Novartis has, ahead of the publication of its full-year financial results, announced a restructuring of its US operations in anticipation of future generic pressure and reduction in demand for Rasilez/Tekturna.
IHS Global Insight Perspective | |
Significance | Swiss firm Novartis plans to reduce its US workforce by approximately 1,960 positions in anticipation of Diovan's patent expiration and the expected reduction in demand for Rasilez/Tekturna following the termination of the ALTITUDE clinical study. |
Implications | The restructuring of its US operations is planned to take place in the second quarter of 2012 and should result in an exceptional charge of approximately USD160 million during the first quarter. In addition to that, reassessment of the future sales potential of Rasilez/Tekturna has led to an exceptional charge of approximately USD900 million in the fourth quarter of 2011. |
Outlook | The planned restructure is expected to trigger full-year savings of approximately USD450 million in 2013. |
Swiss pharma giant Novartis today (13 January) announced that it is about to restructure its General Medicines division in the United States in anticipation of the Diovan (valsartan) patent expiration and expected reduction in demand for Rasilez/Tekturna (aliskiren) following the termination of the ALTITUDE clinical study. The firm will reduce its US workforce by approximately 1,960 as soon as the second quarter of 2012. Novartis's US field force is planned to be reduced by approximately 1,630 positions and its headquarters will be reduced by about 330 positions.
Diovan Patent Expiration, Termination of ALTITUDE
The year 2012 will be marked by the loss of US patent exclusivity for Diovan, Novartis's best-selling medicine. Although generic competition has already started to affect Diovan's performance in Europe, its US revenues will only commence to erode in September 2012 with the loss of patent exclusivity. The job cuts announced today by Novartis were expected, but come earlier than anticipated due to the recent termination of the ALTITUDE study, which accelerated the firm's plans. The termination of the placebo-controlled Phase III trial was recommended by the independent Data Monitoring Committee overseeing the study, due to a lack of benefit with aliskiren and because there were more cases of stroke, renal complications, hyperkalaemia and hypotension in patients receiving aliskiren compared with patients on placebo (see Switzerland: 3 January 2012: EMA Launches Review of Novartis' Rasilez on Safety Concerns). The study was investigating Rasilez/Tekturna in combination with either an angiotensin-converting enzyme (ACE) inhibitor or an angiotensin receptor blocker (ARB) in a high-risk population of patients with Type 2 diabetes and renal impairment. Whereas the termination is expected to affect the sales volume of Rasilez/Tekturna, the recent review initiated by the EMA's Committee for Medicinal Products for Human Use on aliskiren-containing medicines could result in a removal from the market if the committee considers the balance of aliskiren's benefits and risks to be negative. In fact, Novartis can not only expect a reduction in demand for Rasilez/Tekturna, but also for its other aliskiren-containing medicines approved worldwide. For now, Novartis recommends that hypertensive patients with diabetes should not be treated with Rasilez/Tekturna in combination with an ACE-inhibitor or ARB.
Rasilez/Tekturna-based products include:
- Rasilez/Tekturna
- Rasilez HCT/Tekturna HCT, a single-pill combination of Rasilez/Tekturna and hydrochlorothiazide (HCT)
- Valturna, a single-pill combination of Rasilez/Tekturna and valsartan, available in the United States only
- Rasilamlo/Tekamlo, a single-pill combination of Rasilez/Tekturna and amlodipine
- Rasitrio/Amturnide, a triple combination of Rasilez/Tekturna, amlodipine and HCT
Outlook and Implications
The restructuring is expected to result in full-year savings of approximately USD450 million in 2013, with half of that amount expected to be realised in 2012. Novartis has already ceased all promotion of Rasilez/Tekturna-based products for use in combination with an ACE inhibitor or ARB, and will especially not promote Valturna. In 2011, total sales of Rasilez/Tekturna-based products reached USD449 million in the first nine months, representing approximately 1% of Novartis Group sales. In that sense, the patent expiry of Diovan in the US is expected to have a much stronger impact on group sales. In the first nine months, Diovan generated blockbuster sales for Novartis, representing about 17% of its total sales (USD1.4 billion).