Novartis: Leveraging AI to Drive Transformation from a Global R&D Leader with 232 Pipeline Assets

Among numerous pharmaceutical companies worldwide, Novartis has long been renowned as an “innovation engine.”

There is certainly a reason for this. First, in terms of the emphasis placed on research and development (R&D), Novartis’ 2021 financial report shows that its total R&D expenditure reached $9.7 billion in 2021, accounting for as high as 17% of its total revenue.

Secondly, in terms of the number of drugs under development, according to 2021 data, NovartisThe number of drugs under development reached 232, maintaining the top position on the global new drug R&D ranking for five consecutive years.

Finally, in terms of the number of newly launched innovative drugs, Novartis developed and launched 31 new drugs from 1999 to 2018, ranking third globally. In addition to this quantitative advantage, its innovative drug business has been growing steadily. Financial data show that Novartis’s innovative drug business reached $39 billion in 2020, a year-on-year increase of 3.4%; in 2021, sales from its innovative pharmaceuticals business reached $42 billion, a year-on-year increase of 8%.

All kinds of data keep telling us that Novartis is serious and equally effective in driving innovation translation.

In reality, the translation of innovative achievements in the pharmaceutical sector is no easy feat. It demands high technical expertise, entails a lengthy timeline, and requires substantial investment. Even large enterprises encounter various difficulties in promoting new drug development and the commercialization of research outcomes, with numerous cases of failure being all too common.

So, what efforts has Novartis made behind the glow of its innovation? What successful models can be drawn upon in promoting the translation of research outcomes? To this end,VBOrange BureauA comprehensive analysis was conducted.

“True to its name,” this also applies to Novartis.

Novartis, the English name of Novartis, is derived from the Latin words “novo” (new) and “artis” (art or skill), which precisely reflect the company’s core value—innovation.

In fact, Novartis has been closely associated with “innovation” since its inception. In 1996, the Swiss chemical giantCiba-Geigy and SandozIn a $30.9 billion merger of equals, the companies combined to form a new entity named Novartis. Tracing this history further back, Ciba, Geigy, and Sandoz were all companies with strong hard-tech attributes, and their “collective,” Novartis, has perfectly inherited and advanced this spirit of innovation.

Therefore, in 2002, Novartis announced the establishment ofNovartis Institutes for BioMedical Research (NIBR)——A global R&D department independent of business operations. To date, the Novartis Institutes for BioMedical Research has grown to possessmore than 6,000 scientific researchers, and continue to focus on pharmaceutical research and innovation.

In terms of specific R&D efforts, Novartis is also willing to invest substantial financial resources. According to its financial report, in 2021, NovartisTotal R&D Investment Reaches $9.7 Billion, accounting for as high as 17% of total revenue, which places it at an upper-middle level among global pharmaceutical companies.

In the process of commercializing scientific and technological achievements, enterprises function more as resource integration platforms, bringing together the three key elements of innovation translation: talent, technology, and capital.

In response, Novartis has continuously experimented and explored, ultimately establishing a mature model known as the open innovation system. At its core, this model places the company at the forefront, actively collaborating with external resources for research and development partnerships.

It is reported that Novartis’s open innovation system has established an external network comprising more than 300 academic alliances and 100 industry alliances. This extensive network encompasses a wide range of innovation stakeholders, including universities, hospitals, research institutes, and biopharmaceutical companies.

So, how does Novartis connect these innovation entities?

First, let me sayThe Primary Element of Innovation Translation—TalentTo identify talent with innovative potential on a global scale, Novartis has focused its attention on the high-density hubs of elite talent—universities—and has launched“Novartis Institutes for BioMedical Research (NIBR) Global Scholar Program (NGSP)”, it is reported that under this program, selected scholars will receive up to $1 million in R&D funding over three years. Currently, 50 world-class universities worldwide, including the University of Tokyo, the University of Oxford, and the University of Toronto, are participating.

