Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Shares of Novarda's lower in US trading today, despite the
Speaker 2: Swiss drug maker raising its guidance and announcing a ten
Speaker 2: billion dollars stock buyback. Instead, investors are keing in on
Speaker 2: disappointing sales for a key drug and news that it's
Speaker 2: longtime CFO is retiring. All of this against a backdrop
Speaker 2: in which President Trump has signaled possible new tariffs on
Speaker 2: the pharma sector. Joining us now to discuss what's ahead
Speaker 2: is vos Narasimmon, he is CEO of nevardis joining us
Speaker 2: from their global research headquarters in Cambridge, Massachusetts.
Speaker 3: Boss, thanks for joining us.
Speaker 2: I want to start with the big picture, of which
Speaker 2: is tariffs, of course, because you've pledged to invest twenty
Speaker 2: three billion dollars in US production over five years to
Speaker 2: make key drugs for the American market in order to
Speaker 2: mitigate the impacts of potential tariffs. Do you have any
Speaker 2: indication that this commitment, this level of commitment would be
Speaker 2: enough to get an exemption from tariffs in the introim
Speaker 2: until your new facilities are up and running.
Speaker 4: It great to be here, Scarlett, So we don't know.
Speaker 1: We don't know what exactly is going to be required
Speaker 1: for the exemptions that have been talked about, but I
Speaker 1: would say that we are in a very good position
Speaker 1: right now and that we have inventory on hand in
Speaker 1: the US so that tariffs will not impact twenty twenty five.
Speaker 1: We continue to build inventories as well for well now
Speaker 1: into twenty twenty six, and then we're working as fast
Speaker 1: as we can to get those facilities up and running
Speaker 1: so that more and more of our key medicines are
Speaker 1: produced in the US, with a goal that within four years,
Speaker 1: all of our key medicines are produced in the US
Speaker 1: for the US.
Speaker 3: You're hoping that go ahead?
Speaker 1: I'm sorry, I was going to say, we're hopefully the
Speaker 1: administration will be pragmatic in how they think about this, right.
Speaker 2: Right, And to that end, have you had specific conversations
Speaker 2: with the administration on this point.
Speaker 1: We've had conversations with the trade representative trying to understand
Speaker 1: the contours of what they're thinking about, but of course
Speaker 1: we don't know until I think the final policy is
Speaker 1: written and released.
Speaker 3: Yeah, fair enough.
Speaker 2: In a similar way, do you worry that these investments
Speaker 2: won't make as much economic sense if there's a new
Speaker 2: administration in a couple of years, who decides to roll
Speaker 2: back remove any of the tariffs.
Speaker 1: The way we think about this investment is we didn't
Speaker 1: do it because of the tariffs.
Speaker 4: It just makes strategic sense.
Speaker 1: I mean, soon we expect the US to account for
Speaker 1: fifty percent of our global sales, certainly by the end
Speaker 1: of the decade, so it makes sense to have production
Speaker 1: capacity in the US for the US market, Europe for Europe,
Speaker 1: and then of course we also build up capacity in
Speaker 1: China and Japan to service the Asian markets. I think
Speaker 1: that's a sensible strategic approach given all of the uncertainties
Speaker 1: that we've seen over the recent years.
Speaker 2: I want to talk about your siasis drug cocentics. It
Speaker 2: saw slower than expected growth in the US for some
Speaker 2: new indications, and then you also.
Speaker 3: Have the backdrop of a broader.
Speaker 2: Slowdown in China for innovative medicines. What is your confidence
Speaker 2: that either of these factors will improve materially in the
Speaker 2: next few months.
Speaker 1: Look, I think in China, I do expect there to
Speaker 1: be improvement over the second half of the year and
Speaker 1: going into next year, as we go off of a
Speaker 1: lower base that maybe than we had originally expect is
Speaker 1: I think growth will come back, and I think more broadly,
Speaker 1: we expect Consentics to consistently deliver mid single digit growth.
Speaker 1: What's interesting about a lot the focus on Consentics today
Speaker 1: is we have not moved off our eight billion dollar
Speaker 1: plus peak sales guidance in twenty twenty nine. And Consentics
Speaker 1: has had many competitors over the years, and we've been
Speaker 1: able to manage each one. Usually when those competitors come in,
Speaker 1: there is a market reaction like we had today, and
Speaker 1: then we work through it and then we build confidence back.
Speaker 1: I think much more importantly when you look at our
Speaker 1: guide five percent of plus and with all of the
Speaker 1: launches performing well, I think the long run investors will
Speaker 1: see through this and then continue I think to look
Speaker 1: favorably on our performance.
Speaker 2: Which of those markets in the US or China do
Speaker 2: you have more conviction in when it comes to this
Speaker 2: particular drug.
Speaker 1: With respect to Consentics, I mean both are critically critically
Speaker 1: are important.
Speaker 4: I think very different dynamics.
Speaker 1: You know, in China we have a very high growth environment,
Speaker 1: and so obviously when you have a little bit less growth, it.
Speaker 4: Has an impact.
Speaker 1: In the US, this is a very significt in medicine already,
Speaker 1: you know, approaching three billion dollars plus in sales and
Speaker 1: so there. Of course, it's much more of managing competition,
Speaker 1: new new indications, new formulations to continue the growth. But look,
Speaker 1: I think overall, as I said, eight billion dollar plus,
Speaker 1: we're sticking with it and we feel confident we'll get there.
Speaker 3: Yeah, that's a pretty good sign.
Speaker 1: Well.
