November 17, 2010 / 11:27 AM / 9 years ago

UPDATE 1-Novartis efficiency drive to boost profitability

* To make manufacturing, sales, marketing more efficient

* Also looking at procurement and SG&A

* Focusing more on specialty medicines

(Adds details, background)

ZURICH, Nov 17 (Reuters) - Novartis NOVN.VX aims to improve profitability by ramping up a group-wide efficiency drive as the Swiss drugmaker focuses on specialty medicines rather than drugs used in general practice.

Novartis, due to give investors an update on its pipeline in London on Wednesday, said it was starting to review its manufacturing as well as its marketing and sales processes.

“With the pharmaceuticals portfolio shifting to a greater percentage of specialty care business, Novartis will continue to optimise its marketing and sales spending by re-allocating resources geographically as well as simplifying current processes,” Novartis said.

Novartis also said more savings could be made in procurement as well as by simplifying its general and administrative areas.

The news came after Swiss rival Roche ROG.VX outlined plans to cut costs as it deals with a series of product setbacks and increasing pressure on prices.[ID:nLDE6AF29X]

Novartis will have to deal with a number of key drugs, such as multi-billion dollar blood pressure drug Diovan, losing patent protection over the next few years and investors are now looking for more details on what measures the group will take to offset this expected dent in sales.

The group, looking to boost its presence in the fast-growing markets of China, Russia, Brazil and India, struck an upbeat note on its pipeline, said it was planning 30 regulatory submissions in pharmaceuticals before the end of 2012.

Novartis also said by 2015 its pharmaceuticals specialty and oncology portfolio is expected to make up more than 75 percent of pharmaceutical sales, up from some 65 percent at present.

Novartis has had one of the most lucrative pipelines in the industry over the past few years and its newest products generated 20 percent of its third-quarter sales.[ID:nLDE69J13F]

A string of upbeat data, including U.S. approval for multiple sclerosis drug Gilenya, has helped to boost sentiment in Novartis, which is now trading at a slight premium to Roche.

Further growth in its pharmaceuticals unit was likely to come from drugs such as Lucentis, cancer drug Tasigna as well as Ilaris in the treatment of refractory gout, Novartis said. (Reporting by Katie Reid; Editing by Jon Loades-Carter)

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