Promised US tax cut could boost No­var­tis in­vest­ment

The Star Early Edition - - BUSINESS REPORT -

DON­ALD Trump’s plans to cut US cor­po­rate tax rates could trig­ger in­creased in­vest­ment in the US by No­var­tis, its chief ex­ec­u­tive said, de­spite the pres­i­dent-elect’s re­cent harsh words on drug prices.

“When we build a new man­u­fac­tur­ing site we think about the tax rate, we think about the econ­omy of the coun­try, we think about jobs, so a boom­ing US econ­omy would make the US more at­trac­tive for in­vest­ment,” Joe Jimenez said yesterday.

Trump un­nerved drug com­pany ex­ec­u­tives last week by say­ing the in­dus­try was “get­ting away with mur­der” on pric­ing and promis­ing to in­tro­duce more com­pe­ti­tion to drive down costs.

Jimenez said on the side­lines of the World Eco­nomic Fo­rum in Davos, that he ex­pected continued pres­sure on prices in the US mar­ket, but his com­pany was al­ready adapt­ing by shift­ing to out­comes-based pric­ing.

The Swiss drug­maker re­cently struck deals with two US in­sur­ers for its heart fail­ure drug En­tresto, un­der which pay­ments are cal­cu­lated based on any proven re­duc­tion in pa­tient ad­mis­sions to hos­pi­tal, not on the num­ber of pills con­sumed.

En­tresto has got off to a slow start, but Jimenez said there had been a “nice pick up in pre­scrip­tions” more re­cently. It will up­date in­vestors on prospects for the po­ten­tial block­buster when it re­ports full-year re­sults next week, he added. No­var­tis is hold­ing an R&D day to co­in­cide with its re­sults next Wed­nes­day, to high­light pipe­line prospects.

Th­ese in­clude a novel cell ther­apy for child­hood leukaemia called CTL-019, which Jimenez con­firmed was on track for sub­mis­sion to reg­u­la­tors for ap­proval early this year.

Another closely watched new drug is BAF-312 for sec­ondary pro­gres­sive mul­ti­ple scle­ro­sis. No­var­tis is dis­cussing with US and Euro­pean reg­u­la­tors whether it could file BAF-312 for ap­proval based on a sin­gle Phase III clin­i­cal trial, Jimenez said.

No­var­tis is look­ing to th­ese and other new prod­ucts for heart and eye con­di­tions to help off­set generic com­pe­ti­tion to its old blood cancer drug Glivec. “We have a num­ber of cat­a­lysts that are com­ing,” Jimenez said. “From the end of 2017 we will be com­pletely out from un­der that gener­i­ci­sa­tion and the com­pany should en­ter its next growth phase be­gin­ning in 2018.”

No­var­tis is cur­rently weigh­ing plans to sell its sub­stan­tial stake in Basel-based ri­val Roche, but Jimenez said he was in no rush, adding that re­cent weak­ness in Euro­pean drug stocks rel­a­tive to US ones meant the tim­ing wasn’t right just now. It built up its onethird stake in Roche vot­ing stock be­tween 2001 and 2003. – Reuters

PHOTO: REUTERS

No­var­tis should en­ter its next growth phase be­gin­ning in 2018, says its chief ex­ec­u­tive Joe Jimenez in Davos.

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