Introduction
Every year around 56 million people die worldwide. Until the beginning of 2010, US deaths equaled 2,423,712. The three main causes of deaths worldwide are: Ischemic heart disease, celebrovascular disease and lower respiratory infections while in US are heart diseases, cancer and strokes. It is noticeable that most of the deaths result from heart related issues formed from the fast paced environment that is constantly changing in which millennial societies are living in.
Pharmaceuticals are extremely aware of this death numbers and they are trying to commit to help individuals have a better quality of life. Novartis is definitely one of such pharmaceuticals that are constantly seeking opportunities to improve for more research and development initiatives.
Novartis comes from the Latin word "novae" "artes" meaning "new skills." The term reflects the company's commitment to research and development that brings innovative new products to the communities it serves. Novartis has been increasingly changing and improving their operations to better work in the creation of vaccines and drug research. The pharmaceutical has strived to get more advanced technology with new innovative tools and techniques in correlation with their science discoveries.
In this paper, you will find an analysis of the pharmaceutical Novartis starting with its history, current situation, and future outcomes. In addition, a breakdown of Novartis based on the management terms discussed in class (Trends, Social Forces, Change, Staffing, Communications, Motivation, Politics, Conflict, Management Styles, Ethics, Social, Environment, Careers, Stress and Management Ideologies)
History
Novartis was created in December 1996 from a merger of Sandoz and Ciba Geigy forming the world’s largest health care company with approximately 100, 000 associates in 140 countries worldwide. Novartis truly works to deliver its mission:
“We want to discover, develop and successfully market innovative products to prevent and cure diseases, to ease suffering and to enhance the quality of life. We also want to provide a shareholder return that reflects outstanding performance and to adequately reward those who invest ideas and work in our company.”
By the use of their mission, Novartis has helped million of individuals have a better lifestyle every year.Since 1996 until 2001, Novartis and AstraZeneca formed Syngenta, antiviral products. In addition, that year Novartis formed part of the New York Stock Market. That same year, Novartis Institute for Functional genomics is formed and the pharmaceutical announces an agreement to acquire Merck’s crop protection business.
In 2002, Novartis increases 1/3 of the voting shares in its investment in Roche Holding AG. The Association of British Foods acquires Food & Beverage Unit as part of a decision by Novartis to divest the Health & Functional Food Business. Moreover, Novartis unifies and strengthens its global research network forming the Novartis Institute for Biomedical Research in US
In 2003, Novartis started to gain interest in Idenix Pharma as part of their antiviral expansion strategy. Later in 2004, Novartis Institute of Tropical Disease opens in Singapore to conduct biomedical research for dengue fever and tuberculosis. That same year, Novartis acquired the Danish firm Durascan A/S from AstraZeneca and Holdings of Canada. Furthermore, Novartis submitted Xolair, a drug for asthma treatment, for EU approval and was approved in 2005. During 2005, Novartis and Alnylam Pharma create an alliance focused on the discovery of innovative therapies based on RNA iterance (a silencing disease cause in genes). That same year Novartis acquires the OTC Brand portfolio from Bristol Myers Squibb in North America to emphasize its strong brand names.
The year 2006 was highlighted by successful Research and Development efforts for the pharmaceutical. During this year, Novartis opened the Strategic Biomedical Center for Research and Development in Shanghai, China. At the same time, Novartis Institute of Tropical Diseases was researching Malaria in a partnership with WHO (World Health Organization) to create a Coartem treatment. Also, the US Department of Health and Human Services granted 220million contract to build a cell vaccinated.
Through 2007, Novartis enhances vaccines through partnerships with Intercell (Austria Pharma that develops and designs vaccines for infectious diseases). This year, Novartis ranked #1 as “World’s Most Admired Companies” by Fortune Magazine. This same year Novartis starts to focus on Healthcare initiatives with the Gerber Medical Nutrition Business Units with Nestle for 5.5 and 2.5 million USD. Also, NITD opens in Indonesia. A new drug, Tukturnal/ Rasilez for high blood pressure is approved in EU and US.
