Novartis today announced the introduction of a new organizational structure and operating model designed to support the company’s innovation, growth, and productivity ambitions as a focused medicines company in the coming decade.

Several features of Novartis’ new organizational structure:

• New simplified structure and operational set-up supports Novartis strategy as a focused medicines company and is designed to power next phase of innovation, growth and productivity
• Integrating Pharmaceuticals and Oncology business units into an Innovative Medicines (IM) business with separate US and International commercial organizations will increase focus, strengthen competitiveness and drive synergies
• New Strategy & Growth function combines corporate strategy, R&D portfolio strategy and business development to further strengthen pipeline with high-value medicines across internal and external opportunities
• New Operations unit combines Novartis Technical Operations and Customer & Technology Solutions units to generate economies of scale, drive productivity and create a strong technology and operational foundation; G&A functions to be globally integrated
• SG&A savings of at least USD 1bn to be fully embedded by 2024 as a result of these changes
• Novartis expects value creation through these operational improvements, ensuring at least 4% sales growth (CAGR 2020-2026 in cc*), and delivering high end of the company’s IM margin guidance of high 30s in the medium term and 40%+ in the mid- to long-term

Vas Narasimhan, CEO Novartis, said:

The simpler organizational model we are unveiling today is central to our growth strategy as it will make us more agile and competitive, enhance patient and customer orientation, unlock significant potential in our R&D pipeline and drive value-creation through operational efficiencies. With our portfolio of in-market medicines and up to 20 major pipeline assets that could be approved by 2026, Novartis is in a strong position to deliver above-peer-median sales and margin growth in the mid- and long-term.

Novartis will integrate the Pharmaceuticals and Oncology business units and create two separate commercial organizations with a stronger geographic focus—Innovative Medicines US and Innovative Medicines International. The two units will have full P&L responsibility across all therapeutic areas and ownership of customer experience, marketing and sales, and market access for their respective markets.

The elevation and establishment of an independent US commercial organization strengthens Novartis’s ability to achieve its goal of becoming a top-five company in the US in terms of sales while maintaining and growing its leadership position internationally. The new model will also help Novartis bring increased focus and commitment to its core therapeutic areas of Cardiovascular, Hematology, Solid Tumors, Immunology and Neuroscience.