The Exchanges

Q company, regardless of industry has to think about, which is essentially what to proactively invest in and what to proactively opt out of, which killing things as we call it in the media, media business is a pretty hard thing to do. How do you think about that? And how do you tease apart the signal from the noise when you get a lot of inputs, both internally and externally?

A So we do currently in two levels. One is from an overall portfolio standpoint. Um, we've made the decision to really focus as a medicines company powered by advanced therapy platforms and data science. So in order to really make that happen, we transacted, uh, in 2018, uh, around fifty billion dollars of deals to really change the shape of the company. Uh, we took principle decisions to leave consumer healthcare cause we just didn't believe we would be a longterm leader in consumer healthcare. A decision to spin our Alcon business, which is to get out of medical devices and contact lenses. And alongside that, as we moved out of those other areas, we made significant investments of acquisitions in this next wave of therapy, cell therapy, gene therapy, in an area called radio drug conjugates, which is a nuclear medicine kind of, kind of area. So that was at one level, at the portfolio level, changing a Plus your trajectory to actually become a very diversified company. It really came out of a conviction in my mind that science is moving so fast. You have to focus your capital and really focus your energies. That's at the macro level. Now, when you, when you zoom into innovative medicines and we have to decide, okay, which therapeutic area do we stay in cardiovascular disease, or do we stay in ophthalmology? I mean, those are, those are pretty tough decisions because if you take d…

AI assessment note: “we took principle decisions to leave consumer healthcare cause we just didn't believe”

Q Can you give me just a concrete example of how that plays out with like a real disease?

A So there's a couple of really nice examples now with RNA interference. So one that, that, uh, our company is working on is RNA interference to impact a, a factor that's really a big part of heart disease. It's called LP little a. LP little a is, is actually, you know, thought to be one of the remaining risk factors for heart disease that have not been addressed. You know, cholesterol, everybody's of course addressed cholesterol extremely well, triglycerides. LP little a is another factor, but there's no, no, never been a medicine against it. And it turns out it's really hard to drug LP, LP little a. And so the only way to really target it turns out to be using RNA based therapies. These RNA based therapies, um, are, are able to block the production of, of the gene, uh, translation of the gene into, um, into the protein and then actually reduce the LP little a in the blood. And so this is one example of how we're trying to take this into an area where, where otherwise you wouldn't necessarily have a therapeutic against something that could have a big impact for patients with, With prior heart conditions.

AI assessment note: “our company is working on is RNA interference to impact a, a factor”

Q made this argument that it takes 10 years to build up a base, even longer, 2030 years, and yet you're also acquiring the expertise for the very new cutting edge things, which almost makes it seem like you don't seem like you don't have to even bother building up that base. Why not just acquire it? So how do you sort of navigate the build versus buy part of this?

A I think when you want to enter very new areas, um, sometimes it's prudent to ask yourself, does somebody, somebody have this much more figured out than you do? So if you take the example of gene therapy, we acquired a company called Avexis, though, really, I think the front leading edge gene therapy company. Now the scientists at Avexis, um, you know, they've been working at this actually in their academic labs for, for 25 years. I mean, they've been working on trying to hone How to use AAV vectors to get to the neuromuscular system of children to address, to address these issues. They had actually figured out the manufacturing. They built the manufacturing site. We were working on it on gene therapies ourselves in house. But when we looked at that, we said, this is an opportunity to really accelerate what we're doing. And so it made sense, I think, to, to, to go, um, to go external. There's always that balance. You know, we are a company that's very focused internally on research. We consistently invest at the high end on internal R and D simply because we believe that's the heart of the company. But what I'm trying to keep asking our people is if there's somebody out there who's got it better than us, let's just, let's just go get that and then we'll build off of it.

AI assessment note: “if there's somebody out there who's got it better than us, let's just, let's just go get that”

Q company, regardless of industry has to think about, which is essentially what to proactively invest in and what to proactively opt out of, which killing things as we call it in the media, media business is a pretty hard thing to do. How do you think about that? And how do you tease apart the signal from the noise when you get a lot of inputs, both internally and externally?