If focusing on universities aims to identify scientists with innovative potential, then Novartis’s shift toward hospital-based physicians is designed to uncover clinical needs and conduct clinical trials.

As is well known,Doctors are closest to the clinical frontline., therefore, they best understand which R&D outcomes hold practical value in the market, a factor that is critical to the translation of scientific achievements. For this reason, Novartis has maintained close collaborations with physicians worldwide, primarily manifested in two aspects:

First, clinical data is shared with physicians through the Clinical Study Data Request (CSDR) website. Second, physicians can access data via Novartis’s managed access program and collaborate with an external Independent Bioethics Advisory Committee (IBAC), which provides analysis and recommendations on Novartis’s ethical conduct in clinical research, clinical trials, development plans, and managed access programs, prior to conducting further research or granting pre-approval for products.

Having discussed the first key element—talent—the next isThe Second Element of Innovation Transformation – Technology. To identify and develop the most cutting-edge scientific and technological achievements, Novartis has set its sights on research institutions and global biopharmaceutical companies.

Novartis, on the one hand, isEstablishing research institutes worldwide, while also collaborating with other research institutions, with the aim of focusing on cutting-edge technological research and identifying high-value scientific projects. Taking the Novartis Institute for Tropical Diseases as an example, the institute is currently incubating research outcomes aimed at curing African human trypanosomiasis, Chagas disease, and leishmaniasis.

And besides R&D,Mergers and acquisitions are also a common approach for Novartis to identify high-value research projects.In September 2021, Novartis announced the acquisition of Arctos Medical, gaining access to its preclinical optogenetic AAV gene therapy programs and licensing Arctos’ proprietary technology with a unique mechanism of action, thereby further enriching Novartis’ portfolio in ophthalmic therapeutics.

It is worth noting that during the M&A process, Novartis sought genuine innovation, with the “Three No’s” principle serving as a key guiding framework: no acquisition of “me-too” assets across the board, no entry into oversaturated fields to develop me-too therapies, and no redevelopment of next-generation versions of existing drugs.

Lastly, it is worth mentioning thatThe Third Element of Innovation and Translation: Funding. As previously mentioned, Novartis invests substantial funds in research and development each year. In addition to recruiting scientists and identifying cutting-edge projects, a portion of this funding is allocated to investment activities. Specifically, Novartis acts as an early-stage investor during the process of translating scientific discoveries into practical applications, thereby leveraging investment to facilitate the market entry of innovative outcomes.

For enterprises, the core purpose of focusing on innovative R&D is to seize industry market share as quickly as possible and achieve sustainable profitability. Therefore, after identifying high-quality scientific research achievements through the aforementioned open innovation system, the next step is to transform them into concrete products and introduce them to the market.

However, successfully launching a product is no easy feat. In addition to the challenges of early-stage R&D, two other factors are critical: accurately gauging market demand and seizing first-mover advantage.

Integrating digital technologies into the commercialization of research outcomes effectively addresses these two pain points. On one hand, big data analytics enable precise identification of market demand; on the other hand, computer-assisted approaches accelerate the overall R&D process, facilitating faster time-to-market for products.

Novartis recognized this early on and became one of the first companies globally to apply digital technologies to new drug development.

So, how exactly does Novartis embed digital technologies into the process of translating research findings into tangible outcomes?

Step 1 isIn Data Mining and AnalysisTo continuously track market hotspots, Novartis has established the STRATA data platform to aggregate and manage third-party and proprietary commercial data sources. Leveraging this platform, R&D personnel can extract commercially valuable insights and conduct targeted clinical studies based on these findings.

In 2018, Novartis had accumulated clinical data from approximately 2 million patients. Through digital technologies, the company was able to not only achieve precise analysis but also accelerate the pace of early-stage market research.

After analyzing the data and clarifying market demand, the next step is step two—Drug Development. To better ensure the success rate of drug development, Novartis leverages machine learning technologies to enable computers to simulate laboratory experiments, thereby identifying bioactive compounds and shortening the drug design timeline.

