Pharmaceutical giant Novartis has announced that Daniel Vasella, who has held top positions at the company for the past 17 years, would not stand for re-election to the board of directors in February.
The board has proposed Bayer healthcare head Jörg Reinhardt to replace him as chairman. Reinhardt, a German, is a former Novartis executive who had once been tipped as a possible successor to Vasella, but left in 2010 after American Joe Jimenez was given the CEO position.
“I am confident in the leadership of Joe Jimenez and his top team, the company’s strategy with its commitment to innovation, and the course charted to strengthen Novartis as one of world’s leading healthcare companies,” said Vasella in a statement. “I have therefore concluded that after 25 years with the company, the time is right for me to ensure a smooth transition.”
Vasella oversaw the 1996 merger of Sandoz and Ciba-Geigy that led to the creation of Novartis. Elected chairman in 1999, he held down the position along with his role as CEO for over a decade, a situation that was criticised by corporate governance specialists.
Vasella also came under fire for his salary, regularly among the highest in Switzerland. He held the top spot between 2005 and 2009, and earned SFr13.5 million ($14.5 million) in 2011.
He has often been cited as an example during the campaign for the upcoming nationwide vote on excessive salaries in March.
Novartis announced in its statement on Wednesday without elaborating that it plans to introduce changes to compensation for the CEO and the other members of its executive board as of January 1 next year.
Transition year ahead
The firm’s sales for 2012 amounted to $56.7 billion, down three per cent due to the dollar regaining strength last year against most major currencies. Sales of recently launched products grew 13 per cent, contributing $16.3 billion. Net income was $9.6 billion.
Novartis expects sales to grow in the mid-single digits from 2014 once it has absorbed the full impact of competition from cheaper drugs.
The Basel-based group warned investors to expect a decline in its core operating margin in 2013, as competition from generic copies knocks $3.5 billion off sales.
The drugmaker will have to weather the loss of exclusivity on its top-selling blood pressure drug Diovan in the United States and also resolve lingering manufacturing problems at its factory in Lincoln, Nebraska.
Europe's second-largest pharmaceutical specialist by market value after hometown rival Roche, is relying on sales of its newest products, like multiple sclerosis pill Gilenya and cancer drug Tasigna to help drive future growth.
swissinfo.ch and agencies