Novartis: Strengthening Its Infectious Disease Portfolio

Novartis’ efforts to boost its infectious disease portfolio have begun to make headway. The European Commission has cleared the company’s acquisition of Chiron, and Novartis has submitted its Idenix co-developed hepatitis B therapy telbivudine for European approval. These developments should stand Novartis in good stead for future growth, providing it can maximize upon the new opportunities.

The Chiron acquisition, which is expected to be completed during Q1 2006, will significantly enhance Novartis’ capabilities in vaccines, biopharmaceuticals and blood products, as Chiron is the world’s fifth largest vaccines manufacturer. The vaccines market is notoriously difficult to penetrate, but is experiencing rapid growth. Indeed, it is estimated that vaccines sales will more than double over the next five years, reaching approximately $20 billion by 2009/2010.

Significantly, Chiron is a key influenza vaccine provider and, with the world preparing for an imminent flu pandemic, demand for such vaccines is expected to be considerable over the next couple of years.

Currently, Novartis’ ID portfolio consists of antivirals, including Famvir (famciclovir) and Denavir (penciclovir), and antifungals, specifically Lamisil (terbinafine). The acquisition of Chiron will add to this, providing Novartis with two key anti-infectives – Tobi (tobramycin), an inhalable antibacterial used for infections associated with cystic fibrosis, and Cubicin (daptomycin) a novel antibacterial recently approved in the EU for the treatment of resistant and complicated skin and soft tissue infections.

In addition to strengthening its ID portfolio through acquisition, Novartis has also been heavily involved in R&D, with key product telbivudine being submitted for approval for the treatment of hepatitis B (HBV) infection. While there are currently several HBV treatment options, viral resistance to these therapies is common and there is a significant unmet need for more efficacious and tolerable drugs.

Telbivudine has demonstrated a superior response on all evaluated virologic markers compared to lamivudine (GlaxoSmithKline’s Zeffix), the current standard of care. The drug was submitted for US and EU approvals in January and February 2006, respectively, and is expected to be submitted in Asian markets by April 2006.

With these advances in ID, Novartis is expected to be generating approximately $2.9 billion in annual ID revenues by 2010, a significant increase compared to the $1.7 billion generated in 2004. However, while Novartis’ strategies have placed it on the road to growth, the company will have to ensure the opportunities being created in ID are successfully harnessed over the next five years.