1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,840 --> 00:00:10,600 Speaker 2: Shares of Novarda's lower in US trading today, despite the 3 00:00:10,600 --> 00:00:13,360 Speaker 2: Swiss drug maker raising its guidance and announcing a ten 4 00:00:13,400 --> 00:00:17,000 Speaker 2: billion dollars stock buyback. Instead, investors are keing in on 5 00:00:17,079 --> 00:00:19,480 Speaker 2: disappointing sales for a key drug and news that it's 6 00:00:19,520 --> 00:00:23,080 Speaker 2: longtime CFO is retiring. All of this against a backdrop 7 00:00:23,079 --> 00:00:25,680 Speaker 2: in which President Trump has signaled possible new tariffs on 8 00:00:25,720 --> 00:00:28,760 Speaker 2: the pharma sector. Joining us now to discuss what's ahead 9 00:00:28,840 --> 00:00:31,680 Speaker 2: is vos Narasimmon, he is CEO of nevardis joining us 10 00:00:31,680 --> 00:00:35,320 Speaker 2: from their global research headquarters in Cambridge, Massachusetts. 11 00:00:35,440 --> 00:00:36,559 Speaker 3: Boss, thanks for joining us. 12 00:00:36,680 --> 00:00:38,480 Speaker 2: I want to start with the big picture, of which 13 00:00:38,520 --> 00:00:41,280 Speaker 2: is tariffs, of course, because you've pledged to invest twenty 14 00:00:41,280 --> 00:00:43,600 Speaker 2: three billion dollars in US production over five years to 15 00:00:43,600 --> 00:00:46,120 Speaker 2: make key drugs for the American market in order to 16 00:00:46,240 --> 00:00:49,480 Speaker 2: mitigate the impacts of potential tariffs. Do you have any 17 00:00:49,479 --> 00:00:52,600 Speaker 2: indication that this commitment, this level of commitment would be 18 00:00:52,720 --> 00:00:55,360 Speaker 2: enough to get an exemption from tariffs in the introim 19 00:00:55,440 --> 00:00:57,640 Speaker 2: until your new facilities are up and running. 20 00:00:59,280 --> 00:01:01,120 Speaker 4: It great to be here, Scarlett, So we don't know. 21 00:01:01,200 --> 00:01:03,560 Speaker 1: We don't know what exactly is going to be required 22 00:01:03,680 --> 00:01:06,280 Speaker 1: for the exemptions that have been talked about, but I 23 00:01:06,280 --> 00:01:08,160 Speaker 1: would say that we are in a very good position 24 00:01:08,280 --> 00:01:10,600 Speaker 1: right now and that we have inventory on hand in 25 00:01:10,600 --> 00:01:14,360 Speaker 1: the US so that tariffs will not impact twenty twenty five. 26 00:01:14,680 --> 00:01:17,720 Speaker 1: We continue to build inventories as well for well now 27 00:01:17,760 --> 00:01:20,520 Speaker 1: into twenty twenty six, and then we're working as fast 28 00:01:20,520 --> 00:01:22,920 Speaker 1: as we can to get those facilities up and running 29 00:01:22,959 --> 00:01:25,399 Speaker 1: so that more and more of our key medicines are 30 00:01:25,440 --> 00:01:28,240 Speaker 1: produced in the US, with a goal that within four years, 31 00:01:28,240 --> 00:01:30,600 Speaker 1: all of our key medicines are produced in the US 32 00:01:30,680 --> 00:01:31,440 Speaker 1: for the US. 33 00:01:31,760 --> 00:01:33,759 Speaker 3: You're hoping that go ahead? 34 00:01:33,760 --> 00:01:36,160 Speaker 1: I'm sorry, I was going to say, we're hopefully the 35 00:01:36,200 --> 00:01:39,560 Speaker 1: administration will be pragmatic in how they think about this, right. 36 00:01:39,440 --> 00:01:42,160 Speaker 2: Right, And to that end, have you had specific conversations 37 00:01:42,160 --> 00:01:43,720 Speaker 2: with the administration on this point. 38 00:01:45,000 --> 00:01:48,720 Speaker 1: We've had conversations with the trade representative trying to understand 39 00:01:48,720 --> 00:01:51,680 Speaker 1: the contours of what they're thinking about, but of course 40 00:01:51,800 --> 00:01:54,760 Speaker 1: we don't know until I think the final policy is 41 00:01:54,760 --> 00:01:55,640 Speaker 1: written and released. 