Hi everyone, I'm Nicolai Tangen, the CEO of the Norwegian Sovereign Wealth Fund and today I'm in really good company with Vasant Narasimhan, the CEO of Novartis. Vas has one of the most fascinating backgrounds in pharma. He is a trained physician who also worked on the front lines fighting tuberculosis and malaria in developing countries before rising to lead one of the world's largest pharmaceutical companies. We own 2.3% of Novartis, worth more than $5 billion, roughly 10,000 Norwegian kroner per Norwegian citizen. So Vas, big thanks for joining us.
Great to be here, Nicolai.
Um, just briefly to kick off for those who are not familiar with Novartis in 10 seconds, just what are your areas of focus?
Yeah, we're one of the largest biopharmaceutical companies in the world focused on innovative medicines in oncology, cardiovascular disease, neuroscience, and immunological diseases.
Very good. And we'll come back to many of those. Now you have a different background compared to many pharma CEOs. How do you think that has shaped your approach to leading Novartis?
Well, I think it's helped in many dimensions. Being a physician with a scientific background, I'm steeped in the R&D elements. I'm always thinking about how medicines impact patients, data-driven, and how they fit into clinical practice. Given that the core of a biopharmaceutical company is finding breakthrough innovations that matter for patients, it's a helpful background. I had to learn a lot about business, capital allocation, balance sheets, P&Ls, but the combination of medical and business background has served me well.
Yeah, absolutely. Well, to be frank, business is not so difficult compared to medicine. So you know the right things. Now, you were running the R&D efforts at Novartis before taking over as CEO. When you took over, what kind of changes did you implement?
The biggest change was to focus the company. Our best elements were in our R&D engine finding breakthrough medicines. At the time, we were a sprawling conglomerate with consumer health, generics, eye care. We focused as a pure-play innovative medicines company. It took about five or six years of spinning businesses: we moved out of consumer health, spun Alcon, spun Sandoz, sold our stake. Now our market cap is $235 billion, and adding back those companies gives almost another $100 billion. We unlocked a lot of value by focusing.
In the old days, you had stable revenue streams offsetting patent cliffs. Now you're a pure streamlined pharma company. What does that do to attitudes in the company?
There was a belief that stable businesses could offset R&D peaks and valleys. But we found distraction and inability to allocate capital effectively. Now we're appropriately diversified within biopharmaceuticals across technology platforms and therapeutic areas. Being diversified across business lines diluted our effort. Historically, Novartis managed patent expiries not because of other businesses, but because our innovation engine delivered the next wave of breakthroughs. We have to bet on ourselves, play to win, not play not to lose.
Do you think you structure your R&D differently compared to other pharma companies?
We do some things differently. We have a strategy and growth function that relentlessly looks at the outside world and challenges early-stage researchers. We radically focused on four therapeutic areas, cutting out others. We invest in technology platforms: we're world leaders in radioligand therapies, cell and gene therapies, RNA therapeutics. We believe in investing at the cutting edge to lead in the long run. By 2035, we need to be ahead of the curve.
If you were to rank your therapeutic areas by attractiveness, how would you stack them?
That's tough. Each area has different dynamics. Cardiovascular is large-scale population health. Neuroscience focuses on neurodegenerative and genetically driven diseases. Immunology has different challenges. I think we need to be strong in all four. It's important to remember how hard R&D is: unpacking two billion years of evolution to find a drug target and drug it is an incredibly daunting enterprise. It's a miracle that fits in the palm of your hand.
We're living at a time with more miracles because of science. What are the most significant scientific breakthroughs on the horizon that you're excited about?
A couple of things. First, early intervention to prevent disease. With aging populations and strained healthcare systems, we need to prevent disease. We're working on intervening earlier in cancers. Second, resetting diseases with cell and gene therapies. We've learned to deliver cures for genetic diseases. Now we can use cell therapy to reset the immune system for immunological diseases, turning back the clock by 15-20 years. Third, RNA therapeutics that allow infrequent dosing, like every six months or once a year, improving adherence. Fourth, radioligand therapies that target radiation directly to tumors. These are exciting areas.
How do you personally stay on top of this?
I'm quite passionate. My favorite meeting is our innovation management board, which I've chaired for 13 years. I read every document because that's what a company like ours has to deliver.
Tell me about that meeting. Is it the lifeblood meeting of the company?
I do feel it's the lifeblood. We review projects from research teams. The core members are about seven leaders: head of research, development, strategy, commercial, CFO, and myself. It can be two four-hour meetings or one six-hour meeting. I chair it, but my role is to get the best perspectives. We have teams present, and we've gotten better at debate. Debate is the only way to navigate complex topics. If it's just rubber stamping, you fall into biases.
So, I'm now your top cancer researcher. I come into the meeting with 200 pages of pre-read. What happens? Do I present or go straight to questions?
We've evolved. Now we assume the pre-read is read. The leader gives a three-minute summary. We put up a slide with reasons to do or not do the project. Our portfolio analytics group provides data. Then we discuss. My role is to get the room to debate whether we're funding the right project. Terminating projects happens, and it's important. You have to be intellectually honest and have the courage to stop. We celebrate the teams; it's not failure if the science didn't deliver.
I would have loved to sit in that meeting. Sounds more interesting than our investment meetings. Moving on, AI and digital: you've been a champion in digital transformation. What are the most important initiatives?
AI's impact in R&D will have the longest-lasting effect. There's also impact in operations, manufacturing, supply chain, finance. The biggest question is using AI to discover drug targets and optimize drugs. We're already using AI with Isomorphic Labs (Google DeepMind) to optimize candidate drugs, speeding up early development by years. The bigger question of unlocking biological processes with AI is further away.
You work with Microsoft and Palantir, and you mentioned Isomorphic Labs. How do you work with them? What do they do for you?
We're one of their two partners. We give them locks (targets) that we haven't been able to drug. They use AI to design new drugs, coming up with structures we haven't thought of. We have over six projects with them. The question is: can AI help us drug the undruggable?
Relationships with tech companies have become key in pharma. How do you see this changing going forward?
We've learned to find the right use cases. Palantir has been an amazing partner since 2017, helping build our data lake Data42. Microsoft Research Labs has been great. Amazon helped automate patient services. We need these partnerships because we don't have the technological know-how in-house.
Do you think you're better at working with tech companies than your competitors?
I don't know. You'd have to ask the tech companies. Novartis is willing to pioneer at the cutting edge, whether in therapeutic platforms, AI, data science. That means we face early challenges and failures, but that's our ethos.
You've been outspoken about challenges facing the European pharma industry. Tell us about the situation in no uncertain terms.
Europe has been the home of the pharma industry for 100 years, but European governments have commoditized innovation. They constrain budgets, prop up generics, and don't reward innovation. The market size in Europe is half that of the US and not growing, while the US and China are growing. Europe needs to act: stop capping drug prices, penalizing new technologies, and constraining innovation. Otherwise, the industry will leave. It's happening slowly: 30-40% of new drugs are not launched in Europe. Manufacturing is leaving. Novartis had four plants in the UK, now zero. It will take a crisis for governments to act.
Is the problem Brussels or individual countries?
Brussels says they don't control innovation ecosystems. Individual countries make their own decisions. But with a 27-member block, coordinated action is needed. Brussels should provide a framework to guide countries.
What would it take for countries to think more about Europe's common destiny rather than just their own situation?
It will take leadership. Some European leaders need to galvanize support. If each country sits in its corner, the story will keep unfolding.
Draghi wrote a report, but not much is happening. Are you surprised?
