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Vas Narasimhan Photographer: Simon Dawson/Bloomberg

(bloomberg)

(Bloomberg) -- When sales staff at drugmaker Novartis AG wake up each morning, an artificial-intelligence program will soon tell them how best to organize their time.

The project to analyze prescribing patterns and help sales employees determine when to visit physicians is part of Vas Narasimhan’s vision to shake up Novartis and catch up with rivals that have pulled ahead in productivity.

At 41, the youngest boss in big pharma is drawing inspiration from nimble technology firms, tapping data to cut its failure rate and narrowing Novartis’s focus on cutting-edge drugs. As he rejects the conglomerate model of the past, he’s also shunning his predecessor’s quiet corner office in favor of a seat in the hubbub of an open space.

The goal is a “cultural transformation to go from a top-down, more autocratic organization to a more empowered, curious organization that I think will be better suited to find innovative solutions,” he said in an interview Tuesday.

Narasimhan, a 13-year Novartis veteran who replaced Joe Jimenez in February, is trying to make the Basel, Switzerland-based drugmaker more competitive at a time when costs to develop new medicines are rising and the industry’s returns on investment are sliding. He also needs to rebuild the company’s reputation after revelations earlier this year that it paid $1.2 million to Donald Trump’s lawyer and previous allegations of improper sales practices. The turnaround efforts will take time, however, and investors remain leery for now: The company’s shares are flat this year.

“The biggest area for improvement is the tone in leadership and making it very clear that we speak with one voice,” he said. “When there’s any variability on a message like that people notice, and then I think that can lead to some of the issues that we’ve had.”

Narasimhan is taking action aimed at strengthening ethics and managing risk. He said in May that the company made a “mistake” in signing up the lawyer, Michael Cohen, a move that came before the CEO took over. Technology is also set to play a role in that area, with the company looking to create “early warning systems” through artificial intelligence to avoid missteps, Narasimhan said.

Operations Center

Learning from the Boeing Co. and Airbus SE approach to monitoring plane and engine performance, the pharma giant also has built an operations center to assess more than 500 clinical trials in real time, allowing the company to predict enrollment, ensure quality and evaluate costs, he said. The AI program for the sales force will send daily texts or emails helping to plan their time, rolling it out initially to 10,000 employees.

“If the sales reps had the opportunity to have every night a refresh of all of the data sets operating in the country to inform how they spend their next day, I’ll think you’ll get much more efficiency,” he said.

The new boss is recruiting from the technology industry, teaming up with partners in areas like AI and mobile apps and even moving away from desks. Unlike the previous CEO, Narasimhan said he doesn’t work in a private office.

While AI has sparked optimism that it could significantly improve the pursuit of new drugs, Narasimhan said his initial enthusiasm has turned more cautious because of difficulties in finding quality data to feed the algorithms. Novartis has a project to mine about 2 million patient years of trial data over the past 15 years, hoping to find new insights.

$475,000 Drug

“But I think it’s still five-plus years to really have the R&D problem start to be impacted by AI,” he said.

Seeking an edge, a range of drug companies from GlaxoSmithKline Plc to Sanofi are working with artificial-intelligence specialists, luring data scientists and even buying tech startups. Novartis is looking for potential acquisitions in the data and digital realm to add to its partnerships, seeing Roche Holding AG’s $1.9 billion takeover of Flatiron Health earlier this year as a “wake-up call,” yet finding the right opportunity isn’t easy, its chief said.

Narasimhan is moving to build on the company’s breakthrough $475,000 cancer treatment Kymriah and expand in gene therapies to cure DNA flaws that cause devastating conditions as the drugmaker seeks to boost its margins. In a Bloomberg Intelligence analysis of 13 pharma companies’ R&D returns last year, Novartis ranked ninth.

A doctor with a background in public health, Narasimhan has been busy in his first six months at the helm. The company said last month that it will spin off its Alcon eye-care unit following the $13 billion sale of its stake in a consumer-health joint venture with GlaxoSmithKline Plc announced in March. The new chief in April also unveiled the purchase of rare-disease drugmaker AveXis Inc. for $8.7 billion.

The conglomerate model, he said, “strikes me as very hard in the current environment.”

(Updates to add M&A in 12th paragraph.)

To contact the reporter on this story: James Paton in London at jpaton4@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III, Marthe Fourcade

©2018 Bloomberg L.P.

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