Agents of Change: Interview with David Epstein
Paul Simms discusses Novartis’ transformation to a healthcare company with David Epstein, head of Novartis Pharmaceuticals.
Based in Basel, David Epstein has been with Novartis for 25 years, the last five of them in his current role. We discuss the company’s future direction, patient centricity, the role of diagnostics, inspirational leadership and the importance of reputation.
Paul Simms: What do you need to prioritize over the next 12-18 months at Novartis?
David Epstein: Over the last five years, we have focused the company on a number of things. We started by going on a journey to become more inspirational, authentic leaders – including a major change in culture to be able to begin to work side-by-side with patients: we have publicly issued a ‘patient declaration’ for holding the people in our company accountable, to taking a large step forward in terms of patient safety, access, transparency, and involving them in clinical trials. We have also worked on changing the values of the company, being much more focused on courage, collaboration, integrity and quality, as well as performance – the very things our customers would expect of us. This has been a journey and we are not done yet, but we are creating an environment in the company with a lot more passion. People are coming to work because they feel they can really make a difference – improve and extend patients’ lives.
That all came from my oncology experience: I ran Novartis Oncology for 10 years, so I was lucky to be working in a place where you really can make a difference for patients. The second big area, for me, is around innovation. Our pipeline is fantastic: we are launching Cosentyx for moderate to severe psoriasis, a new standard of care for these patients. We are also going to be launching it next year for psoriatic arthritis and ankylosing spondylitis and we just got approval from FDA for Entresto, a product for chronic heart failure. Both of these are US$5 billion-plus opportunities. It is not just innovating in the pipeline but around moving the company towards eventually getting paid for outcomes – delivering on the idea of the right patient getting the right drug at the right time, sharing risk with payers and the like. We are also focused on building up emerging markets where we are now number 2 and there is a big focus on general productivity – how to streamline pretty much everything we do to take down costs and deal with the price pressures the industry is facing. The people components are the inspirational parts: hiring and coaching is 40% or more of my energy.
Paul: Are you spending that 40% with your immediate reports or are you spending that time with large audiences?
David: It starts with my immediate reports. Two to three times a year, we work on how to get in touch with what motivates us, our values, how to be inspirational for our people. How we work out problems; how do we really inspire our teams? We are putting the next 250 people through a leadership expedition program so they will go through a similar experience. I am constantly out talking to large audiences and small audiences in our company. In my ‘hallway meetups’, I meet with a particular department and we just talk. It can be as simple and laid back as that, or it can be a big town-hall-style presentation. It varies considerably: I like speaking, I love the questions and answers and find it fun and the more they see me and my executive team, the more people feel they are part of something bigger than the individual parts.
Paul: What changes are you making in where you place your company’s resources?
David: We are spending about 21% of our money and our people’s time on R&D. The rest is largely around managing the ongoing business and innovating on other areas such as manufacturing, digital medicines, social media and more. A lot of the money is obviously focused on these big launches. Many do not know that we lead the industry in changing the way we manufacture. Drug manufacturing hasn’t changed for 30-40 years and we are committed to continuous manufacturing processes that are highly automated, small-scale. To put it into perspective, if you can imagine injecting into individual capsules the exact amount of drug to a third decimal place, with no excipients and that process taking a day or a week to manufacture a drug, instead of months. We have a pilot facility, we plan to totally change the way drugs are manufactured to take down costs, improve quality and take cash out of the system.
Paul: Okay, so obviously manufacturing is a large part of your work. Is anywhere else attracting a rising amount of your time?
David: In terms of moving towards outcomes and system-building, we are building a real world evidence group. We now have a digital medicines team which is charged with ensuring patients go home, not just with drugs, but the various sensors and iPhone-related questions to improve the outcome for those patients and collect data and feed it back to physicians, caregivers and buyers. Those are big initiatives. We also have an initiative around blood testing that we will launch at the end of this year – a table-top device that will sit in doctors’ offices, so they will be able to do a lot of the tests they send out to laboratories, in order to better select patients for treatment in real time.
Paul: That’s a diagnostic tool?