A So we do currently in two levels. One is from an overall portfolio standpoint. Um, we've made the decision to really focus as a medicines company powered by advanced therapy platforms and data science. So in order to really make that happen, we transacted, uh, in 2018, uh, around fifty billion dollars of deals to really change the shape of the company. Uh, we took principle decisions to leave consumer healthcare cause we just didn't believe we would be a longterm leader in consumer healthcare. A decision to spin our Alcon business, which is to get out of medical devices and contact lenses. And alongside that, as we moved out of those other areas, we made significant investments of acquisitions in this next wave of therapy, cell therapy, gene therapy, in an area called radio drug conjugates, which is a nuclear medicine kind of, kind of area. So that was at one level, at the portfolio level, changing a Plus your trajectory to actually become a very diversified company. It really came out of a conviction in my mind that science is moving so fast. You have to focus your capital and really focus your energies. That's at the macro level. Now, when you, when you zoom into innovative medicines and we have to decide, okay, which therapeutic area do we stay in cardiovascular disease, or do we stay in ophthalmology? I mean, those are, those are pretty tough decisions because if you take d…

AI assessment note: “So we do currently in two levels. One is from an overall portfolio standpoint.”

Q On that note, I do find it ironic. A big part of your business is still generics. So, I mean, what is that but a me too drug? Like, how does that fit into this big picture? Yeah.

A So, uh, you know, if you look overall at Novartis generics, you know, from a sales standpoint and value standpoint, um, is, is a small portion of the company, but you look at a volume standpoint, it's the biggest part of access. And so really what, what a generics, uh, our generics business does is take when medicines go off patent, you know, we then produce them at scale. I mean, we were the largest producer, for example, of penicillins in the world. I mean, so we, we have a huge role to play in providing access to medicines around the world. I mean, right now Novartis reaches about a billion patients a year, um, through, through our work, and a lot of that is through our Sandoz generics unit.

AI assessment note: “from a sales standpoint... small portion... volume standpoint, it's the biggest part of access”

Q made this argument that it takes 10 years to build up a base, even longer, 2030 years, and yet you're also acquiring the expertise for the very new cutting edge things, which almost makes it seem like you don't seem like you don't have to even bother building up that base. Why not just acquire it? So how do you sort of navigate the build versus buy part of this?

A I think when you want to enter very new areas, um, sometimes it's prudent to ask yourself, does somebody, somebody have this much more figured out than you do? So if you take the example of gene therapy, we acquired a company called Avexis, though, really, I think the front leading edge gene therapy company. Now the scientists at Avexis, um, you know, they've been working at this actually in their academic labs for, for 25 years. I mean, they've been working on trying to hone How to use AAV vectors to get to the neuromuscular system of children to address, to address these issues. They had actually figured out the manufacturing. They built the manufacturing site. We were working on it on gene therapies ourselves in house. But when we looked at that, we said, this is an opportunity to really accelerate what we're doing. And so it made sense, I think, to, to, to go, um, to go external. There's always that balance. You know, we are a company that's very focused internally on research. We consistently invest at the high end on internal R and D simply because we believe that's the heart of the company. But what I'm trying to keep asking our people is if there's somebody out there who's got it better than us, let's just, let's just go get that and then we'll build off of it.

AI assessment note: “if there's somebody out there who's got it better than us, let's just, let's just go get that”

Q Can you give me just a concrete example of how that plays out with like a real disease?

A So there's a couple of really nice examples now with RNA interference. So one that, that, uh, our company is working on is RNA interference to impact a, a factor that's really a big part of heart disease. It's called LP little a. LP little a is, is actually, you know, thought to be one of the remaining risk factors for heart disease that have not been addressed. You know, cholesterol, everybody's of course addressed cholesterol extremely well, triglycerides. LP little a is another factor, but there's no, no, never been a medicine against it. And it turns out it's really hard to drug LP, LP little a. And so the only way to really target it turns out to be using RNA based therapies. These RNA based therapies, um, are, are able to block the production of, of the gene, uh, translation of the gene into, um, into the protein and then actually reduce the LP little a in the blood. And so this is one example of how we're trying to take this into an area where, where otherwise you wouldn't necessarily have a therapeutic against something that could have a big impact for patients with, With prior heart conditions.

AI assessment note: “RNA interference to impact a, a factor that's really a big part of heart disease.”

Q classic NIH not invented here syndrome. And when you have a strong internal R and D culture, it does compete with NIH a lot. So the question that really begs is how you then with all these amazing acquisitions, Integrate them into the company and actually make sure the classic Chesbro study of all these acquisitions not being killed by the big company, like how do you balance that piece?

A So I think there's two things I'd say. One, one is as a R and D person, I have a sort of the ability to, to really get in there and, and have the discussions directly with the scientists and argue why we, we need to actually go external and really evaluate the case, um, with, with hopefully objective eyes. The other thing we've decided to do, at least with these very new tech, three new technology platforms is leave them as independent units and really let them grow up independent from the big R and D and manufacturing machine. Because I think exactly for that concern, it's very, it makes sense to let them build up and really, you know, incubate these new technologies, get them all sorted out. And then we can ask the question, what's the right setup down the line?