Speaker 2: One reason of Artists did raise its full your earnings
Speaker 2: guidance is because of the growth of your breast cancer medicine,
Speaker 2: Chris Colli, and the UK has said that it will
Speaker 2: now recommend the drug for more patients. I guess I
Speaker 2: wonder are you surprised by the uptake of this medicine
Speaker 2: in recent months for patients with early breast cancer.
Speaker 1: It succeeded our expectations, scarl I have to say, I mean,
Speaker 1: when we look at it, we knew the medicine could
Speaker 1: be significant, but we're now market leader in new to
Speaker 1: brand RX in the US, both in metastatic and early
Speaker 1: breast cancer. We've seen remarkable uptake with the early launch
Speaker 1: in Germany, so the demand is really there and I
Speaker 1: think what's most promising for long run is that we're
Speaker 1: seeing patients with no zero or so called lymph node
Speaker 1: zero lymph node one, so a little bit earlier stage
Speaker 1: of the disease, also using the medicine, and that's an indication.
Speaker 1: It's two thirds of women with this form of early
Speaker 1: breast cancer and we're the only one with this indication.
Speaker 1: So I give us a lot of energy and excitement.
Speaker 1: We've guided to eight billion dollars plus, but certainly if
Speaker 1: things continue in this way, the medicine could be significantly bigger.
Speaker 2: Okay, so that's that's where you I want to go next.
Speaker 2: At what point do you start to really reassess what
Speaker 2: the peak sales potential for this drug could be?
Speaker 4: You know, we look at it every year and so
Speaker 4: before our capital markets.
Speaker 1: Day in the fall, we evaluate and so certainly we'll
Speaker 1: do that right now. I mean, given the momentum we're seeing,
Speaker 1: we'll have to look at would we raise our CAISCOALI
Speaker 1: guidance given given the performance that we're seeing. So it's
Speaker 1: very exciting and we have that with a few medicine semblics.
Speaker 1: Are other cancer drug performing extremely well, plu Victo, our
Speaker 1: pro say cancer medicine performing extremely well. So I think
Speaker 1: we'll be able to show investors that we have the
Speaker 1: growth drivers to growth through the end of a decade
Speaker 1: and into the twenty thirties.
Speaker 2: You also, as I mentioned, plan to buy back up
Speaker 2: to ten billion dollars of your own shares in the
Speaker 2: coming years. What does to say about your appetite for
Speaker 2: M and A and in licensing of medicines. Is there
Speaker 2: a lack of sufficiently priced, attractive targets right now out there?
Speaker 1: We're in the great position that we can do both.
Speaker 1: We can buy back our shares and do M and A.
Speaker 1: When you look at where our cash flow is heading,
Speaker 1: we'll soon be approaching twenty billion dollars of free cash flow.
Speaker 1: That enables us to play a strong and growing dividend,
Speaker 1: that enables us to buy back our shares and then
Speaker 1: also to invest fully in M and A and media
Speaker 1: l So we're not pulling back. We actually led the
Speaker 1: industry and the number of deals completed over the last
Speaker 1: eighteen months, and so we'll continue to look and if
Speaker 1: there's a good asset that fits with our therapeutic areas,
Speaker 1: fits with our technology priorities, we'll certainly go after it.
Speaker 3: Now, you mentioned M and A and how you are
Speaker 3: looking for things.
Speaker 2: You've talked about maybe bolt on deals, which specific areas
Speaker 2: make the most sense for you.
Speaker 4: Right now, we stick with our priorities.
Speaker 1: Have war main therapeutic areas oncology, immunology, cardiovascular, neuroscience. We
Speaker 1: have three main technology eras selling gene therapies, RNA therapeutics,
Speaker 1: and radio ligan therapies.
Speaker 4: That's where we look. We've learned that focus is.
Speaker 1: What's driven the outstanding performance we've seen over the last
Speaker 1: three plus years, and we want to say ultra focus
Speaker 1: key therapeutic areas, key technology platforms, and that's where we
Speaker 1: primarily look.
Speaker 2: I mentioned Boss that you are in Cambridge. That's where
Speaker 2: Novartis's global research headquarters are based. But it's also your
Speaker 2: old stomping grounds because you've got your MD and your
Speaker 2: MPH from Harvard. I believe you're also a current fellow,
Speaker 2: so you've got a lot of links to the city and.
Speaker 3: To the school itself.
Speaker 2: We know that the school is under attack from the
Speaker 2: Trump administration. There's losses flying both ways. How do you
Speaker 2: think about the brain drain, the discouragement to the Harvard
Speaker 2: community by what's going on within the political climate right now.
Speaker 1: Look, I'm not close to the details, but certainly. I
Speaker 1: think speaking for research based universities, it is a challenging
Speaker 1: time and we see now with China emerging as a
Speaker 1: major player in biopharmaceuticals and biotech, particularly in the Shanghai area,
Speaker 1: that the US has to maintain competitiveness, and that means
Speaker 1: having world leading universities, a strong NIH and continuing to
Speaker 1: fund the breakthrough science that's led to the Cambridge biotech ecosystem,
Speaker 1: which you see behind me where there's over five hundred biotechs,
Speaker 1: a leading biopharmaceutical ecosystem. To see the Harvard University research
Speaker 1: labs and hospitals with other universities as well have similar footprints.
Speaker 1: And we need to maintain that competitive edge in the
Speaker 1: US and that's going to be I think, really something
Speaker 1: that comes to the fore in the coming years as
Speaker 1: China continues to invest in biotech.
Speaker 2: Yeah, it's something that we keep hearing from leaders among
Speaker 2: companies and the role that the US needs to play
Speaker 2: to kind of fend off that competition.
Speaker 3: Boss, thank you so much for joining us today.
Speaker 2: Vos Narrisimon is CEO of Novardest joining us from Cambridge, Massachusetts,