While healthcare is expected to remain a growth industry well into the future, it also is a rapidly and dramatically changing environment, creating new opportunities and challenges. The aging population and increasing rates of obesity are leading to increased demand for healthcare. However, downward pricing pressures and healthcare reforms will also force companies to adapt their approach to reimbursement and build broader portfolios that can deliver on diverse healthcare needs.
Jimenez added, I believe that Novartis is among the best positioned companies in the industry to leverage this increase in demand and address the needs of patients and payors around the world.
The execution of the strategy is built on four elements; firstly the diversified healthcare portfolio provides a robust growth platform through focus on key healthcare growth sectors – Pharmaceuticals, Eye Care, Sandoz, Consumer Health and Vaccines and Diagnostics; Novartis’ industry leading innovation has generated an “innovation premium” to market growth and this is expected to continue with the current pipeline; a greater emphasis on productivity should generate improved profitability leading to strong cash flow returns. Cash flow is expected to drive re-investment for future growth and shareholder returns.
Novartis expects to invest in innovation at the high end of the industry over the next five years, at a time when peers are cutting spending in research and development. In addition, the Group plans to strengthen its commercial position in fast growing emerging markets and develop significant businesses in China, Russia, Brazil and India.
The company expects to continue investments to scale up its businesses for long-term growth, especially in emerging markets, and plans to do so through freeing up working capital as well as increase productivity which will provide the basis to reinvest into innovation and gain greater operating leverage.