely slimmed down. But I think there's nothing that can
• 19:13
  Speaker 2: replace showing up face to face and describing why.
• 19:16
  Speaker 4: We do what we do.
• 19:17
  Speaker 1: So, as the CEO of the artists, you tell your
• 19:19
  Speaker 1: subordinates these are the areas that I think we should
• 19:22
  Speaker 1: work on and see if you can come up with
• 19:24
  Speaker 1: a pharmaceutical product in that area. Or do they come
• 19:26
  Speaker 1: to you and say, we have a prospect here and
• 19:29
  Speaker 1: you bless this. How does that work?
• 19:31
  Speaker 4: Well?
• 19:31
  Speaker 2: In general, I have a philosophy that we call in
• 19:33
  Speaker 2: our culture unbost and we try to unboss our people.
• 19:36
  Speaker 2: We want our people to actually bring the ideas up
• 19:39
  Speaker 2: and then we of course have to challenge them, but
• 19:41
  Speaker 2: then we make the call. So I really believe that
• 19:43
  Speaker 2: in our sector where some of our scientists are world class,
• 19:46
  Speaker 2: many of our scientists are world class, they should be
• 19:49
  Speaker 2: bringing up the ideas and we have to curate them.
• 19:51
  Speaker 2: But certainly, I'm not sitting on some mountain here knowing
• 19:54
  Speaker 2: what the right thing to do is.
• 19:55
  Speaker 4: Certainly so, if.
• 19:56
  Speaker 1: Somebody is saying, I'm graduating from college or graduate school
• 20:00
  Speaker 1: the next year or so, and I want a nice career,
• 20:03
  Speaker 1: why should somebody want to be in the pharmaceutical industry.
• 20:05
  Speaker 1: Why not go into something sexy like private equity or
• 20:08
  Speaker 1: investment banking or something like that.
• 20:11
  Speaker 2: You know, despite some of the things people have, concepts
• 20:14
  Speaker 2: people have about our industry. In the end, what we
• 20:16
  Speaker 2: do is we create these miracles that fit in the
• 20:19
  Speaker 2: palm of your hand, these little medicines that can transform
• 20:22
  Speaker 2: a human beings life. And if you look at the
• 20:24
  Speaker 2: arc of history, in the last one hundred and thirty years,
• 20:27
  Speaker 2: we've been able to move through the power of medicine
• 20:29
  Speaker 2: life expectancy from thirty years to eighty years. We're now
• 20:33
  Speaker 2: able to cure diseases. We're able to give people, you know,
• 20:36
  Speaker 2: with debilitating disease their lives back.
• 20:39
  Speaker 4: So if you're part of.
• 20:39
  Speaker 2: That kind of enterprise, you can get up every day
• 20:42
  Speaker 2: knowing you're moving the needle for society, you're moving the
• 20:44
  Speaker 2: needle for mankind. I think we do reimagine medicine with
• 20:48
  Speaker 2: the medicines we create, and I think that's a pretty
• 20:50
  Speaker 2: inspiring way to spend your time.
• 20:51
  Speaker 1: So suppose a president came along to you and said,
• 20:54
  Speaker 1: I know you're living in Switzerland, but it'd be great
• 20:56
  Speaker 1: to be the Secretary of Health and Human Services or
• 20:59
  Speaker 1: head of FDA or something.
• 21:01
  Speaker 3: What would you say?
• 21:02
  Speaker 4: I would think hard about it.
• 21:03
  Speaker 2: At the moment, it would feel like a really daunting
• 21:07
  Speaker 2: task given the politics.
• 21:09
  Speaker 4: But on the flip side, I do think public.
• 21:11
  Speaker 2: Service, of course, has so much power, and I think
• 21:13
  Speaker 2: if you're in the right context, you could do a
• 21:15
  Speaker 2: lot of good for good for the world. But I
• 21:18
  Speaker 2: think it's very context dependent. As you know, it can
• 21:21
  Speaker 2: be a very short time in some of these roles
• 21:23
  Speaker 2: with some of the recent recent cabinet members.