Specifically, Novartis employs deep learning methods to enable machines to mimic how the eyes and brain process visual images. Research results indicate that the accuracy of translating digital images into a biological understanding of drug efficacy within cells approaches nearly 100%.

In fact, the advent of machine learning algorithms for image recognition has accelerated the drug screening process compared to manual testing of compound responses in diseased cell samples, significantly reducing both R&D time and costs.

The final step isBringing Achievements to MarketAs a global enterprise, Novartis looks beyond any single region or country. Therefore, before launching a product in a local market, its primary considerations are whether there is strong local demand for the product and, given such robust demand, whether competing products already exist. Leveraging digital technologies, Novartis can not only identify the optimal markets for product launch but also establish differentiated advantages over competitors during the marketing process.

So, how exactly should it be brought to market? This brings us to Novartis’s mature commercialization system. To accelerate product launch, Novartis has assembled a specialized commercial operations team comprising numerous core professionals who are experts in bringing innovative drugs to market. In addition to their expertise, these individuals possess corresponding commercial resources, which play a significant role in accelerating the translation of research outcomes into market-ready products.

This market-oriented operational capability is also reflected in its revenue figures from the past one to two years. According to financial reports, Novartis’s total revenue reached $48.659 billion in 2020, a year-on-year increase of 2.44%; in 2021, total revenue reached $51.626 billion, a year-on-year increase of 6%.

It is evident that digital technology permeates the entire process of Novartis’ innovation translation. First, in assessing market demand, Novartis leverages big data technologies to collect clinical data and precisely analyze market needs. Second, during the specific drug development process, Novartis employs machine learning and computer vision technologies to screen compounds. Finally, in the commercialization phase, Novartis utilizes digital technologies to precisely match product promotion regions and analyze the advantages of existing competitors, thereby formulating differentiated marketing strategies.

Regarding digital technology innovation, Karin Breiner, Global Head of Discovery Chemistry at the Novartis Institutes for BioMedical Research, has also stated, “Artificial intelligence, particularly machine learning, helps accelerate the inherent iterative learning cycles in the drug development process and further assists researchers in identifying promising drug candidates.”

In 2006, the Novartis Institutes for BioMedical Research (China) was unveiled in Zhangjiang, Shanghai. After sixteen years of development, Novartis’ R&D team in China has grown to 600 employees, distributed across three major operational hubs in Shanghai, Beijing, and Changshu, and is currently conducting nearly 100 clinical research projects.

And in this large-scale"China's Drug Development Strategy"In China, the Novartis model has gradually adapted to the environment for new drug R&D in China. This is mainly reflected inComprehensive Application of Open Innovation Systems.

Currently,Novartis is engaging in business collaborations with Chinese research institutions, biopharmaceutical companies, and investment firms., with the aim of identifying valuable cutting-edge drug research projects in the Chinese market and facilitating their translation. This July, Novartis signed a strategic cooperation memorandum with Fudan University Shanghai Cancer Center, under which researchers from both sides will jointly conduct clinical trials in disease areas with significant unmet clinical needs in China, including breast cancer, lung cancer, and gastrointestinal cancers.

In addition to introducing its own innovative model to China, Novartis is also continuously exploring“Mastering” the Chinese Market。

Based on this, Novartis conducted in ChinaMajor Business Restructuring, in 2019, the operational focus of the Novartis Institutes for BioMedical Research (China) was adjusted to expand the scale of early-stage clinical development and late-stage clinical trials. This means that Novartis’ global drug development division will align with the R&D needs of the Chinese market, shifting from passive to proactive research and development.

Over the next five years, Novartis expects to submit registration applications for 50 new drugs and new indications in China, and to achieve registration for over 90% of its new drugs in China by 2024. This will undoubtedly bring more possibilities to China’s new drug R&D market, while Novartis’s model of translating research into commercial products will subtly influence R&D and translational efforts in China’s new drug sector.