January 26, 2010 / 6:25 AM / 9 years ago

REFILE-UPDATE 3-Novartis taps Jimenez for industry challenges

(Corrects day in first paragraph to Tuersday)

* Drugs chief replaces long-serving CEO Vasella

* Still considers bid for Alcon minorities as fair

* Q4 net profit $2.3 billion, vs forecast $2.4 billion

* Sees sales growing at mid-single digit rate in 2010

* Shares rise 1.8 pct

(Rewrites, adds detail on executives, strategy, Alcon, shares)

By Sam Cage and Katie Reid

BASEL, Switzerland, Jan 26 (Reuters) - Novartis NOVN.VX on Tuesday handed drugs head Joe Jimenez the top job with a mission to guide the Swiss drugmaker through ever increasing competition to its key medicines.

The chatty 50-year-old American steps up after just over two years running Novartis’ dominant drugs unit and faces a tough industry landscape as more blockbuster medicines lose patent protection and the sector struggles to generate new products.

He takes over from Daniel Vasella, the longest-serving CEO in European Big Pharma who is stepping down Feb. 1 after overseeing the acquisition of U.S. eyecare group Alcon ACL.N.

“I can, and the board can, hand over in confidence to Joe,” Vasella said on Tuesday, reflecting on his 14 years as chief executive. “I am leaving happily as CEO.”

Vasella’s departure marks the completion of a changing guard at the top of the industry after rival European drugmakers GlaxoSmithKline (GSK.L), AstraZeneca (AZN.L) and Roche ROG.VX have all brought in new CEOs.

Novartis Chief Operating Officer Joerg Reinhardt, who had been tipped as a possible successor to Vasella, will leave the company and the position will disappear.

Jimenez joined Novartis’s consumer health unit in 2007 and soon took over the pharmaceuticals business, overseeing the progression of several promising new medicines including multiple sclerosis pill FTY720, or Gilenia, and cancer drug Afinitor.

His appointment at the head of a slimmed-down executive board came as the company reported a 54 percent rise in fourth-quarter net profit to $2.3 billion, helped by sales of its H1N1 swine flu vaccines.

Shares rose 1.8 percent to 56.70 Swiss francs by 0905 GMT, outperforming a slightly stronger DJ Stoxx European healthcare sector .SXDP.


Novartis has agreed to buy a majority of Alcon from Nestle NESN.VX, using the acquisition to insulate against losing exclusivity on treatments like top-selling blood pressure drug Diovan, and has since come under fire for its lowball offer to minority shareholders.

The group still considered its offer - originally worth $11.2 billion but dependent on share price moves - as fair, Vasella said.

Novartis has had no negative feedback from its own shareholders on the Alcon deal, said Vasella, who will remain as chairman. [ID:nLDE60O0HT]

Novartis, whose Diovan loses patent protection in 2012, expects group sales to grow at a mid-single-digit percentage rate this year but said profit was difficult to predict given the Alcon deal.

Impressive fourth-quarter numbers and the new CEO are positives, but 2010 could still be a difficult year given challenges like U.S. healthcare reform and competition to Diovan, said Kepler Capital Markets analyst Tero Weckroth.

Sector investors will be closely eyeing results from another diversified healthcare group, Johnson & Johnson (JNJ.N), due later on Tuesday, for more clues on whether tapping new markets away from prescription medicines is helping some drugmakers.

Novartis trades at a premium to GlaxoSmithKline, AstraZeneca and Sanofi-Aventis thanks to promising new drugs like multiple sclerosis pill FTY720 and a broad business base, but lags Swiss rival Roche.

Analysts had expected Novartis to post a 53 percent jump in fourth-quarter net profit to $2.4 billion. [ID:nLDE60J1YS] (Additional reporting by Paul Arnold; Editing by Dan Lalor and David Cowell)

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