According to Chief Executive Daniel Vasella, there is no change in the company's overall business strategy in India and the company is confident about long-term growth for its specialised cancer and cardio-vascular drugs as well as success in research and development.
"We know it is difficult for coalition governments to take radical decisions (on issues centering patent protection) but we are confident that the pharmaceutical industry will grow rapidly in the coming years through enhanced patent protection," he told Business Standard, after announcing the financial results for 2007.
"One way or the other, they (the government) will have to make compromises," he said.
New strategies
Vasella, however, would not give details about the company's overall business and R&D strategies in India post the Chennai High Court's rejection of a patent appeal on Glivec.
Novartis has said that it is working on a new project to increase its presence in the country's rural market. The project involves innovative pilot programmes to educate villagers about specific health problems and access to affordable medicines. "Our aim is to provide medicines to people in the rural areas which do not have access to affordable drugs," said Udit Batra, strategic planner for Novartis in India.
Below expectations
Though Novartis' net profit jumped 66 per cent to $11.97 billion with net sales growing by 11 per cent to over $38 billion in 2007, analysts said the performance in the last quarter left a lot to be desired.
The company had a poor spell in the US, its largest market, where sales dropped by one per cent, while growth in Europe, Asia and South America was a steady 10 per cent.
Part of the problem has been the intense competition from generic drug companies in the US, where sales of Lotrel (cardiac drug) and Lamisil (anti-fungal medication) dropped by more than $150 million.
The company's profits in the fourth quarter belied expectations as net income fell 45 per cent to $904 million and sales growth was the slowest ever. Consequently, Novartis shares dropped significantly, bucking a firmer trend on the Swiss Market Index.
Under investigation
Vasella said pharma growth would be negative in the US market, but he was confident of single-digit growth there.
In this context, the company plans to cut 2,500 jobs over the next two years which would cut costs by $1.6 billion annually by 2010.
Novartis has admitted that Sandoz, its ace profit-making generic company, is the focus of anti-trust investigations by the European Union, which is inquiring into alleged patent infringement and pricing policies.
Andreas Rummelt, head of Sandoz, said the company is fully cooperating with the EU to provide the data required, suggesting that Sandoz did not expect an adverse ruling.
