Novartis Aims to Counter $9 Billion Patent Cliff with 20 Blockbuster Drug Launches by 2026

Novartis to Lose Exclusive Market Rights for Several Blockbuster Drugs in the Next Five Years, Including Heart Failure Treatment EntrestoNovartis will lose exclusive market rights for several blockbuster drugs over the next five years, one of the most significant being Entresto, its heart failure treatment. This drug alone generated $900 million in sales just in the third quarter of 2021, making it Novartis' second-highest selling drug. Not only Entresto, but several other marketed drugs from Novartis are also set to face generic competition before 2026. These impacts are expected to result in a patent cliff of nearly $9 billion for Novartis by 2026 compared to its 2020 revenue.

Nevertheless, Novartis CEO Narasimhan is highly confident in the future pipeline and promised at the R&D Day held on December 2, 2021, that revenue would grow by at least 4% annually over the next five years. Novartis can achieve a growth rate of at least 1.5% annually from the sales of already marketed drugs, Narasimhan further pointed out that Novartis will launch 20 blockbuster drugs with sales exceeding one billion US dollars before 2026. Let’s take a look at where these blockbusters will come from.

Novartis' Existing Pipeline

One of the drugs leading Novartis' major product launches is Leqvio, a cholesterol therapy awaiting an FDA review decision by January 1, 2022. Other upcoming blockbusters include Scemblix, a newly FDA-approved leukemia therapy, Lu-PSMA-617 for prostate cancer radiotherapy, and tislelizumab, a PD-1 inhibitor developed in collaboration with BeiGene.

At the same time, Novartis' top-selling drug Cosentyx recently achieved positive data in two Phase III clinical trials for the treatment of moderate to severe hidradenitis suppurativa. Novartis said on Thursday that it is currently planning to submit an FDA application in 2022.

Novartis also hopes to repurpose its monoclonal antibody canakinumab, used for treating autoinflammatory diseases, as an adjuvant therapy for non-small cell lung cancer post-surgery. This clinical trial is in Phase III, and Kisqali is also being tested for its potential adjuvant use in breast cancer. Additionally, Novartis is conducting clinical trials on the intrathecal gene therapy Zolgensma for elderly patients with spinal muscular atrophy.

Mergers and Acquisitions of New Projects

All of the above potential blockbuster drugs come from Novartis' existing pipeline. The industry is also highly focused on how Novartis plans to utilize the $20.7 billion in cash proceeds gained from the sale of its long-term stake in Roche.

Novartis CEO Narasimhan said on Thursday that the company's management is talking to key shareholders for their input and expects to make a decision on capital allocation in the coming months. CFO Harry Kirsch noted that half of the investors currently support a large-scale share buyback, while others are urging the company to invest in mergers and acquisitions of new projects or companies. Although Kirsch did not specify the scale of Novartis' upcoming mergers and acquisitions, he stated that Novartis would not engage in large-scale M&A deals.

According to reports, a rumored acquisition target that Novartis is eyeing is Alnylam Pharmaceuticals, a pioneer in RNA interference technology and the creator of Leqvio. However, given Alnylam's market value exceeding $20 billion, acquiring this biotech company would constitute a major deal.

Narasimhan is known for shaping Novartis' strategy around cutting-edge platforms applicable across various disease areas. In Thursday's presentation, the CEO spotlighted RNA therapies, as well as cell and gene therapies and radioligand therapy. These advanced technology platforms are expected to drive Novartis' growth beyond 2030.

Narasimhan pointed out that although Novartis significantly reduced its investment in RNAi starting from 2014, the company has had R&D capabilities in this field for over a decade. With Leqvio becoming the first siRNA therapy for common diseases to reach the market, Novartis will become the world's largest siRNA manufacturer due to its capability to manufacture siRNA drugs.

"Due to the expertise we already possess, the partnerships we've established, and our belief in the ability to direct siRNA to parts of the body beyond the liver, Novartis has the opportunity to leverage our internal R&D and manufacturing capabilities to create a pipeline of drugs," Narasimhan said.

The complexity of these advanced technologies, including the manufacturing process, means that drugs produced this way will be difficult for competitors to copy, the CEO said.