Novartis aims for double-digit growth in India, eyes Hyderabad expansion

Novartis global CEO Vas Narasimhan on Thursday (March 21) said he is eyeing robust growth at a double-digit rate in India, as the company ramps up its capabilities in research, IT, and data science, along with other core functions.

"I would foresee us continuing to grow at a double-digit rate, as we continue to build out capabilities in R&D, IT and data science, as well as all of our core functions.

Two areas we are now looking to invest in Hyderabad, are our research, so basic research, which would be a significant expansion of our current footprint, as well as expanding our US marketing operations as well into India," Narasimhan said.

"When you think about this Hyderabad center, or Novartis Corporate Center, which we really consider as one of the extensions of our headquarters in Basel and some of our major sites in East Hanover, this is now an 8,300-person operation in India. We are growing 10%, I would expect this to be at over 9,000 people by the end of this year," the CEO added.

A: As your ally we have two entities here in India, NIL and Novartis Healthcare Private Ltd (NHPL). Novartis India Ltd is an entity that markets older brands. These are brands that are established brands that we launched sometime 20 or 25 years ago. We often market these with partners or recent partnership with Dr. Reddy’s with great success and I think we have seen good progress.

But the strategic question is, are we the right owner for that entity given that our future investment will primarily be through NHPL where we house this beautiful site here where you are at, where we have over 8,300 people, as well as all of our future launch medicines. So that's the strategic consideration we are undergoing, no decisions have been taken and we will see how it unfolds.

A: I can't come obviously, on specific opportunities for companies. But certainly, the thought process is to see if there is a better owner for this business than the Novartis. And we will have to see now as we have started this strategic review, what kind of offers we get. Is it better for us to continue to own this listed entity, or to partner it or to sell it to another logical buyer? So we will see how it goes too soon to say at this moment.

A: Certainly, we think the pricing environment should improve in India for innovative medicines. However, our strategic thought here is not driven by any specific pricing policy. It's much more in the long run, are we the logical owners of a business, that's housing much more established older medicines than our current focus?

A: When you think about NHPL, which has our exciting new launches, incredible medicines, like our medicine, Cosentyx in immunology or Entresto for heart failure, we continue to invest in those new medicines and those new launches, wanting to bring them to as many people as we can within India. But then also, when you think about this Hyderabad center, or Novartis Corporate Center, which we really consider as one of the extensions of our headquarters in Basel and some of our major sites in East Hanover, this is now an 8,300-person operation in India.

We are growing 10%, I would expect this to be at over 9,000 people by the end of this year. And I would foresee us continuing to grow at a double-digit rate, as we continue to build out capabilities in R&D, IT and data science, as well as all of our core functions.

Two areas we are now looking to invest in Hyderabad, are our research, so basic research, which would be a significant expansion of our current footprint, as well as expanding our US marketing operations as well into India.

A: If you think about our total dollar investment right now, it's around $400 million annually we invest into India, we estimate that actually translates into around $1.5 billion of investment into the entire ecosystem. So we would expand 10% in terms of people, I don't know the exact dollar figure, but I think you could assume that continued steady investment into India through these various footprints.

A: India has become incredibly strategic. Now, as you know, over the last seven years, we have done this transformation of Novartis. We have done over $100 billion of transactions. We are a pure play medicines company. Last year, we had record performance and when you look at our performance --- 10 positive phase three trials, every one of those trials was touched by our Indian operations.

Every one of those trials, the submissions of those trials to global regulators happens through our Hyderabad centre. We get some of the best talent in the world here. And it's really where we see Hyderabad becoming a talent story, a transformation story, for enabling us to get more and more medicines to patients around the globe.

A: Manufacturing not a priority, no, I think technical development, as you mentioned, we have outstanding facilities in Genome Valley, which we continue to invest in. That, of course, enables production. But in terms of production facilities, we don't see a need at the moment for further investment really anywhere other than our existing sites.

A: So in India, I believe we are still the number one operator of clinical trials in the country and we have seen improvements with DCGI in terms of the speed at which clinical trial applications are being processed. Continue obviously, we always would want things to go faster. We see an improving environment in terms of operating our clinical trials here. India is generally involved in our key global clinical trials.

I think the next step, of course, is to continue to encourage the government to invest through the outstanding programs that we have now for the National Health Insurance Program, to enable investment into the next innovative medicines as that is always a struggle, given the price between generics and innovative medicines. But I think that's the next opportunity here in India, then we could grow our Indian operations through Healthcare Ltd from a $200-$300 million operation, we hope over time to a much larger business.