In 2008, Novartis signed an agreement with Nestle SA for Alcon. In addition, the pharmaceutical opens a new research center in Siena, Italy. Novartis Vaccines Institute for Global Health, the new research center, will focus in development of new nonprofit vaccines. Gleevec/Glivec is the first US FDA approved treatment for gastrointestinal stromal tumor surgery. This year was highlighted by the 20% reduction for the anti malaria Coartem treatment reaching 70 million treatments. On June 4,2008, Novartis bought Protez for 400 million to develop the antibiotic PZ601 to for MSRA. In addition, Novartis will pay from $100-$300 extra for the antibiotic success. On July 10,2008, Novartis increased from 10% to a 51% its business with Speedel for $880 million for the Tekturna high blood pressure drug.
That same year, Novartis received several recognitions. First, Novartis is categorized as the health care super sector leader in the Dow Jones Sustainability Index. Second, the pharmaceutical is recognized “World’s Most Ethical Companies” in the Ethisphere Institute. Moreover, it is recognized one of the Top 20 “World’s Most Respected” companies in Barron’s Magazine.
Novartis focused in saving lives in 2009. During this year, the 250th treatment of Coartem, which the pharmaceutical started to implement in 2001 and until this year, has saved 750,000 lives in 60 malaria endemic countries. Furthermore, Novartis was the first to produce H1N1 vaccines in their development center in Holly Springs, North Carolina. There was a one billion investment in China to build the largest Pharmaceutical Research and Development Institute. Moreover, the pill Prevacid 24 hour was launched marking one of the biggest Rx to OTC switch in US. On May 20, 2009, Novartis acquired the cancer drug division of Ebewe Pharmaceutical for $1.2 billion. This year, the total revenues equaled 44.3 billion.
Novartis bulk of sales is concentrated in cancer and cardiovascular diseases. The pharmaceutical business segments are concentrated in four main categories. First, is the Pharmaceutical Division with 65% of sales to a total of $28.5 billion in 2009. Second, are the generic efforts from Sandoz that equal a 17% of sales totaled to $7.49 billion. Third, is the Consumer Health with 13% of sales resulting in $5.81 billion. Finally, Vaccines and Diagnosis with 6% of sales resulting in $2.4 billion.
"Novartis has leading businesses in fast growing segments of health care, and by focusing on our strategic priorities we are well positioned to succeed in a rapidly changing health care environment," said Joseph Jimenez, CEO of Novartis. (Novartis Newsroom 1) "Novartis remains committed to the core strategy of focused diversification in high-growth health care segments. We are leveraging our core competencies in scientific discovery and development to continue driving innovation, growth and productivity across the businesses”, Jimenez added. (Novartis Newsroom 2)
Novartis received many awards in 2009. The pharmaceutical first received Universum's World's Most Attractive Employers ranking on the top 50 most powerful employer brands. That same year, Novartis was part of the PharmaVOICE’s Top 100 List that recognizes the 100 most inspiring individuals in the life-sciences industry and Daniel Vasella from Novartis became one of those. Novartis received a double recognition in the “World's Most Innovative Companies” list by Fast Company magazine. Novartis listed as No. 8 on the overall company list, and No. 1 on the biotechnology sector list.
Current Situation of Novartis
a. Overview
Novartis is a growing business in the healthcare, eye care, generics, vaccines & diagnosis, and consumer health. With a global vision, Novartis is actively present in EU, US, Asia, India and Latin America markets. The pharmaceutical started the year with a new CEO, Joseph Jimenez, and Dr. Daniel Vasella as Chairman of the Board of Directors working with strategy. In January 4, 2010, Novartis raised ownership with the eye care product, Alcon to 77% in a 49.8 billion deal to control 70% of the entire eye care sector after the merger. Novartis proposed to complete purchase of majority stake in Alcon by the end of the year to strengthen the pharmaceutical health care portfolio and provide greater access to this new sector.
Up to the third quarter of the year, Novartis sales have increased 13% from 2009 to a total of 12.3 billion. This past November, Novartis unveiled a long-term strategy to grow in a dynamically changing health care environment. The company is investing in new treatments for cancer, cardiovascular diseases and diabetes.
b. Marketing
Ad Age ranks Novartis #68 in 2010 Advertising Expenditure with $516.3 million spend. This past November, the pharmaceutical received the Agora Awards for Advocacy Marketing from the PhilippinesMarketing Association.