42 00:01:55,760 --> 00:01:56,600 Speaker 3: Yeah, fair enough. 43 00:01:56,920 --> 00:01:59,200 Speaker 2: In a similar way, do you worry that these investments 44 00:01:59,240 --> 00:02:01,920 Speaker 2: won't make as much economic sense if there's a new 45 00:02:02,000 --> 00:02:04,600 Speaker 2: administration in a couple of years, who decides to roll 46 00:02:04,720 --> 00:02:06,200 Speaker 2: back remove any of the tariffs. 47 00:02:07,200 --> 00:02:09,160 Speaker 1: The way we think about this investment is we didn't 48 00:02:09,200 --> 00:02:10,320 Speaker 1: do it because of the tariffs. 49 00:02:10,360 --> 00:02:11,640 Speaker 4: It just makes strategic sense. 50 00:02:11,639 --> 00:02:14,000 Speaker 1: I mean, soon we expect the US to account for 51 00:02:14,040 --> 00:02:16,160 Speaker 1: fifty percent of our global sales, certainly by the end 52 00:02:16,240 --> 00:02:18,760 Speaker 1: of the decade, so it makes sense to have production 53 00:02:18,840 --> 00:02:22,560 Speaker 1: capacity in the US for the US market, Europe for Europe, 54 00:02:22,560 --> 00:02:24,440 Speaker 1: and then of course we also build up capacity in 55 00:02:24,520 --> 00:02:27,919 Speaker 1: China and Japan to service the Asian markets. I think 56 00:02:27,919 --> 00:02:31,160 Speaker 1: that's a sensible strategic approach given all of the uncertainties 57 00:02:31,200 --> 00:02:32,840 Speaker 1: that we've seen over the recent years. 58 00:02:33,000 --> 00:02:35,840 Speaker 2: I want to talk about your siasis drug cocentics. It 59 00:02:35,919 --> 00:02:38,320 Speaker 2: saw slower than expected growth in the US for some 60 00:02:38,440 --> 00:02:40,079 Speaker 2: new indications, and then you also. 61 00:02:39,880 --> 00:02:41,880 Speaker 3: Have the backdrop of a broader. 62 00:02:41,600 --> 00:02:45,560 Speaker 2: Slowdown in China for innovative medicines. What is your confidence 63 00:02:45,600 --> 00:02:48,320 Speaker 2: that either of these factors will improve materially in the 64 00:02:48,320 --> 00:02:49,079 Speaker 2: next few months. 65 00:02:50,480 --> 00:02:52,480 Speaker 1: Look, I think in China, I do expect there to 66 00:02:52,520 --> 00:02:54,880 Speaker 1: be improvement over the second half of the year and 67 00:02:54,960 --> 00:02:57,160 Speaker 1: going into next year, as we go off of a 68 00:02:57,639 --> 00:03:00,200 Speaker 1: lower base that maybe than we had originally expect is 69 00:03:00,240 --> 00:03:02,680 Speaker 1: I think growth will come back, and I think more broadly, 70 00:03:02,760 --> 00:03:06,440 Speaker 1: we expect Consentics to consistently deliver mid single digit growth. 71 00:03:06,720 --> 00:03:09,440 Speaker 1: What's interesting about a lot the focus on Consentics today 72 00:03:09,480 --> 00:03:11,480 Speaker 1: is we have not moved off our eight billion dollar 73 00:03:11,560 --> 00:03:14,920 Speaker 1: plus peak sales guidance in twenty twenty nine. And Consentics 74 00:03:14,919 --> 00:03:17,240 Speaker 1: has had many competitors over the years, and we've been 75 00:03:17,240 --> 00:03:20,520 Speaker 1: able to manage each one. Usually when those competitors come in, 76 00:03:20,560 --> 00:03:23,280 Speaker 1: there is a market reaction like we had today, and 77 00:03:23,320 --> 00:03:25,960 Speaker 1: then we work through it and then we build confidence back. 78 00:03:26,280 --> 00:03:28,520 Speaker 1: I think much more importantly when you look at our 79 00:03:28,560 --> 00:03:30,920 Speaker 1: guide five percent of plus and with all of the 80 00:03:31,000 --> 00:03:34,240 Speaker 1: launches performing well, I think the long run investors will 81 00:03:34,240 --> 00:03:36,720 Speaker 1: see through this and then continue I think to look 82 00:03:36,760 --> 00:03:38,200 Speaker 1: favorably on our performance. 