Biotech Values

[DewDiligence]

One needs some context to appreciate what this WSJ profile
of Dan Vasella is talking about. At the end of yesterday’s NVS
press conference (not the CC for investors), Vasella issued a
strongly political statement in reply to a rhetorical question
asking if NVS had lost its Swiss roots. The questioner noted
that NVS’ new executive committee contains only one Swiss
national (see #msg-45887968). It sounds to me as though
Vasella may be interested in a job on Switzerland’s Federal
Council, the country’s unorthodox seven-member executive
branch. (There is no president or prime minister.)

http://blogs.wsj.com/source/2010/01/26/vasellas-impeccable-timing

›Vasella’s Impeccable Timing

January 26, 2010
By Anita Greil

Novartis had quite a surprise in store for its shareholders this morning. The Swiss drug maker’s record results were overshadowed by news that Daniel Vasella is handing over the CEO title to Joe Jimenez, an American who joined Novartis a bit more than two years ago after a long career in the consumer goods industry.

Vasella has held the strategic as well as the executive top jobs at Novartis for 11 years. But recently he has come under pressure from vocal shareholders to split the roles. It was felt that holding both the Chairman of the board and the CEO title unified too much power in just one person and is not befitting to a company of Novartis’ size.

The pressure increased in 2008, when cross-town rival Roche appointed Severin Schwan as CEO, thereby doing away with the double-role at the top for Schwan’s predecessor and still Chairman Franz Humer. This change came close on the heels of Nestle’s decision to separate the combined CEO-Chairman structure in 2007, and marked the beginning of the end of this style of boardroom structure for Swiss companies.

The decision to appoint Jimenez as the new CEO of Novartis was only just taken yesterday, Vasella told reporters at a news conference in Basel. Though it had obviously been in the making longer than that, he conceded, saying he had started to think about relinquishing the dual role at the top about a year ago.

Vasella could hardly have chosen a better time for stepping back from day-to-day management. Novartis’ most recent earnings report confirmed that the Swiss group is currently the fastest-growing among the big drug companies, and one that has a relatively full pipeline of potential new drugs.

While he’ll leave it up to his successor to wrap up the purchase of U.S. eyecare company Alcon, the foundations for integrating this profitable business into Novartis have been laid.

What remains to be seen, however, is in which direction Vasella will be pulling when he steps down as CEO on Monday. Some onlookers have expressed skepticism as to whether Vasella–who has a reputation of being a micro-manager–will be able to let the new leadership team run free.

But they forget that Vasella may have bigger ambitions than looking over the shoulder of a competent management team. And they neglect his genuine interest in improving the lives of people in need of medicines, which may well lead him to eventually assume a role in the public sector.‹