Novartis AG said its Chief Executive Joe Jimenez is to step down in January after leading the Swiss pharmaceutical giant through a tumultuous eight years marked by big patent expiries and intensifying scrutiny on drug pricing in the U.S.
He will be replaced by Vas Narasimhan, who is currently global head of drug development at the company.
Continue Reading Below
Mr. Jimenez, 57 years old, joined the company in 2007 and became its CEO in 2010. He will remain available to Novartis in an advisory capacity until the end of August next year, when he will retire, the company said.
He presided over the patent expirations Diovan for hypertension and cancer drug Gleevec, both of which generated several billion dollars annually at peak. When a drug patent expires, cheaper copycats can enter the market, sharply eroding sales.
To replace that lost revenue, Mr. Jimenez bet on a series of would-be blockbusters which have met with mixed success.
Cosentyx, for certain rheumatological conditions and psoriasis, generated annual revenue of $1.1 billion last year, having launched in 2015.
But Mr. Jimenez's other big bet, Entresto for heart failure, was met with resistance from doctors reluctant to switch patients onto a new drug, as well as reimbursement barriers from insurers. That is changing as doctors gain more experience with Entresto and insurers gradually adopt more permissive policies, but those initial hurdles have hampered the drug's growth. Although Novartis launched Entresto shortly after Cosentyx, the heart drug's 2016 revenue came to just $170 million.
Novartis Chairman Joerg Reinhardt credited Mr. Jimenez with rejuvenating the company's drug pipeline and navigating the patent expirations of the company's two largest products.
"We anticipate a smooth transition as Joe built a strong leadership team and mentored his successor," he said. The board considered both internal and external candidates for the role, he told reporters.
Mr. Jimenez said Novartis was on a "strong path to the future" and that it was the "right moment" to hand over the reins to Dr. Narasimhan.
"I have been pretty public about the fact that a CEO should not stay much longer" than eight years, he told reporters. "You come in, see what you want to change, and change it."
Novartis is in the midst of a strategic review on the future of its struggling eyecare unit, Alcon. Mr. Jimenez told reporters he planned to complete that review by the end of the year, before he steps down.
Dr. Narasimhan, 41 years old, trained in medicine and joined Novartis in 2005 from management consultancy McKinsey & Co.
Mr. Reinhardt said Dr. Narasimhan's medical background combined with his "significant experience managing the interfaces between research and development and commercial units" made him the right choice to succeed Mr. Jimenez.
Dr. Narasimhan told reporters it was too soon for him to comment on the next phase of the company.
Mr. Jimenez said he planned to move back to California, where he is from, with an eye to taking up a role in Silicon Valley. "It's too early to say [what I will do next], but I've always been incredibly interested in the intersection between biology and technology," he told reporters.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
September 04, 2017 04:16 ET (08:16 GMT)