AI assessment note: “leave them as independent units and really let them grow up independent”

Q classic NIH not invented here syndrome. And when you have a strong internal R and D culture, it does compete with NIH a lot. So the question that really begs is how you then with all these amazing acquisitions, Integrate them into the company and actually make sure the classic Chesbro study of all these acquisitions not being killed by the big company, like how do you balance that piece?

A So I think there's two things I'd say. One, one is as a R and D person, I have a sort of the ability to, to really get in there and, and have the discussions directly with the scientists and argue why we, we need to actually go external and really evaluate the case, um, with, with hopefully objective eyes. The other thing we've decided to do, at least with these very new tech, three new technology platforms is leave them as independent units and really let them grow up independent from the big R and D and manufacturing machine. Because I think exactly for that concern, it's very, it makes sense to let them build up and really, you know, incubate these new technologies, get them all sorted out. And then we can ask the question, what's the right setup down the line?

AI assessment note: “leave them as independent units and really let them grow up independent”

Q by the way, find it very fascinating because I wasn't aware that you have a scientific background. It reminds me of this idea that we have around CTO led, you know, really having technical people at the helm. So I am curious about your view. I mean, besides being able to talk to the internal scientists, like how has that affected your own career and trajectory at Novartis so far?

A Given the company's heart is innovative medicine. And most of my background has been developed in drug development and really developing vaccines and then developing, um, various medicines. I think it gives me a really good insight into the heart of the company. Our key technology is if you think about our pipeline today, I know every asset, every clinical trial, I know all the clinical trial endpoints. So that I think gives you a certain, um, insight into where the company is heading. And also I think enables you to hopefully Hopefully guide the company into the right areas in the, in the, in the future. Um, I think it'd be self-serving to say that it's better to have an MD, uh, R and D person running companies, but I think it does give you a different perspective on an R and D industry like ours.

AI assessment note: “I think it gives me a really good insight into the heart of the company.”

Q On that note, I do find it ironic. A big part of your business is still generics. So, I mean, what is that but a me too drug? Like, how does that fit into this big picture? Yeah.

A So, uh, you know, if you look overall at Novartis generics, you know, from a sales standpoint and value standpoint, um, is, is a small portion of the company, but you look at a volume standpoint, it's the biggest part of access. And so really what, what a generics, uh, our generics business does is take when medicines go off patent, you know, we then produce them at scale. I mean, we were the largest producer, for example, of penicillins in the world. I mean, so we, we have a huge role to play in providing access to medicines around the world. I mean, right now Novartis reaches about a billion patients a year, um, through, through our work, and a lot of that is through our Sandoz generics unit.

AI assessment note: “we have a huge role to play in providing access to medicines around the world.”

Q If you were to write a letter to grad students or just people kind of entering the space, like what kind of skills would you encourage them to have? Like if you could have added things 20 years ago, what would you tell them to do?

A I'd say focus a lot on how you lead people. Uh, I think, I think there's so much of a focus on technical expertise and thinking that that's going to get you there. It matters, of Of course, competence matters tremendously, but what really makes the difference is how you, how you lead people, how you lead yourself. And I think investing more in that would pay off a lot. I think the other thing I'd say is don't underestimate the importance of getting multidisciplinary exposure. I mean, I think most people get worried when they have to make those jumps. I've had a career at Novartis where I've, I've worked in, in commercial areas and marketing areas. So most of my time in R and D Worked across four different areas of the business. And so with that diversity of experiences, it enables you, I think, to, to take the right decisions. There was one other point I was just, I wanted to raise. I think what's often lost on people, because you mentioned the miracles, right?

AI assessment note: “I'd say focus a lot on how you lead people.”

Q by the way, find it very fascinating because I wasn't aware that you have a scientific background. It reminds me of this idea that we have around CTO led, you know, really having technical people at the helm. So I am curious about your view. I mean, besides being able to talk to the internal scientists, like how has that affected your own career and trajectory at Novartis so far?

A Given the company's heart is innovative medicine. And most of my background has been developed in drug development and really developing vaccines and then developing, um, various medicines. I think it gives me a really good insight into the heart of the company. Our key technology is if you think about our pipeline today, I know every asset, every clinical trial, I know all the clinical trial endpoints. So that I think gives you a certain, um, insight into where the company is heading. And also I think enables you to hopefully Hopefully guide the company into the right areas in the, in the, in the future. Um, I think it'd be self-serving to say that it's better to have an MD, uh, R and D person running companies, but I think it does give you a different perspective on an R and D industry like ours.

AI assessment note: “I think it gives me a really good insight into the heart of the company.”

