Novartis (NVS) will still need to invest in R&D to face the challenge of selling new drugs to national health systems as cheaper generics come online, Chairman Joerg Reinhardt says: "With every new product coming off patent, the benchmark comes up."
"We need to add value, life-prolonging or quality-of-life benefits that are meaningful enough for payers around the world to say, 'Yes, I'm willing to pay a premium over generic opportunities,' " he says.
The company raised in-house R&D spending 5.6% to $9.85B last year while competitors like Merck are streamlining.
Along those lines, Novartis is still likely to divest at least one of its smaller divisions.
Reinhardt adds he's not expecting a bigger strategic interaction with Roche, despite Novartis holding a third of Roche's voting stock.