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An illuminated logo sits outside Novartis AG's headquarters in Basel, Switzerland.(bloomberg)
(Bloomberg) -- Swiss drugmaker Novartis AG is holding the line on U.S. prices this year as an attack from President Donald Trump led rival Pfizer Inc. to delay planned increases for some medicines.
Novartis has voluntarily pulled back on increasing prices in the U.S., Chief Executive Officer Vas Narasimhan said on a call Wednesday. The company wants the cost of its medicines to be “reasonable” and “defensible” and to reflect their value for patients, he said.
Pfizer last week agreed to defer planned price increases for certain drugs a day after Trump criticized the company over reported plans to raise them. In recent weeks, Novartis, Gilead Sciences Inc., Roche Holding AG and Novo Nordisk A/S sent notices to California health plans rescinding or reducing previously announced increases on at least 10 drugs.
“We thought the prudent thing to do was to pull back on any further price increases in 2018 and evaluate as the environment evolves,” Narasimhan said in an interview with Bloomberg Television’s Matt Miller and Guy Johnson. Novartis said it earlier published its pricing policy on its U.S. website.
In the U.S., price erosion and rising competition is hurting Novartis’s Sandoz generics unit. The company is evaluating a range of options for the U.S. business, including divesting parts of the operations or some of its products, Narasimhan said in a separate interview. It’s also considering bringing in or investing in other medicines, he said. Sandoz at the same time is seeing “good growth” in Europe, he said.
“We’re actively working on the Sandoz U.S. approach,” he said.
Narasimhan spoke after Novartis reported profit that beat estimates in the latest quarter and reiterated its full-year forecast. The company expects to be at the high end of its sales forecast range for the year, assuming continued momentum, he said. The shares rose 3.35 percent to 80.90 Swiss francs at 4:22 p.m. in Zurich.
The new CEO is seeking to narrow the focus on the most innovative medicines to make the company more competitive. After a recent study, the drugmaker halted development of an experimental obesity treatment that didn’t achieve enough weight loss in patients to justify further work, he told analysts on a conference call.
Narasimhan is taking steps to try to strengthen the company’s ethics, manage risk and regain trust following revelations earlier this year that Novartis paid $1.2 million to Trump lawyer Michael Cohen to try to gain insight into the administration’s health-care policy. An investigation led by U.S. Senate Democrats concluded last week that Novartis’s ties to Cohen were deeper than the drugmaker acknowledged.
The CEO has been grappling with fallout over the contract, which drew the pharmaceutical giant into Special Counsel Robert Mueller’s probe of suspected Russian meddling in the U.S. presidential election.
The company isn’t aware of any further investigations into the matter and considers it “closed,” Narasimhan said.
(Adds obesity-drug discontinuation in eighth paragraph.)
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