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Jimenez aims for savings and marketing rejuvenation

Published on 28/01/08 at 12:11pm

The head of Novartis’ pharmaceutical business Joe Jimenez has set out his plans to make the division more efficient and profitable, and wants to renew the spirit of innovation in its marketing strategy.

Jimenez joined Novartis in April 2007 after a short stint at private equity firm Blackstone, and was also a non-executive member of AstraZeneca’s board. But most of the American’s business experience has been at food company Heinz.
Competing against global giants such as Unilever and Nestle, Heinz was forced to streamline its operations to maintain its competitive edge and profit margins, and as head of its European operations, Jimenez oversaw the divestment of business units and streamlined operations to make it a ‘leaner, more nimble, world-class competitor.’

Now Jimenez is overseeing a similar process at Novartis Pharma, and must deliver a target of $1.2 billion in savings in 2010 across the business unit. By far the biggest component of this total is in Sourcing – the purchasing of materials and services to support all facets of the business. Jimenez confirms that this includes the procurement of marketing services, but says the power will still rest in the hands of marketers.

“We have to change the way we operate in procurement,” he tells Pharmafocus.       “You can have a situation where a purchaser asks procurement to help negotiate on a deal once they have chosen what they want, which works OK. But if the procurement people can talk to the budget holder about their wider needs first, then they can usually find lots of savings and efficiencies from the beginning.

“But procurement isn’t going to be able to dictate the deal, and I want a clear quality target in terms of the decision-making. They will be collaborating with that budget holder.”

 Jimenez reveals he has managed to increase the projected savings since he took over in the pharma division from Thomas Ebeling in November and says of the $1.2 billion figure: “We should be able to beat it.”

The streamlining is being reflected right across the industry’s biggest players and across all divisions of Novartis. The company is outsourcing and offshoring back office functions, including its finance operations, which will be re-located to India and bring millions in savings.

But the changes are also an opportunity to improve the speed and quality of decision making. Novartis, like rivals Pfizer look set to strip out several layers of management in order to create a leaner organisation.  Jimenez says the review is meant to generate competitive advantage for Novartis and is keen to talk about ‘innovative commercial models’ to offer its customers.

One example is an existing deal in the UK with hypertension drug Diovan. Novartis is offering the UK national health service a money back guarantee that patients will reach an agreed blood pressure lowering target.

Jimenez says the UK is ‘one of the toughest primary care markets in the world’ and innovations like this have already helped it differentiate its offering and gain market share. The next drug which could benefit from this approach is Aclasta, the company’s new once-a-year injection to prevent osteoporosis.  Novartis now wants to negotiate with healthcare providers to persuade them their product, while much more expensive than similar oral treatment, is much better value because of its clinical data and lack of compliance problems.

Jimenez says he hopes to bring much of his experience in bringing innovative products to the market with Heinz to the pharma arena. In order to launch innovative marketing ideas which really work, they need to be tested and researched just like the drugs themselves.

 “We want to use different regional markets around the world as [kinds of] laboratories to test out new and innovative approaches to marketing, testing ideas in one market and then rolling it globally if it works well.”

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