83 00:03:38,480 --> 00:03:40,360 Speaker 2: Which of those markets in the US or China do 84 00:03:40,360 --> 00:03:41,920 Speaker 2: you have more conviction in when it comes to this 85 00:03:41,960 --> 00:03:42,960 Speaker 2: particular drug. 86 00:03:44,800 --> 00:03:48,160 Speaker 1: With respect to Consentics, I mean both are critically critically 87 00:03:48,280 --> 00:03:49,280 Speaker 1: are important. 88 00:03:49,720 --> 00:03:51,560 Speaker 4: I think very different dynamics. 89 00:03:51,600 --> 00:03:54,800 Speaker 1: You know, in China we have a very high growth environment, 90 00:03:54,920 --> 00:03:57,480 Speaker 1: and so obviously when you have a little bit less growth, it. 91 00:03:57,400 --> 00:03:58,200 Speaker 4: Has an impact. 92 00:03:58,360 --> 00:04:01,280 Speaker 1: In the US, this is a very significt in medicine already, 93 00:04:01,400 --> 00:04:04,800 Speaker 1: you know, approaching three billion dollars plus in sales and 94 00:04:04,920 --> 00:04:09,520 Speaker 1: so there. Of course, it's much more of managing competition, 95 00:04:10,000 --> 00:04:14,240 Speaker 1: new new indications, new formulations to continue the growth. But look, 96 00:04:14,280 --> 00:04:16,880 Speaker 1: I think overall, as I said, eight billion dollar plus, 97 00:04:16,880 --> 00:04:19,000 Speaker 1: we're sticking with it and we feel confident we'll get there. 98 00:04:19,080 --> 00:04:20,200 Speaker 3: Yeah, that's a pretty good sign. 99 00:04:20,520 --> 00:04:20,680 Speaker 1: Well. 100 00:04:20,680 --> 00:04:23,039 Speaker 2: One reason of Artists did raise its full your earnings 101 00:04:23,040 --> 00:04:25,480 Speaker 2: guidance is because of the growth of your breast cancer medicine, 102 00:04:25,560 --> 00:04:28,279 Speaker 2: Chris Colli, and the UK has said that it will 103 00:04:28,279 --> 00:04:31,560 Speaker 2: now recommend the drug for more patients. I guess I 104 00:04:31,720 --> 00:04:34,680 Speaker 2: wonder are you surprised by the uptake of this medicine 105 00:04:34,720 --> 00:04:37,679 Speaker 2: in recent months for patients with early breast cancer. 106 00:04:39,040 --> 00:04:42,080 Speaker 1: It succeeded our expectations, scarl I have to say, I mean, 107 00:04:42,120 --> 00:04:44,520 Speaker 1: when we look at it, we knew the medicine could 108 00:04:44,520 --> 00:04:47,160 Speaker 1: be significant, but we're now market leader in new to 109 00:04:47,240 --> 00:04:50,839 Speaker 1: brand RX in the US, both in metastatic and early 110 00:04:50,880 --> 00:04:54,320 Speaker 1: breast cancer. We've seen remarkable uptake with the early launch 111 00:04:54,680 --> 00:04:58,480 Speaker 1: in Germany, so the demand is really there and I 112 00:04:58,520 --> 00:05:01,599 Speaker 1: think what's most promising for long run is that we're 113 00:05:01,600 --> 00:05:05,159 Speaker 1: seeing patients with no zero or so called lymph node 114 00:05:05,240 --> 00:05:08,000 Speaker 1: zero lymph node one, so a little bit earlier stage 115 00:05:08,080 --> 00:05:11,000 Speaker 1: of the disease, also using the medicine, and that's an indication. 116 00:05:11,400 --> 00:05:13,920 Speaker 1: It's two thirds of women with this form of early 117 00:05:13,960 --> 00:05:16,880 Speaker 1: breast cancer and we're the only one with this indication. 118 00:05:17,360 --> 00:05:19,520 Speaker 1: So I give us a lot of energy and excitement. 