Novartis announced Monday that CEO Joseph Jimenez will step down from his role effective January 31, 2018, to be replaced by Vasant Narasimhan, the company's current global head of drug development and chief medical officer. Jimenez, who has been chief executive since 2010, will be available for advice and support until he retires from Novartis on August 31 next year.
Chairman Joerg Reinhardt commented "during his tenure, Joe focused Novartis on leading global businesses, while divesting non-core divisions. Under his leadership the innovation pipeline was rejuvenated, and we successfully navigated the patent expirations of our two largest products."
Meanwhile, Jimenez remarked "this is the right moment to hand the leadership reins of the company to Vas," adding "I've been CEO for eight years and I've been pretty public about the fact that I didn't think a CEO should stay much longer than that." Jimenez continued "you come in, you see what you want to change, you change it, and then it's time to pass it on to a successor."
However, UBS Group analyst Michael Leuchten said "whether the current strategy is on track, though, and whether Novartis can deliver on its ambition to grow its pharma top line despite continuing patent expiry headwinds, remains to be seen." Leuchten added "Novartis continues to face commercial challenges as the world has changed."
Prior to his current role, Narasimhan, who joined Novartis in 2005, served as head of development for the drugmaker's pharmaceuticals division. Reinhardt noted "Vas is deeply anchored in medical science, has significant experience in managing the interfaces between research and development and commercial units and has strong business acumen with a track record of outstanding achievements." The chairman indicated that Novartis' board conducted "a thorough evaluation of internal and external candidates" before deciding to appoint Narasimhan as Jimenez's successor.
Commenting on the news, Morgan Stanley analyst Vincent Meunier said that Narasimhan's expertise in clinical development and medicine make him well suited to run Novartis, especially during the ongoing review of Alcon's operations. Meunier noted that Narasimhan "has had increasing exposure to investors over the past few quarters and company events," adding "we believe that…Narasimhan will bring the skills and leadership to tackle Novartis' challenges."
In July, Novartis reported that quarterly sales in the Alcon unit grew 1 percent to $1.5 billion, prompting the company to boost its annual outlook for the division, with revenue now expected to grow in the low single digits this year, up from a previous estimate of unchanged from the prior year or expanding slightly. At the time, Novartis indicated that it is still on track to provide an update on its strategic review of Alcon towards the end of the year, with Jimenez suggesting that the turnaround of the business will "improve the options we have available to us."