Government Partnerships Are Key to Growth, Says Novartis President for Latin America

Bloomberg Línea — Public investment in pharmaceutical drugs and medicinal therapies should not only be seen from the perspective of improving patients’ health but also as a means to reduce hospitalization rates and other associated costs. That’s what Pasquale Frega, President of Novartis Innovative Medicines for Latin America and Canada, put forward during an exclusive interview with Bloomberg Línea.

“With the pandemic, we saw governments finally realize that investing in health is not only good for patients but also for the economy itself,” said the Italian executive.

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The industry’s key players are noticing that governments are developing models to reduce the time needed for large pharmaceutical companies to recover investments of as much as $10 billion in new therapies. The company has a team of 70 professionals in Brazil alone, and thousands worldwide, dedicated to thinking about how to make these therapies more accessible.

For Novartis, a global giant with a market value of $225 billion and headquartered in Basel, Switzerland, future growth depends not only on research and development (R&D) investment but also on new distribution models necessary to reach millions of people. In this regard, public-private partnerships with governments drive the group’s expansion.

However, there are still challenges, such as the limited budgets of regulatory agencies and the time it takes to analyze and ultimately approve new drugs and therapies.

The executive also spoke about the innovations and trends that are shaping the pharmaceutical industry’s research efforts and what is expected to come to the market in the coming years.

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“More and more, R&D programs are adapting to specific subsets of patients, often with the support of genetics-based diagnostics, so these therapies target a limited number of patients, but are sometimes even curative. This is a major trend,” he said.

“The second major trend is finding solutions to the leading causes of death or the major areas of unmet medical needs, where there has been little development in recent years. One of them, for example, is resistance to antibiotic drug therapy,” he added.

See below for the interview with Pasquale Frega, edited for clarity:

For Novartis Innovative Medicines, what are the main growth opportunities, and what is the strategy to achieve them?

First and foremost, Novartis believes that public-private partnerships are the main driver of its future growth. What is clear is that there are two elements. One is the fact that health is, in any economy, the main driver of growth, and this is something that governments have not yet really included in their agenda to accelerate investment.

The pandemic has changed this situation somewhat, and now we see that governments finally realize that investing in health is not only good for patients but also for the economy itself. So the question is: how can a government or institution worldwide drive a health agenda without public-private partnerships? And we see more and more collaborations to combat diseases and the leading causes of death. The pandemic, of course, was a great example.

And Novartis is shaping its agenda around the opportunity to come, for example, to Brazil or Latin America and drastically change the way cardiovascular diseases or cancer are treated through collaboration with institutions.

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And what is the second element?

It’s pure innovation. When we look at the diseases we are involved in, we like to be the first to market a new product or be in market segments where we can truly make a difference. Cardiovascular diseases, cancer, especially breast cancer, are the areas where we are accelerating our presence and investments.

There is a second path where Novartis wants to grow, which is technology. And it’s disruptive technology. We had a recent example with Zolgensma for SMA [Spinal Muscular Atrophy], for those young patients whose lives will be saved through gene therapy. There is a second example that we hope will also arrive in Latin America soon, which is radioligand therapy. We have incredible data on prostate cancer with a product called Pluvicto.

Is the partnership with governments necessarily dependent on investment, or can it be achieved in other ways?

First of all, for me, there are two areas: one is technology, and the other is public-private partnership. What technology offers to healthcare systems around the world are significant opportunities to invest more effectively. It’s about thinking about what can be leveraged from big data in healthcare, from this enormous amount of data that is there and nobody exploits.

This is an area where I have seen significant improvements in developing countries. It has changed the way healthcare is provided, for example, to certain categories of patients.

And the second area is, once again, collaboration and partnership, not only with pharmaceutical companies but with all stakeholders in the healthcare system. I’ll give the example of cardiovascular diseases.

We all know that cardiovascular diseases are the deadliest. If we look at the statistics, Latin America is well above the global average. And cardiovascular diseases are not only the leading cause of death but also have a billion-dollar impact on healthcare spending.

