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Currently, 1 percent of Americans incur 35 percent of all healthcare costs. At the same time, preventable diseases such as diabetes and heart disease among traditionally underrepresented groups are increasing. The system is broken. How can we have quality, affordable care for all?
To find out, DiversityInc's CEO Luke Visconti sat down with Daniel L. Vasella, M.D., chairman and CEO of Novartis AG (Novartis Pharmaceuticals Corp. is No. 20 on The 2009 DiversityInc Top 50 Companies for Diversity® list). Here are edited excerpts of their conversation.
Click here to read "How Does Novartis International AG Help People Who Can't Afford Healthcare?"
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Luke Visconti: How are Novartis' development in medicine, expenditure in R&D and global corporate social responsibility all linked?
Daniel L. Vasella, M.D.: It's an integration of the same theme in different facets of society. I was reading our press release for the fourth quarter and full-year results, and there was a sentence in there that I took issues with--it was the draft. It said we create value for patients. We don't create a value for patients. It's very dangerous to mix up the consequences from what the mission is. The mission is not to make more money for rich people--that may be a consequence. But the mission is to fulfill a need that society has, and that need is a specific one that we can fulfill: to bring better medicine again and again to treat patients. We don't even treat diseases; we treat patients with a disease.
You see, these are little things, but they need to be clear in the heads of people. And then we want to do it better than our competition, so it's absolutely a competitive element. And we want to make a profit from it, because it's the only way to make it sustainable. And the other thing that is very important is to acknowledge it.
Visconti: Can you connect healthcare innovation with diversity?
Vasella: First of all, we have a major sect of diseases that are common to humanity and irrespective to the genetic make-up. Then you have diseases that are linked to the genetic make-up, which are geographic. For example, [there's] a disease of the blood in children around the Mediterranean but also partially in Africa. Then you have certain diseases that are climate-related, like tropical diseases. And climate and wealth often go hand in hand. And you can see that many of the poorer countries are in the tropical region, so these diseases are geographically linked. And it's much less [related] to genetic make-up as it is to climate. The fact is, much less research is going on for treating these patients because these patients don't have the rights. So it's much less a question of availability of monetary resources than incentives for companies to invest in areas where basically they cannot make a profit or just have costs. There is a real dilemma because when you've done good research, you can do more from an ideal point of view when you have money and human resources. Of course, all these projects were always at the bottom of the list. In order to separate a piece of it, we needed to separate out a budget--and that was the creation of the [Novartis Institute for Tropical Diseases] in Singapore. [It's] now the second institute for vaccines. They are not profit-oriented, so they have a protected budget.
Visconti: Clearly, development is going on in countries that were really poor. Tell me about your work in treating disease and treating hardship in those areas. Do you see the two converging?
Vasella: Of course, being historically a Swiss company has as a consequence that we are very outside of Swiss folks. Switzerland is such a small market that you cannot live from that market. So we are, in general, more international than a traditional U.S. company that has a much larger market share in the U.S. To us, it's much more diversified. We're in about 140 countries.
The growth that is emerging now is really from a few emerging growth markets, which are relatively large and have high double-digit growth figures … What interests me more is the many countries in which we don't do well, because we work with distributors and we're not present, or we are, but only minimally. How can we pay more attention to these countries? In rural India, for example, we have a large number of people with very poor access to healthcare. They don't have a lot of money, so it's not a natural run. But we started an initiative where we have reps on bikes go with a health educator. They concentrate on diseases like TB and some infections and how you treat them, and they sell basically generics for very small prices. It's moving nicely now. It's not a big profit; we break even. But we fulfill a service to these people.
The reason why I like it and want it to grow is almost like a challenge, in a sense, of "Are we really not able to do business here? Is it really true that we disregard these areas? Is it really not possible to put something into place that is self-sustainable and doesn't have to have a big profit but can be something that you can say marginally it brings something [and] serves a base of agents in which we would otherwise not have access?"
Visconti: Do you want to extract lessons learned from all of these programs?
Vasella: Yes. We try new things, and then we transfer or don't. We launched, for example, an initiative two years ago where we saw that in [certain] countries, customers were not buying expensive prescription medicines but generics. So we reorganized in these countries to offer our whole portfolio--anything they have an interest in. We organized by business line and said we are going as a conglomerate, and we put everything in one hat. Now we are organized according to channel and not according to product line.
With that, we are able to learn and to see what these people need, which is different from other countries, and then serve them to the best of our knowledge. It took off, and in these countries last year we rose 30 percent. We have done it in nine countries. We chose Latin American countries, Asian countries, and now let's see where else it could possibly work.
Visconti: Do you foresee an ability to take a lesson learned from one place and plug it into another?
Vasella: Yes, sure, we learn. I mean, this initiative in India, we will try to do it in other countries like in Africa. I don't know if it is going to work or not, but we will try. And the other initiative that I mentioned to you, we are going to expand it probably in two more countries. But you have to also look at it in an evolutionary way, which means that right now if the country changes and it matures, our businesses grow--breaking it up again. So this involves a lot of thinking in a linear, sequential way.
About Daniel L. Vasella, M.D.
Daniel L. Vasella, M.D., is chairman and CEO of the Swiss pharmaceutical giant Novartis AG. During his tenure, he has enhanced the company's corporate-governance policies and listed Novartis on the New York Stock Exchange. In addition, he has strengthened the research capacity of Novartis by creating the Novartis Institute for BioMedical Research and establishing The Genomics Institute of the Novartis Research Foundation. Vasella has also initiated global programs to ensure better access to medicines and to foster research on neglected diseases in developing countries. Novartis was one of the first multinational companies to sign the U.N. Global Compact initiative. Vasella is a member of the board of PepsiCo (No. 24 on The DiversityInc Top 50 Companies for Diversity® list) and a member of the Board of Governors of the Peres Center for Peace in Israel, the International Business Leaders Advisory Council for the Mayor of Shanghai and the Global Health Program Advisory Panel of the Bill & Melinda Gates Foundation.
This article appeared in the May/June 2009 issue of DiversityInc magazine. Click here to read the digital version of this story.
