Novartis U.S. Sales Force Increase Anticipates Up To Five NME Launches

Novartis is ramping up its U.S. sales force in anticipation of a spate of product launches, the company indicated at its 1999 sales and earnings presentation in London Feb. 17.

"In 1999 we increased the U.S. sales force by 36% and by the end of the second quarter we will have 4,000 sales reps in the U.S. market," CEO Daniel Vasella, MD, announced. Novartis has 13,000 reps worldwide.

At the end of 1999, Novartis had 3,130 U.S. reps, including 570 reps who market to specialists; by the second quarter of 2000, Novartis expects to add 830 reps, bringing the U.S. total to 3,960.

By that time, 800 reps will target specialists rather than general practitioners, reflecting the "need to make concerted efforts during the first 24 months of a product life cycle," Vasella said.

Visudyne, for age-related macular degeneration, was approved in Switzerland in December and EU-wide approval is expected in August. FDA deemed Visudyne "approvable" Feb. 11 and Vasella said approval was expected before mid-year. In the U.S. and Europe, over 400 lasers needed for the treatment procedure have already been installed. Zometa, a bisphosphanate for hypercalcemia due to cancer, may be approved in the third quarter.

For products that will be detailed to GPs, the Alzheimer's drug Exelon is "approvable" at FDA. It has been launched in 50 countries, Novartis noted. The diabetes therapy Starlix was filed Dec. 17 and may be launched before 2001 if it receives a 10-month review.

The company filed an NDA for the irritable bowel syndrome therapy Zelmac Feb. 14, and it could receive a priority review because it treats constipation-predominant IBS. Glaxo's Lotronex was recently approved for diarrhea-predominant IBS (¹ (Also see "Glaxo Lotronex Studies May Expand Market To Men, Teens, Pediatrics" - Pink Sheet, 14 Feb, 2000.)).

Half of Novartis' pharmaceutical promotional spending in 2000 will support its top five "growth drivers," Vasella indicated: Diovan, Cibacen/Lotrel, Miacalcic, Exelon, and Lamisil. In 1999, the promotional spend for the top five growth drivers was about 35% of the total, and in 1998 it was about 25%.

As part of its movement towards focusing on its top several products, Vasella announced Novartis' intent to "eliminate about 100 brands out of our pharmaceutical portfolio - 100 brands that in fact only make up about 5% of our sales."

Marketing & distribution represented 29% of 1999 spending for the pharmaceuticals division, compared with 18% for R&D expenditure.

Pharmaceutical marketing & distribution spending growth outstripped its growth in the company overall. Company-wide, Novartis increased M&D by 13%, including a 16% increase for pharmaceuticals, 9% for Ciba Vision and 7% for generics.

Total 1999 sales were $19.91 bil. (CHF 32.46 bil.), an increase of 2%. Novartis has announced plans to spin off its agriculture business and merge it with AstraZeneca's ag business to form Syngenta (² (Also see "Novartis, AstraZeneca Cede Seed Business: Two Pharma Pure Plays Created" - Pink Sheet, 6 Dec, 1999.)). Discounting the ag business, sales were $14.22 bil., a gain of 9%.

The pharma division comprised 46% of Novartis' operations in 1998 but will increase to 77% in 2000, after the Syngenta spin-off. The pharmaceuticals division posted a 4% sales increase to $9.57 bil.

The top-seller for 1999 was the immunosuppressant Neoral/Sandimmune, with CHF 2.01 bil. ($1.23 bil.), an increase of 5% despite generic competition. Vasella commented that the product "reached for the first time, and probably the last time, the CHF 2 bil. mark."

The angiotensin II inhibitor Diovan posted the largest gain-78%-on sales of $454 mil. Marketing spend for Diovan is expected to grow 41% in 2000. The bisphosphanate Aredia gained 44% to sales of $512 mil. The antifungal Lamisil grew 8% to $645 mil.

Sales of Novartis' second-largest product, Voltaren/Cataflam, declined 13% to $871 mil. due to generic competition and the introduction of COX-2 inhibitors. Novartis has its own COX-2 in Phase II trials.

Chief Financial Officer Raymund Breu said Novartis is at an "advanced stage" regarding a U.S. listing, which is expected by mid-year. Ten percent of Novartis' shareholders are U.S.-based, Breu said, adding that Novartis does not expect a dramatic increase. "The main objective of the U.S. listing is transparency and visibility," he said.