By correcting the way a patient is treated through technology, through the new therapies available, it will not only improve the patient’s outcome but also the healthcare service and reduce spending in other areas, such as hospitalization and other types of patient care. Typically, pharmaceuticals only represent between 7% and 10% of the total health budget.

Are there countries that have adopted this strategy and are considered examples to follow?

There are great examples in most European countries. The most advanced systems are those of the Nordic countries: Sweden, Finland, Denmark, Norway. For example, I am Italian. If you think about Italy, it’s a country where regions (and there are 20 regions in the country) have a lot of autonomy. That’s why they are closer to what happens in that sense in terms of healthcare delivery, and there we see many great examples where strong collaboration between the political, academic, medical, and business levels has changed ecosystems for some categories of patients.

This is changing. Technology is playing a significant role. And once again, the impact of COVID has changed the agenda of decision-makers in most countries. We are in a new era, and we all need to understand what it takes to make healthcare more accessible and sustainable. It’s not just about investing more but investing better.

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Are there other ways to make advanced drugs and therapies accessible to people who cannot afford them?

One of the efforts that the industry is undertaking in collaboration with governments is to change the paradigm of how products are made available. For a pharmaceutical company to bring a product to market, there is an enormous investment required, which probably takes between seven and eight years and costs between US$5 billion and US$10 billion. Once the product is available, the company typically has eight years before it becomes a generic drug, and during that time, it has to recoup the investment.

The great service to humanity is that this product, once it becomes generic, becomes incredibly affordable in terms of price, as it should be, and becomes available to many more millions, perhaps billions, of patients. Now, in those eight years, you have to make the investment profitable.

And is it possible to accelerate the returns that the company needs?

Normally, volumes [of sales] are incredibly low at the beginning, and then there is an acceleration, which usually lasts for five years. During that period, price flexibility is limited. Now, how to change that curve and make the medication available to more patients earlier and at a lower price is a matter of public-private partnership.

We have a new product that, with just two injections a year, drastically reduces uncontrolled cholesterol levels in patients who have already had a first cardiovascular event. It doesn’t make sense to treat 2% of the population in the first year and 10% in the third, which is the normal uptake of the product. If we can make it available to as many patients as possible from the beginning, the industry can reduce the price even in the initial phase of this eight-year window.

Then there’s another element, which is the flexibility we have at Novartis to make innovation available quickly, with agreements to make it accessible to the population.

The biggest example, not only in Brazil but probably in many parts of the world, is what our team has achieved with Zolgensma and its inclusion in the public system. Patients will receive a single injection in one day, and the effect will last for several years, but the total cost will be recouped in five years if the benefit is obtained during this period.

Are there teams dedicated to these strategies to expand the market?

Yes, we have thousands of people worldwide working on global strategies and then on how to enable daily access to medicines and therapies. In Brazil, there are 70 people.

In other words, it’s not enough to be an innovative pharmaceutical industry in terms of research, but you also have to be efficient in terms of distribution.

Sometimes there are barriers. I’ll give you three examples. In Brazil, I think in the period between 2020 and 2021, only 30% of global innovation was available in the country, and that’s because there are difficulties and the time needed to go through the [analysis] process with Anvisa. In Mexico, the local agency faces a backlog of around 6,000 analyses and cannot process them on time due to limited resources.

We all respect the analysis processes because they involve products entering the human body. They need to be reviewed. But in Colombia, for example, the agency suffered some hacker attacks last year and didn’t resolve the issue. And this happens in many other parts of the world, not just in Latin America. So we have to fight the inefficiency of public administration, which is the first barrier, once again, that we face in terms of access to medicines.

The second is the public administration’s view that when you put innovation on the table, it’s a problem, not an opportunity because you have to look for budget. And that, for me, is one of the most frustrating aspects, I would say because a company spends between US$5 billion and US$10 billion and works for eight or ten years to develop a product and then brings it to market, but there are those who don’t want to spend time [on analysis] or don’t have a budget.

If we consider pharmaceutical spending as a way not only to improve patient outcomes but also to reduce hospitalization and all the other aspects that generate high costs, it would be easier and faster.

What medications and therapies can patients expect in the coming years?