• 21:26
  Speaker 1: Suppose I said, I'm a stock market picker and I
• 21:29
  Speaker 1: want to be buying good stocks and companies that are
• 21:31
  Speaker 1: going to grow and so forth. Why should I want
• 21:34
  Speaker 1: to invest in the pharmaceutical industry? Is it going to
• 21:36
  Speaker 1: continue to grow as it did last year? And what
• 21:38
  Speaker 1: about your own company?
• 21:39
  Speaker 3: Do you think it's going to have good growth prospects
• 21:41
  Speaker 3: over the next couple of years. We do.
• 21:43
  Speaker 2: We've signed up for a five percent plus growth, forty
• 21:45
  Speaker 2: percent plus margins, and very consistent growth over time. I
• 21:49
  Speaker 2: think the reason to invest in the sector is the science.
• 21:52
  Speaker 2: I mean, when you look again, if I go back
• 21:53
  Speaker 2: into the history, for most of the last century, we
• 21:56
  Speaker 2: were only giving people pills and.
• 21:58
  Speaker 4: Small, small molecule drugs.
• 22:00
  Speaker 2: Then we discovered that we had this whole world of
• 22:02
  Speaker 2: biologics and we could treat diseases with biologicals. More recently,
• 22:06
  Speaker 2: we've discovered that we can reprogram yourselves, we can edit
• 22:09
  Speaker 2: the genome, we can use these RNA therapeutics to completely
• 22:12
  Speaker 2: transform areas of medicine. Those technology areas are at their
• 22:16
  Speaker 2: very nascent stage, and what we're going to find is
• 22:18
  Speaker 2: they're going to open up whole new areas of growth
• 22:20
  Speaker 2: from our business standpoint and a human health impact standpoint.
• 22:24
  Speaker 2: And so to get in now, as that's happening, and
• 22:26
  Speaker 2: you've seen how the obesity companies have cleared five hundred
• 22:28
  Speaker 2: billion market cap, we hope that as we work in
• 22:32
  Speaker 2: our areas like cell therapy and RNA therapeutics, we will
• 22:35
  Speaker 2: also be able to climb to a whole other level
• 22:37
  Speaker 2: of market cap over time.
• 22:38
  Speaker 1: So as you look back on your career and are
• 22:40
  Speaker 1: still very early in the career relative to many other people,
• 22:43
  Speaker 1: I often talk to any regrets about going this route
• 22:47
  Speaker 1: or not becoming a medical doctor and working on patients, No,
• 22:50
  Speaker 1: I have to say.
• 22:51
  Speaker 2: I mean, when I look at the reach of our
• 22:54
  Speaker 2: medicines and the impact they have, I'll just go back
• 22:57
  Speaker 2: to my time with Paul Farmer just to say that
• 22:59
  Speaker 2: who unfortunately passed away, but it was an incredible mentor
• 23:02
  Speaker 2: and inspiring mentor. I always told him, I want to
• 23:04
  Speaker 2: have this big impact on public health. He of course
• 23:07
  Speaker 2: did it, working with patients and some of the poorest
• 23:08
  Speaker 2: communities in the world. Today, Novartis are malaria drug Coartem.
• 23:13
  Speaker 2: Coartem is almost ninety nine percent effective when it's given
• 23:17
  Speaker 2: on time to.
• 23:17
  Speaker 4: Treat a malaria patient.
• 23:19
  Speaker 2: Over four hundred million children treated with our malaria medicines
• 23:22
  Speaker 2: and the biggest malaria pipeline, so even from a public
• 23:25
  Speaker 2: health standpoint, the opportunity to have an impact at scale
• 23:28
  Speaker 2: has really been fulfilled.
• 23:30
  Speaker 4: With this role.
• 23:32
  Speaker 1: Thanks for listening to hear more of my interviews. You
• 23:34
  Speaker 1: can subscribe and download my podcast on Spotify, Apple, or
• 23:39
  Speaker 1: wherever you Lisien