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EF: In light of the economic impact of covid-19, how can you restore investor confidence as business leader?
FC: The dialogue between the industry and the regulatory authorities must be re-established to incentivize investments. Part of this means that the rules of the game must be clear. Centralized procurement is coming along but it hasn’t been easy. The uncertainty doesn’t help to encourage investment in the country. There needs to be a clear timeframe established for both market and access timeline. When headquarters decide where to place their investments, they’re going to pick the place with the most certainty, the place that benefits the most number of patients. The priorities to focus on to encourage investments are establishing clear rules of the game, a clear IP framework, and an efficient regulatory system.
EF: The past few years have been a time of great transition. 2019 saw the transition of a new presidency. 2020 started with significant transitionary periods for both Novartis and the world. What advice would you give to other GMs on managing in a time of transition?
FC: There’s a lot of anxiety in continuing growth trends and maintaining sales momentum. It’s understandable because we’re commercial organisations; we have a business to run. However, we also need to look beyond business. We need to address the concerns of pricing, access, and universal coverage. The best way to manage these concerns is to build trust, focus on a long term approach, and sit down to have those uncomfortable conversations.We know there are serious problems with budget and pricing, and we’re willing to sit down and have those conversations. For us, this involves creative approaches beyond the transactional model one that is based on outcomes which helps to create long-term sustainability. We have to think beyond business. If you’re able to convey these messages and build that trust, then they’re willing to listen to what you have to offer.
EF: In an interview concerning coronavirus, Vas Narasimhan asked the question: “How do you keep the investment in place in the troughs of interest in pandemics and these kinds of outbreaks? That’s a challenge.” How do you maintain the momentum of interest and investment after the corona epidemic passes?
FC: Locally, I noticed we were having those conversations that we were not having before. Governments are starting to realize that this country is facing a huge challenge in an aging population. That aging demographic will be living longer but will also be suffering from more non-communicable diseases. 70% of the world’s global health expenditure will be on this demographic. There is not a single healthcare system in the world that is ready to tackle that challenge. We need to work together, industrial leaders and policy makers. In Mexico, there’s currently a demographic boom. However, in the future, the demographic pyramid is going to be inverted and that population will live longer but also suffer from the major NCDs: cancer, obesity, diabetes, CNS diseases. Putting all this together, it makes sense for everyone to start thinking of health. For the last 20 or 30 years, the pharmaceutical industry has been talking about health. The average OECD country health spending is 9% of which 7% is public and 2% is out-of-pocket. In comparison, Mexico’s health spending is 6% with 3% public and 3% out-of-pocket. For Novartis, we’re trying to reach out to strategic Mexican industries, e.g. automotive, aerospace to have a unified conversation about health. If we want to have a competitive and productive economy, we need industry-wide cooperation in tackling the health issues affecting us today and impacting our future. Beyond just being a social equalizer, health is the cornerstone of productivity.
EF: What is your mission for next year as CEO?
FC: For me, Novartis brings unique offerings to the table. There’s the innovation arm with oncology and other innovative drugs, but there’s also the affordability aspect with generics and biosimilars through Sandoz. We are moving forward to becoming a highly specialised company with gene therapy products and the like. The question is how do we make sure these products are both accessible and sustainable when brought to the Mexican market? My mission next year is to build the foundations of how access will operate in the next 5-10 years. It’s necessary to drive the business agenda, but you also need to drive a comprehensive, social agenda. We are the first company that is trying to measure our economic footprint through our Materiality Assessment which analyses employment, carbon footprint, clinical trial investment, economic spillover. We’re also involved with bold access programs. Currently, the buying authorities can only pay for units, not outcomes, so we’re trying to inspire policy reform. It’s a challenging task. We need a third-party to assess the outcomes. How can we help IMS, for example, to dive deep into the data-information age? There have yet to be a set of quality metrics to measure efficacy of treatments. At Novartis, we have a variety of ongoing social initiatives, e.g. Novartis Access Initiative, Materiality Assessment, shared risk models. Currently, we are in collaboration with government authorities to help build institutional capacity through medical education, data and technology, and infrastructure. The impact I actually want to leave for this year is to create access, not just for this year but in the long term, 5-10 years down the road.
EF: Could you expand on the Novartis Access Initiative?
FC: It falls under the umbrella of Novartis Social Businesses. The Novartis Access Initiative is a portfolio of 15 molecules, some of which are still patented, that are provided at the price of $1 per month per patient. For Mexico, we focus on diabetes, breast cancer, and cardiovascular diseases. The purpose is to provide health services for these therapeutic areas in underserved communities. We are trying to be the partner of choice for the government. We want to ease the government’s burden by helping out identified underserved populations in Mexico. There are three pillars to this:
- Novartis’ medicines that are provided.
- A 3rd party present in the field, e.g. the NGO clinics in these areas. These players help us ensure that our medicine is given to the right patient.
- The payer to provide for the $1 per patient per month plan. It’s a symbolic amount to communicate that there was a tremendous amount of effort to bring these products forth.
In the case of Mexico, we have advanced conversations with 2 or 3 potential partners through which we hope to pilot this initiative by the end of this year.
EF: Last year we talked about clinical research, the Center of Excellence, and Novartis’ $50 million investment in Mexico. What are the key priorities on your agenda today for Novartis’ business operations?
FC: I am very excited about clinical trials. Mexico has massive potential to be a regional hub for clinical trials. There’s a large population, the largest payer in Latin America that covers 75 million people, sound infrastructure, great doctors, and quality research centres. However, we still need to improve the regulatory side of the equation. The approval period for clinical products is greater than many other developed nations. Novartis spends $9 billion in clinical research around that world. I would like to bring more of that to Mexico. We are already committed to Mexico as we are building a quality assurance centre with regional scope which is the first of its kind in Mexico. It’s a $14 million investment for this year, but it depends on pending regulatory approval. In Mexico, we also have a Global Service Center which is one of 5 world-wide locations that Novartis operates. This service centre provides back office support for all the divisions in the Americas, from Argentina to Canada, including the US. We invest in high skilled local Mexican talent at that centre. Employment at that centre has doubled from 1000 employees in 2015 to nearly 2000 employees right now.
EF: Is there any final message you would like to send?
FC: I like to talk about opportunity. We understand that all these industries are going through challenging times. The public expectations and environment for healthcare have changed. It’s important to discuss the challenges and hurdles, but it’s equally as important to look at what opportunities are available of which there are plenty. For me, the vision is about sharing the challenges, building trust. I am proud of the transparency and the ethics standards that we have. Our reputation in Mexico has improved dramatically in the past few years. We’re in the top 30 for all the industries. We’ve been recognized for many aspects beyond business like diversity inclusion and being a top employer for women. LinkedIn has listed us as the number one pharmaceutical company to work at. We’ve received awards for being a top employer for hiring top talent. If the fundamentals are in place - for Novartis, the fundamentals are innovation and operation excellence - you need to embrace other things like diversity/inclusion that stems from a genuine interest in transforming healthcare. It is only through this approach that you’re able to build trust and through that trust the system progresses. There are plenty of challenges in Mexico but I also see plenty of opportunities.