119 00:05:19,560 --> 00:05:22,000 Speaker 1: We've guided to eight billion dollars plus, but certainly if 120 00:05:22,120 --> 00:05:25,120 Speaker 1: things continue in this way, the medicine could be significantly bigger. 121 00:05:25,200 --> 00:05:27,720 Speaker 2: Okay, so that's that's where you I want to go next. 122 00:05:27,760 --> 00:05:30,440 Speaker 2: At what point do you start to really reassess what 123 00:05:30,520 --> 00:05:32,800 Speaker 2: the peak sales potential for this drug could be? 124 00:05:34,040 --> 00:05:35,839 Speaker 4: You know, we look at it every year and so 125 00:05:35,920 --> 00:05:37,440 Speaker 4: before our capital markets. 126 00:05:37,120 --> 00:05:39,360 Speaker 1: Day in the fall, we evaluate and so certainly we'll 127 00:05:39,400 --> 00:05:42,400 Speaker 1: do that right now. I mean, given the momentum we're seeing, 128 00:05:42,400 --> 00:05:44,760 Speaker 1: we'll have to look at would we raise our CAISCOALI 129 00:05:44,839 --> 00:05:47,760 Speaker 1: guidance given given the performance that we're seeing. So it's 130 00:05:47,880 --> 00:05:50,479 Speaker 1: very exciting and we have that with a few medicine semblics. 131 00:05:50,480 --> 00:05:53,800 Speaker 1: Are other cancer drug performing extremely well, plu Victo, our 132 00:05:53,839 --> 00:05:56,920 Speaker 1: pro say cancer medicine performing extremely well. So I think 133 00:05:56,960 --> 00:05:59,120 Speaker 1: we'll be able to show investors that we have the 134 00:05:59,160 --> 00:06:01,520 Speaker 1: growth drivers to growth through the end of a decade 135 00:06:01,600 --> 00:06:02,839 Speaker 1: and into the twenty thirties. 136 00:06:03,400 --> 00:06:05,599 Speaker 2: You also, as I mentioned, plan to buy back up 137 00:06:05,640 --> 00:06:07,560 Speaker 2: to ten billion dollars of your own shares in the 138 00:06:07,600 --> 00:06:10,760 Speaker 2: coming years. What does to say about your appetite for 139 00:06:10,960 --> 00:06:13,880 Speaker 2: M and A and in licensing of medicines. Is there 140 00:06:13,920 --> 00:06:17,440 Speaker 2: a lack of sufficiently priced, attractive targets right now out there? 141 00:06:18,440 --> 00:06:20,359 Speaker 1: We're in the great position that we can do both. 142 00:06:20,400 --> 00:06:22,599 Speaker 1: We can buy back our shares and do M and A. 143 00:06:22,680 --> 00:06:24,400 Speaker 1: When you look at where our cash flow is heading, 144 00:06:24,400 --> 00:06:27,239 Speaker 1: we'll soon be approaching twenty billion dollars of free cash flow. 145 00:06:27,520 --> 00:06:30,120 Speaker 1: That enables us to play a strong and growing dividend, 146 00:06:30,360 --> 00:06:33,120 Speaker 1: that enables us to buy back our shares and then 147 00:06:33,279 --> 00:06:35,920 Speaker 1: also to invest fully in M and A and media 148 00:06:36,080 --> 00:06:38,240 Speaker 1: l So we're not pulling back. We actually led the 149 00:06:38,240 --> 00:06:40,760 Speaker 1: industry and the number of deals completed over the last 150 00:06:40,760 --> 00:06:43,360 Speaker 1: eighteen months, and so we'll continue to look and if 151 00:06:43,360 --> 00:06:46,040 Speaker 1: there's a good asset that fits with our therapeutic areas, 152 00:06:46,080 --> 00:06:49,520 Speaker 1: fits with our technology priorities, we'll certainly go after it. 153 00:06:49,920 --> 00:06:51,720 Speaker 3: Now, you mentioned M and A and how you are 154 00:06:51,800 --> 00:06:52,680 Speaker 3: looking for things. 155 00:06:52,880 --> 00:06:56,360 Speaker 2: You've talked about maybe bolt on deals, which specific areas 156 00:06:56,360 --> 00:06:57,159 Speaker 2: make the most sense for you. 157 00:06:57,240 --> 00:06:59,719 Speaker 4: Right now, we stick with our priorities. 