Novartis China President Yin Xudong to Step Down Amid Industry-Wide Executive Exodus

More than half of 2020 has passed, and nearly every month has seen multinational corporations (MNCs) announce personnel changes. A close examination of MNCs’ recent moves suggests that strategic adjustments under the dual pressures of the patent cliff and R&D innovation may be the underlying reason. Meanwhile, favorable domestic policies and capital inflows are driving the development of innovative drugs in China, creating an urgent need for senior executives with mature experience among local biotech companies.

In August, the most unexpected personnel change among multinational corporations (MNCs) was the confirmed departure of Luo Yongqing, General Manager of Gilead Sciences China. As September arrives, another major MNC has announced a significant leadership change: Yin Xudong, President of Novartis China, will be leaving Novartis.

On the afternoon of September 4, Novartis announced to its employees that Yin Xudong, President of Novartis Pharmaceuticals Asia Pacific, Middle East and Africa (APMA) and President of Novartis China, has decided to leave Novartis for personal reasons.

Following Yin Xudong’s departure, Dan Brindle will succeed him as President of Novartis China, and Iris Zemzoum will assume the role of President for the Asia Pacific, Middle East and Africa (APMA) region.

Personnel changes at Novartis and Gilead were not uncommon in the first half of 2020. According to incomplete statistics by E-Pharma Manager, since 2020, in addition to the aforementioned two companies, several other multinational corporations (MNCs), including GE Healthcare, Bayer, BMS, and Merck & Co., have announced personnel changes.

01 Continuity of Strategic Transformation

Looking back at previous years, there has always been a wave of resignations among multinational pharmaceutical companies, and this year is no exception. However, there is an additional influencing factor this year: the COVID-19 pandemic.

The most intuitive impact of the COVID-19 pandemic on multinational corporations (MNCs) has been the acceleration of layoffs, spin-offs, and restructuring.

In February, Merck & Co. announced that it would begin spinning off its women's health products, mature products, and biosimilar products to form a new independent publicly listed company;

In the same month, GSK also announced a two-year plan to split into two separate companies, each focusing on immunology and consumer healthcare, respectively;

In May, AbbVie announced the completion of its $63 billion acquisition of Allergan;

In July, Sanofi announced plans to cut more than 1,700 jobs in Europe, with approximately 1,000 of these positions to be eliminated in France over the next three years. The Vaccines Business Unit is implementing a two-year restructuring plan expected to result in the layoff of 720 employees;

In August, Bayer announced the divestiture of its animal health business and its merger into Elanco Animal Health;

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In fact, these adjustments are a continuation of the business and strategic transformations undertaken by multinational corporations (MNCs) in recent years, with the pandemic serving as a catalyst.

According to the recently released “Review of Global Pharmaceutical M&A Transactions in 2019” by IQVIA, the average value of mergers and acquisitions (M&A) and collaboration deals in the global life sciences sector increased in 2019, with the annual M&A transaction volume reaching $293 billion, a 43% increase from 2018.

Patent cliffs, medical insurance reimbursement, and R&D costs have placed significant pressure on the performance of multinational corporations (MNCs), compelling them to urgently seek new growth drivers. Consequently, MNCs have adopted a new strategic logic of “addition and subtraction”—expanding their R&D pipelines through mergers and acquisitions while divesting non-core businesses through spin-offs and carve-outs—with personnel adjustments serving as a key component of this strategy.

Following AbbVie’s acquisition of Allergan, Allergan Aesthetics was established. Wang Wei, the former President of Allergan China, was promoted to Vice President of Allergan Aesthetics and Head of Japan and the Asia-Pacific region, a typical example of such personnel changes. Humira, AbbVie’s flagship “blockbuster” drug, has long been the primary driver of the company’s performance growth, topping global pharmaceutical sales rankings for consecutive years. However, with the approaching patent cliff—Humira’s patents expired in the United States in 2016 and in Europe in 2018—AbbVie’s demand for new blockbuster drugs has become increasingly urgent. The acquisition of Allergan and the establishment of Allergan Aesthetics represent part of AbbVie’s strategic layout to expand its product pipeline.

Mergers, acquisitions, and divestitures, along with expansion of the product pipeline and personnel adjustments, may also be among the reasons why multinational corporations (MNCs) are embarking on a new phase of development.

The most typical example is Gilead China. In August, the news that Luo Yongqing, General Manager of Gilead China, was about to step down caused a stir in the industry. However, a closer look at Gilead’s recent performance suggests this development was perhaps not unexpected. Luo joined Gilead in 2016 with the primary objective of building Gilead China’s commercial team. To date, Gilead China has grown to over 450 employees, clearly indicating that this goal has been achieved. Another key objective for Luo was to facilitate the launch of blockbuster products—Sovaldi, Harvoni, Epclusa, and TAF—in China, a target that has also been evidently met. Currently, Gilead has eight innovative drugs approved in China, among which Vemlidy, Epclusa, Sunvepra, and Stribild were included in the National Reimbursement Drug List within just one year of their market launch.

Gilead has been in China for nearly five years, and its first “Five-Year Plan” has basically been completed. Luo Yongqing’s departure may have been expected.

02 The Surge of Domestic Innovative Pharmaceutical Companies

Another driver behind personnel changes is the evolving innovation landscape in China. Policies such as the “4+7” centralized volume-based procurement have accelerated the transformation of domestic pharmaceutical companies toward innovative drugs, while new regulations on the Hong Kong Stock Exchange and the launch of the STAR Market have encouraged capital inflows into local biotech firms. Under this dual boost of “policy + capital,” Chinese innovative pharmaceutical companies have experienced a significant surge. Given the urgent need for talent in both R&D and operations, executives from multinational corporations (MNCs) with extensive experience have become the preferred candidates for these emerging innovators.

In March this year, Shanghai Allist Pharmaceuticals announced the appointment of Mou Yanping as Chief Executive Officer. Previously, Ms. Mou founded and headed the China Oncology Business Unit of Merck & Co. (MSD), which, under her leadership, successfully ranked among the top three foreign pharmaceutical companies in oncology business in China.

In May, 1 Drug Network announced the appointment of Guo Anfeng as Chief Innovation Officer. Guo previously served as Vice President of the Immuno-Oncology Business Unit at BMS China and established BMS’s first immuno-oncology sales team in China.

Multinational pharmaceutical companies are fully committed to “returning to their core businesses,” while domestic pharmaceutical firms in China are receiving dual support from capital and policy. Whether for local biotech firms or multinational corporations (MNCs), innovation is undoubtedly the direction of development, and R&D and operational talents are also facing choices.

Original Title:Novartis China President to Step Down: With One Executive Departing Monthly from Multinational Corporations, Is a “Talent War” Between Domestic Innovative Pharma Companies and Multinational Pharma Giants Imminent?