If we look at Latin America, short- to medium-term opportunities are in the cardiovascular and oncology areas. In cardiovascular, as I mentioned, there are these products that, with just two injections a year, allow for a rapid response in patients who do not respond to statins, with a reduction in cholesterol. These are patients who have already had a cardiovascular event and, therefore, have a high risk.

The second is breast cancer. Recent data has been published on the impact of one of our products, Kisqali, on young women who can now stop chemotherapy and completely change their expectations of survival but also of quality of life.

The third is prostate cancer and radioligand therapy. For 20 years, there has been no improvement in patient outcomes for prostate cancer patients who have failed one or two lines of therapy. The new technology, which also has limited therapy duration as it’s four to six cycles, dramatically extends patient survival. And prostate cancer is the leading cause of death among men.

These are therapies that have been approved or are in the process of being approved for use in Brazil.

And what about medications and therapies that are in development, in the testing phase? What are the big promises?

We have a hundred development programs, I could go on for hours. It’s hard to summarize. But there is an area that will probably be our next big target: patients who do not respond to any antipsychotic agent. So we have a whole population with schizophrenia, depression, who do not respond to any available therapy. If we can develop it, it will be another area of significant unmet medical need in which we want to play a role.

Thinking about the next five to ten years in the pharmaceutical industry, and not just at Novartis, what major advances can we expect?

First of all, let’s say that two big games are being played. One focuses on personalized therapies for each patient, which provide great efficacy and safety. Increasingly, the programs that are being developed are tailored to specific subsets of patients, often supported by genetics-based diagnosis, so these therapies target a limited number of patients but are sometimes even curative. This is a major trend in R&D.

The second major trend is finding solutions to the leading causes of death or the major areas of unmet medical needs, where there has been little development in recent years. One of them, for example, is resistance to antibiotic drug therapy.

One of the big fears of governments around the world is that the next pandemic will not be viral but bacterial. We do not research antibiotics enough. We see governments around the world funding new antibiotic research because it is something that has been neglected for the past 20 years. So the pandemic plays a significant role in moving us towards prevention rather than seeking a solution when it’s too late.

On the other hand, there is a subset of neglected patients. There are about 8,000 rare diseases on the list, and we have therapies for 150 of them. So there are still over 7,800 rare diseases that do not have a therapeutic solution.

Why did Novartis decide to create a division called Innovative Medicines?

We had two divisions: one that was more focused only on oncology and hematology, and another historically called general medicine because it had products mainly aimed at primary care. Over time, the R&D portfolio and the marketed product portfolio of the general medicine division became increasingly specialized products used mainly in hospitals or in cases where diagnosis is made in a hospital setting. This business became very similar to oncology, so it no longer made sense to have two divisions. That’s why these two divisions were merged into one called Innovative Medicines.

Innovative Medicines also existed because we have Sandoz, a generic therapy company. It is well known that Sandoz will be spun off and become an independent unit, so Novartis will have completed its transformation from a company that, just a few years ago, operated in Animal Health, Vaccines, OTC products, ophthalmic business results, and other divisions to one that focuses exclusively on innovative medicines.

In other words, did Novartis decide to become a more specific-focused company?

In the first decade of this century and the last of the last century, it was understood that diversifying your business was a way to reduce risk. So there were many companies that produced everything from toothpaste to cancer drugs. And that has changed because the pace of innovation has accelerated. If a company wants to be good and successful, it has to be focused.

How important is Latin America to Novartis?

Not only from Novartis’ perspective, but Latin America is a very interesting area in the markets because we are seeing a continuous increase in healthcare investments, both public and private. Compared to other geographies like Europe, we have significant growth in the region because there is a demand for healthcare. The pandemic has accelerated the need for governments to find solutions to treat more and more patients, and that’s why we are very committed to the region, not only to Brazil. Novartis is one of the major companies that have decided to maintain a very significant presence in the region, so we will grow and continue to invest significantly in Latin America. I think there is an interesting window of opportunity because, in Asia, China is overshadowing all other markets. There are geopolitical tensions between Europe, Russia, China, and the United States, while Latin America could really be the next growth path because, from that perspective, we could see some reallocation of industry and other activities.”