“This award will inspire us to work even harder in implementing our key advocacies in partnership with the government and private sector stakeholders. Through our access and R&D initiatives, we are committed to helping improve the quality of life of Filipinos,” said Novartis Healthcare Philippines CPO head and country president Eric van Oppens, during the 2010 Agora Awards Night in Makati City.
Novartis marketing efforts are driven by geographical relocation and focusing on the advertisement of special medicine. The pharmaceutical wants to increase their present in the fast- growing markets of China, Russia, Brazil and India. Novartis is expecting 30 regulatory submissions in pharmaceuticals by the end of 2012. Moreover, Novartis specialty and oncology portfolio will make up more than 75% of the sales by 2015, up 10% from what it is currently.
c. Workplace
Novartis engages in communication through Public Relations, Media Relations, Employee communication, electronic communication, government relations and investor relations. The pharmaceutical uses a formal style of communication with presentations, awards and team meetings. In addition, the pharmaceutical uses a vertical- rule bases style with a bureaucratic leadership style as a result of the government and FDA regulations.
d. Management
There are several forces behind managing Novartis. Some of these forces are: education, technology, government systems, Internet and globalization. Education is crucial to enter the workplace in this industry and throughout the years working in the field. As more discoveries are made, more training is needed for the employees. Learning more and getting trained is a recurrent activity within the industry. Similarly, technology is an ongoing field that is constantly being improved. Being in such an evolving field, which is based on research and development, pharmaceuticals need to stay on top of all the latest technological advancements so they can benefit from them. Moreover, the Internet and globalization go together. The Internet has revolutionized the world of communications and how information is spread worldwide. As a consequence, by using the Internet people and companies are becoming globalized by the constant exchange of information in the web. Novartis is not the exception, they take advantage of the Internet by providing information about drugs to their consumers and they also exchange information with importers overseas. On the other hand, government systems are the ones that regulate pharmaceuticals and therefore demand that all procedures all properly managed.
Moreover, Novartis can fit into two management ideologies; role and task oriented. Novartis is a role oriented in the way that they are preoccupied about legal procedures and are monitored by hierarchical structures. Most of the time, pharmaceuticals are in a stable environment and are slow adapting to new ideas.However, Novartis can also be task driven because their main goal is to achieve the highest value focusing on the task of testing and manufacturing drugs. This type of organizational ideology deals with authority that derives from knowledge and competence from the different companies that are in the market. As more discoveries come into their hands, more responsive to change the company become as an element of that task ideological factor.
Today, management is situational oriented based off consent and joint. In addition, there is a huge movement on mentoring programs and fast, heavy on results project management initiatives. Furthermore, managers are focusing more on strategy, tactics and operations like social media to achieve short-term results. Novartis is one of the companies that truly rely on project management initiatives to achieve success.
Babe Ruth says: “The way a team plays as a whole determines its success. You may have the greatest bunch of individual starts in the world, but if thy don’t play together, the club won’t be worth a dime.” As of September 2010, Novartis has been operating through a project management framework with the formation of teams. This framework integrates a four-step process of initiation, strategy & planning, execution and closure. The initiation step is where the team structure and membership is created as well as the formation of the purpose and goals for the specific project. Moreover, the metrics and project deliverables are also present. This is the step where the boundaries, agreements, roles, responsibilities and discoveries are established. There are several communication skills that are essential in this step of the process. These skills are: listening, communicating, team norms, leadership development, and Myers-Briggs Type Indicator for decision-making.
The second step in this framework is the strategy and planning. During this stage, the risk and scope management are created as well as developing a schedule for what and when needs to be accomplish to finish the project with the critical path decision process. Finally, is the stakeholder management that is responsible of the communications plan and the functional alignment. To be successful in this step, you need to have a certain level of trust, collaboration, cooperation, and innovation tools and to be able to contribute in decision-making. As part of this step, employees need to be part of strategy workshops to better understand the process.