Q I love that. And that's a great example. And by the way, LP sounds like a name of a rapper. And just remind me really quickly, like, you know, obviously I know what I learned about RNA from like biology class in the sense of proteins, but can you give us a little bit more distinction about what you, what's unique about RNA based therapeutic modalities?

A Absolutely. So when you think about the history of our industry, maybe another way to describe the trend I see that's happening is we used to be about chemicals, the small molecules. So for probably a hundred years, I mean, many, most of the pharmaceutical companies, uh, had their, their basis in the chemicals industry. And so we made these small molecules that happened to have various effects on the body. And over a hundred years, we figured out we could really target what those chemicals do. Around the night, late 19 eighties, we realized you could actually make large molecules, large proteins. And make them be therapeutic. So this is antibodies and recombinant proteins. Um, and that led to a whole new renaissance in, in our industry. And so over the next, next 20 years and up to today, probably still the largest category is so-called biologic medicines. These are antibodies and proteins. What I see happening now is a shift to a next set of modalities that move beyond small molecules and proteins. And that is now really touching other elements of what happens in a cell. So One is RNAs, which is really the way DNA gets translated into a protein and goes through an RNA. So that's one new, new modality. Another modality, both of them really are about editing DNA in different ways. One is to take the cells out of the body and edit the DNA of the cell or, or enable the cell to pro…

AI assessment note: “a shift to a next set of modalities that move beyond small molecules and proteins”

Q Oh, interesting. Are you allowed to share those parameters?

A I don't know them off the top of my head, but, um, you know, we really try to score the score, the medicines to say, is this really transformative? So you have a financial score, you have a transfer transformational score. And then another kind of a subjective element is, does this strategically fit? So is it in one of our core therapeutic areas? So if somebody comes with a great breakthrough, which happens not, not, um, quite often in an area that we're not in, that's, that's the toughest one because it's a big breakthrough, but we're not in this space. And what do we do now? Right. And do we really want to build this up or do we want to just send it to an out license to a fund or, or, or do something else? Um, those are, those are, those are tough discussions, but we try to be disciplined because it's again, the patience and being really sure you build depth in your key areas. Because if you take another program on, that means that there's another program you have to stop. I mean, it's a zero sum game for us.

AI assessment note: “you have a financial score, you have a transfer transformational score”

Q I love that. And that's a great example. And by the way, LP sounds like a name of a rapper. And just remind me really quickly, like, you know, obviously I know what I learned about RNA from like biology class in the sense of proteins, but can you give us a little bit more distinction about what you, what's unique about RNA based therapeutic modalities?

A Absolutely. So when you think about the history of our industry, maybe another way to describe the trend I see that's happening is we used to be about chemicals, the small molecules. So for probably a hundred years, I mean, many, most of the pharmaceutical companies, uh, had their, their basis in the chemicals industry. And so we made these small molecules that happened to have various effects on the body. And over a hundred years, we figured out we could really target what those chemicals do. Around the night, late 19 eighties, we realized you could actually make large molecules, large proteins. And make them be therapeutic. So this is antibodies and recombinant proteins. Um, and that led to a whole new renaissance in, in our industry. And so over the next, next 20 years and up to today, probably still the largest category is so-called biologic medicines. These are antibodies and proteins. What I see happening now is a shift to a next set of modalities that move beyond small molecules and proteins. And that is now really touching other elements of what happens in a cell. So One is RNAs, which is really the way DNA gets translated into a protein and goes through an RNA. So that's one new, new modality. Another modality, both of them really are about editing DNA in different ways. One is to take the cells out of the body and edit the DNA of the cell or, or enable the cell to pro…

AI assessment note: “One is RNAs, which is really the way DNA gets translated into a protein”

Q and ML and data. I mean, it's not a question of if, when, it's how. The question I have, because quite frankly, it's a very hype topic too, and people sort of Promise all kinds of things when they talk about applying AI and ML to medicine. I'm very curious from your take as a head of Novartis, like where do you see the strongest applications of AI and ML?

A Well, I have to first say, I completely agree about the hype cycle here. I mean, as we've gotten quite scaled and working on digital health and data science, we've learned that there's a lot of, a lot of talk and very little in terms of actual delivery of, of, of impact. Um, but we've learned a lot. I think the first thing we've learned is the importance of having outstanding data to actually base your ML on. And, um, in our own hands, we've, in our own shop, we've been working on a few big, big projects. Um, and we've had to spend most of the time just cleaning the data sets before you can even run the algorithm. That's just taken us years just to clean the data sets. And I think people underestimate how little clean data there is out there and how hard it is to

AI assessment note: “we've had to spend most of the time just cleaning the data sets”