158 00:06:59,839 --> 00:07:04,680 Speaker 1: Have war main therapeutic areas oncology, immunology, cardiovascular, neuroscience. We 159 00:07:04,760 --> 00:07:09,520 Speaker 1: have three main technology eras selling gene therapies, RNA therapeutics, 160 00:07:09,560 --> 00:07:10,960 Speaker 1: and radio ligan therapies. 161 00:07:11,240 --> 00:07:13,640 Speaker 4: That's where we look. We've learned that focus is. 162 00:07:13,640 --> 00:07:16,240 Speaker 1: What's driven the outstanding performance we've seen over the last 163 00:07:16,440 --> 00:07:19,320 Speaker 1: three plus years, and we want to say ultra focus 164 00:07:19,440 --> 00:07:23,280 Speaker 1: key therapeutic areas, key technology platforms, and that's where we 165 00:07:23,360 --> 00:07:24,280 Speaker 1: primarily look. 166 00:07:24,760 --> 00:07:28,239 Speaker 2: I mentioned Boss that you are in Cambridge. That's where 167 00:07:28,440 --> 00:07:31,320 Speaker 2: Novartis's global research headquarters are based. But it's also your 168 00:07:31,320 --> 00:07:34,200 Speaker 2: old stomping grounds because you've got your MD and your 169 00:07:34,320 --> 00:07:37,520 Speaker 2: MPH from Harvard. I believe you're also a current fellow, 170 00:07:37,600 --> 00:07:39,920 Speaker 2: so you've got a lot of links to the city and. 171 00:07:39,880 --> 00:07:40,800 Speaker 3: To the school itself. 172 00:07:41,040 --> 00:07:43,120 Speaker 2: We know that the school is under attack from the 173 00:07:43,120 --> 00:07:46,600 Speaker 2: Trump administration. There's losses flying both ways. How do you 174 00:07:46,640 --> 00:07:50,920 Speaker 2: think about the brain drain, the discouragement to the Harvard 175 00:07:50,920 --> 00:07:54,920 Speaker 2: community by what's going on within the political climate right now. 176 00:07:56,160 --> 00:07:59,080 Speaker 1: Look, I'm not close to the details, but certainly. I 177 00:07:59,120 --> 00:08:03,440 Speaker 1: think speaking for research based universities, it is a challenging 178 00:08:03,520 --> 00:08:06,960 Speaker 1: time and we see now with China emerging as a 179 00:08:07,160 --> 00:08:12,240 Speaker 1: major player in biopharmaceuticals and biotech, particularly in the Shanghai area, 180 00:08:12,520 --> 00:08:15,200 Speaker 1: that the US has to maintain competitiveness, and that means 181 00:08:15,240 --> 00:08:19,400 Speaker 1: having world leading universities, a strong NIH and continuing to 182 00:08:19,520 --> 00:08:23,800 Speaker 1: fund the breakthrough science that's led to the Cambridge biotech ecosystem, 183 00:08:23,840 --> 00:08:27,280 Speaker 1: which you see behind me where there's over five hundred biotechs, 184 00:08:27,520 --> 00:08:32,480 Speaker 1: a leading biopharmaceutical ecosystem. To see the Harvard University research 185 00:08:32,559 --> 00:08:36,440 Speaker 1: labs and hospitals with other universities as well have similar footprints. 186 00:08:36,640 --> 00:08:38,840 Speaker 1: And we need to maintain that competitive edge in the 187 00:08:38,960 --> 00:08:41,200 Speaker 1: US and that's going to be I think, really something 188 00:08:41,200 --> 00:08:43,360 Speaker 1: that comes to the fore in the coming years as 189 00:08:43,440 --> 00:08:45,439 Speaker 1: China continues to invest in biotech. 190 00:08:45,640 --> 00:08:49,319 Speaker 2: Yeah, it's something that we keep hearing from leaders among 191 00:08:49,360 --> 00:08:52,000 Speaker 2: companies and the role that the US needs to play 192 00:08:52,000 --> 00:08:53,160 Speaker 2: to kind of fend off that competition. 193 00:08:53,240 --> 00:08:54,880 Speaker 3: Boss, thank you so much for joining us today. 194 00:08:55,040 --> 00:08:59,000 Speaker 2: Vos Narrisimon is CEO of Novardest joining us from Cambridge, Massachusetts,