›CEO to Cede Some Duties to Drug Maker's First Operations Chief
By JEANNE WHALEN and ANITA GREIL OCTOBER 21, 2008
Novartis AG's long-serving chief executive officer, Daniel Vasella, is giving up some duties by naming Joerg Reinhardt to the new post of chief operating officer, an appointment that makes Mr. Reinhardt a strong contender to eventually become CEO of the Swiss pharmaceutical giant.
Dr. Vasella, who helped create Novartis from a merger of Ciba-Geigy and Sandoz 12 years ago and has led it ever since, has a new contract with Novartis's board that extends his tenure as chairman and chief executive through early 2010. Some analysts and investors expect Dr. Vasella, 55 years old, to relinquish the CEO role at some point and remain chairman. Some shareholders have pushed the company to split the chairman and CEO duties, as rival drug company Roche Holding AG did last year, to improve corporate governance.
"I have no plans to change anything," Dr. Vasella said in an interview Monday. On a conference call following the release of third-quarter earnings and a management reshuffling, he said Novartis's board regularly considers splitting the jobs, "and if ever the board feels this is appropriate, it will split the jobs."
Dr. Vasella, one of the longest serving and most outspoken chiefs in the industry, said Mr. Reinhardt, 52, will assume some operational duties on Dec. 1, freeing the CEO to focus on strategic aims, such as improving research and development and expanding in developing markets such as China.
As the prescription-drug business grows more difficult, with tough competition from less-expensive generic drugs, Dr. Vasella has pushed Novartis to invest in new areas of health care, such as generics. But a wider management reshuffling disclosed Monday -- the company's second in a year -- suggests that that strategy isn't going as smoothly as Novartis had hoped.
Dr. Vasella said the current global financial turmoil could cause some consumers to cut drug spending, particular for over-the-counter products. But he said medicines are "relatively resistant to recessions. I anticipate we will see some impact, but not to the degree of other industries."
Mr. Reinhardt, a media-savvy German with a doctorate in pharmaceutical sciences, has long been one of Dr. Vasella's closest lieutenants. When Novartis bought full control of the vaccine maker Chiron Corp. several years ago, Mr. Reinhardt ran the business. Before that, he was head of drug development when Novartis launched a number of new products. He joined Sandoz in 1982.
Among other management changes laid out Monday, Andreas Rummelt was removed from Novartis's generic-drug unit, Sandoz. Novartis has invested heavily in generics, but Sandoz has failed to release new products in the U.S. this year, forcing Novartis to lower its sales forecast for the division. Jeff George, head of emerging markets in the branded prescription-drug unit, will take over at Sandoz, while Mr. Rummelt will become group head of quality assurance and technical operations.
Thomas Ebeling, once seen as a potential successor to Dr. Vasella, is leaving the company a year after he was demoted from head of the prescription drug unit to head of the much smaller consumer health-care unit[#msg-23784999].
Andrin Oswald, who just months ago took a top job in drug development, will succeed Mr. Reinhardt as head of vaccines and diagnostics.
Novartis also said it would cut 550 sales jobs in the U.S., and reorganize the remaining sales team into five regional units.‹
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