Novartis (NYSE:NVS) is naming drugs unit chief Joe Jimenez as its new CEO, inciting grumbles from some investors over what was expected to be an accession by COO Joerg Reinhardt. In supporting his pick, long-time CEO Daniel Vasella noted Jimenez' “international experience in pharmaceuticals and consumer businesses together with an excellent track record,” which includes overseeing the development of the multiple sclerosis pill, Gilenia, and Afinitor, for treating advanced renal cell carcinoma.
Reinhardt, former head of the company's successful vaccines division, is taking the cue to exit. Meanwhile, Vasella will stick around as chairman of Novartis' board. The change becomes official February 1.
Novartis announced the leadership change with its fourth quarter and full-year earnings report on January 26, saying it wants to streamline its organizational structure.
“If you think about chairman, CEO, COO, it is just too many levels, if you count also the division heads. So, with that, we needed to compress and that was right and it was also very well understood and supported by my colleagues and particularly in this case Joerg Reinhardt,” Vasella told investors during the company's earnings call.
Completing Novartis’ acquisition of consumer eye-care giant Alcon and ensuring a full pipeline of drugs to replace revenue from generic competition will be among Jimenez's top priorities for Novartis in the year ahead.
The last year gives Jimenez a good base and a strong financial position. The company reported a 2009 record profit of $8.5 billion, up four percent from 2008.
The selection of Jimenez is considered notable in the pharmaceutical industry, where executives tend to have long track records in the industry. By contrast, Jimenez has spent much of his career in the food industry, working for companies like HJ Heinz (NYSE:HNZ), Clorox (NYSE:CLX) and ConAgra (NYSE:CAG).
Jimenez says he optimistic about pharma in 2010, especially in China where the market is growing substantially.
Source: Novartis Makes Notable CEO Pick