The third step is the project execution. In this step, the project deliverables are executed and the project progress is being monitored. This is the step where issues are identified, revoked and the recommended changes are performed. Moreover, employees will need new approvals if the execution is out of scope from the original. Finally, the team needs to communicate the progress to the sponsor and the customer. The skills present here are: regulatory training, drug development training, negotiation, protocols with ongoing feedback and meeting effectiveness.
The last step of the process is the project transition and closing. In this step, is crucial to the teams because it provides feedback, lessons learned, and knowledge of the transfer. Moreover, the project impact its measured and the teams celebrate their work together. The main skills here are the lessons learned and any recommendations for improvement that there could be.
Crisis Management
In 2004, Novartis was filed on a lawsuit from Amy Velez and four others about discrimination in pay, promotion and for pregnancy within the pharmaceutical. This lawsuit was made on behalf 5,600 women that were part of a sex bias back in July 15,2002. In September 2010, Novartis accepted to pay $152.5 million for a sex bias settlement. From that number, $60 million will go to the class and $40 million for damages. In addition, Novartis will be responsible for paying $13.4 million in damages to the 12 affected women. As a solution, Novartis will start to implement measures to protect female from this incidents in a future turnaround.
Ethics
Novartis has an obligation to provide accurate information and education about their products to consumers and healthcare professionals. The pharmaceutical adheres to the principles of ethical business in their Code of Conduct, Corporate Citizenship Policy and Guidelines. Novartis associates are guided by the specific standards for marketing activities set out in the Novartis Pharma Principles and Practices for Professionals updated in 2008.
The basic ethical principles are: Promotional practices must be consistent with patients' benefit, must be ethical and must be in good taste. Second, the information provided must take account of customer needs and must be based on product information. Product information has to be approved by the local authority, derived from the approved Basic Product Information. Third, an event sponsorship must be clearly disclosed and the primary objective of a meeting must be scientific in nature. Fourth, hospitality must be appropriate, in good taste consistent with local practices and secondary to the main purpose of the meeting. Fifth, the gifts must be modest and relevant to the practice of medicine. Sixth, the personal incentives to prescribe are prohibited. Seventh, the samples must be handled with the prime objective of familiarizing the customer. Eighth, sales representatives must have appropriate training and product knowledge. Finally, compensation for healthcare professionals must be provided only for actual, reasonable and necessary services.
Novartis has developed ethics training for their employees to get them familiarized with the policies and procedures. "Novartis Land", an online training program offering the learner the opportunity to interactively explore the policies and answer questions in a dialogue-role play setting. First the employee interacts with 3D characters found in a variety of buildings that make up Novartis Land. The 3D characters have dialogues based on concepts found within the policies.
The learner needs to navigate through the dialogues where eventually decisions must be made. The learner selects the best available option. Once the dialogue is completed successfully, the learner encounters a quiz style game show. Here is where questions are presented and answered. Once all available buildings, dialogues and game shows are successfully completed, a certificate is issued. The program is designed and integrated to be tracked by Novartis’ existing LMS System. Tracking, scoring and successful completion data are passed to the LMS. Since Novartis has many different departments that need different policies emphasized, the employee chooses what group he belongs to before entering Novartis Land. Each group receives different dialogue and questions that are customized for them.
e. Social Responsibility & Environment
As part of their social responsibility, Novartis has been incredibly recognized for their accomplishments and new strategies in 2010. The Pharmaceutical started the year being recognized in The Scientist's 2010 ranking of the “Best Places to Work for Postdocs” — Horsham, UK, and Basel, Switzerland, as No. 1 and No. 5 in the international list, and Cambridge, Massachusetts, as No. 4 in the US list. That same year, Novartis went up in numbers to the top three pharmaceutical companies on Fortune’s list of the “World’s Most Admired Companies” for the sixth year. Moreover, Novartis Vaccines is nominated the Best Vaccine R%D Pipeline at the 2010 Vaccine Industry Excellence Awards. Furthermore, Diversity Inc ranks Novartis No. 7 in its Top 10 Companies for Global Diversity in 2010. In 2009, Novartis was No. 8 on this list. Likewise, the National Organization for Rare Disorders in the US honors Novartis their research on rare diseases. The Scientist ranks Novartis as one of the best places to work in industry. Novartis ranks no. 6 on the global list of Newsweek’s 2010 “Green Rankings.” For the first time this year, Newsweek expanded its “Green Rankings” to analyze the green score of the 100 biggest companies worldwide. Novartis retained the top spot in the 10th annual ranking by MedAdNews. “Most Admired Pharmaceutical Company”. Novartis received the 2010 Scrip Awards for Best Overall Pipeline and Corporate Social Responsibility.
Future Projections of Novartis
Novartis is looking forward to fully enter into the healthcare sector. By 2011, the pharmaceutical expects tocomplete a further 13 regulatory clinical development submissions with an additional nine planned for 2012. Moreover, the pharmaceutical is planning on premiering over 50 products within the next 5 years including Meningitis vaccines for infants and meningitis B vaccines. These vaccines will have a cost of $1 billion a year each. By 2015, Novartis pharmaceuticals specialty and oncology portfolio is expected to account for 75 percent of sales; outcomes-based commercial model expected to increase value for stakeholders.
Novartis future strategy is to focus on innovation through Research and Development. To make this possible, Novartis has emphasized four main issues that they should address. First, they will work with the diverse healthcare portfolio on key healthcare growth sector. Second, they want to emphasize on productivity to generate profitability. Third, they will invest on innovation to achieve success. Finally, Novartis will develop businesses in China, Russia, Brazil and India.
Summary
Novartis is an international pharmaceutical known for working in the development of medicines for infectious diseases. The pharmaceutical strategy through the years has highly focus on research and development. Most of their research is focused in cancer, cardiovascular diseases, diabetes, malaria and meningitis research. One of the biggest project Novartis manages is the development of new vaccines like H1N1 that many individuals in the US got.
Lately, Novartis is facing major challenges with FDA patents approvals and prices to lower the prices on medications. Novartis is starting to cut sales staff jobs budget to help boost research and development since two of their biggest patents will expire in the beginning of 2011. The pharmaceutical will cut 1,400 jobs out of the 6,449 employees totaling 22%. Novartis is expecting to lose their Diovan patent in January 2011.
Conclusions
Throughout this paper, it has been recurrent the fact that Novartis keeps changing and growing in size, revenues and discoveries. It is very prominent that the success of Novartis comes from their research and development initiatives and the creation of new vaccines.
From a manager perspective as it refers to communication and leadership, Novartis is mainly a bureaucratic system when it relates to the organization/ government relations. This is because they need to follow rules rigorously to ensure that the employees are following the procedures precisely. This type of ‘by the book’ communication style is often seen in the operations side of the industry where serious safety risks are involved. Likewise, bureaucracy is portrayed in the relationship of the industry and the government regulations. Another type of communication is tell or directive style between department managers and their employees to communicate the different tasks that must be done. Likewise, a selling style of communication can be derived from manager relationships with employees when they approach them to do certain tasks and explain the different regulations and the importance of following the rules.
Novartis works mainly through an intrinsic motivational force where they get into the employees head to form a relationship. This theory comes from Maslow’s hierarchy of needs to reach ones maximum potential and respecting other. Some of these intrinsic forces are listening, responsibility, involvement and keeping people informed. It is certain that all of these forces are present in the pharmaceutical world and in the way their employees get the work done.
In conclusion, Novartis is based on the projects to develop and manufacture drugs for cancer and infectious diseases. Novartis has received many accomplishments through the years through research, development and measuring results. All of this has given the pharmaceutical a trustable and better reputation.
Recommendations
Novartis should continue to expand globally as more development arises. The pharmaceutical should focus on implementing new emerging technologies as well as expand more their social media initiatives. The pharmaceutical should use social media platforms for marketing efforts to create awareness and understanding of their products and the medication functions. It is certain that more drugs discoveries will come along the way but by focusing on project management, Novartis can increase revenues and keep growing if they use social media in appropriate and effective ways. The competition between Novartis and La Roche relies in the tactics and initiatives they take in relation to how to market these drugs. Technology and social media are two powerful cost effective tools that companies are starting to use. With the big money investments in insurance, Novartis is taking this as an opportunity to cut on marketing and communication budgets.
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