David: Yes, with the idea that you only want the right patients treated. After all, fundamentally, we have a strange industry. If you go shopping, buy a shirt, and find it’s wrong, what do you do? Take it back and exchange it. If you don’t like a product, you get your money back. In our industry, our drugs work perhaps 30 or 40% of the time: patients have consumed it, buyers have paid for it, but people can have side effects and are getting no benefit. However, that model cannot exist in the future. We are one of the few industries on this route, and we need to move towards more risk sharing. You need to do the digital stuff and the real world evidence stuff in partnership with payers to make that happen. Patients need to contribute by being more compliant.
Paul: Presumably these diagnostic tests are specifically linked to your own products?
David: They will be initially. The first few tests which are all the same platform will be our products and then we will open it up. It is a physical device. You get a special card, there is a series of sensors, lights and other things that will measure blood levels, various proteins, drugs and so on to make it very easy to get an answer. We have a drug called Xolair which is used to treat allergic asthma where you need to know a patient’s IgE levels. Usually you have to send that out to test, taking two weeks – with this, they will get the answer in four minutes.
Paul: Is that device always going to stay in the doctor’s office or is it going to move into the patients’ hands at any point, in your opinion?
David: The second generation device, which is not out for probably another year and a half, will be connected to the cloud for submitting data. The third generation device will plug into an iPhone, but that is a little more science fiction right now. We bought the company and have been working on it for a couple of years to get it where we want it.
Paul: You are forging ahead. Do you feel this is a relatively entrepreneurial venture within the company you have here?
David: I think it is very entrepreneurial. This will help us take the next step forward, so only the right people are getting the drugs they need. We have proved the technology works, we know that now, so we are pretty excited about it.
Paul: What about using the device to bring together internal departments within Novartis? I often discuss the rise of the medical organization relative to the commercial organization. I hear about trying to integrate more into the wider healthcare system as a delivery partner and those are not two things you have mentioned specifically.
David: We are doing that: though we started down that road several years ago. We have made a lot of progress in that regard. Commercial organizations for the most part have been getting smaller and will continue to do so. However, they will not go away but change. Medical is becoming increasingly important so that has been a big part of what we have been doing.
Paul: Tell me about your own motivation. What is the driver for you, as an individual?
David: I was lucky or unlucky enough to work in a pharmacy while I was pre-college and I enjoyed it. I got interested in biology and chemistry. What drives me is being able to come to work and really make a difference. I have had the opportunity to launch several breakthrough therapies: one was Gleevec which basically almost eliminated bone marrow transplants and CML patients were restored to almost a normal life. I launched Gilenya, the first oral drug for multiple sclerosis, and later this year, we are launching Entresto for heart failure, which reduces mortality by 20%, reduces expensive hospitalizations and improves quality of life. Heart failure is as serious as metastatic cancer, it is a really awful disease and I have met many of the patients we have helped. I’ve had relatives who have been ill; this drives me, and this company provides the platform. We have the resources to actually make a real difference on a global scale.
Paul: Do you think people know that? I feel there are some companies – and it is often the smaller ones, to be honest – that have a reputation for being very focused on patient benefit. None of, I would say, the top ten companies have a reputation that is particularly strong in that area. I am not trying to be rude or provocative here, but I am interested to see what can you as a company, actually do to move the needle on this?
David: Good question. Seriously, it is a journey. The patient declaration we issued is one step and we have to continue to get louder and more visible, take some risks, shake things up. The declaration came when my team and I all decided, based on our values and motivation, “Why don’t we tell the world how we feel”? So we did. But there has also been a steady stream of activities to become more of a leader as a company, to shape regulation, shape how our industry is perceived, get closer to patients. And at the very least, I’ll end up with more motivated employees, which means they will do a better job for our patients.
Paul: To be truly patient-focused, do you also have to be medicine-agnostic? You talked about making your diagnostic tool available to third parties eventually. To go further down that path and become a true partner, to be fully trusted, do you have to take some control away from promoting your own medicines at every turn and be willing to allow others to collaborate to a greater degree?
David: We would have to talk about the nuances of that. You have to remember we are also the world’s second largest generic company, so we can treat the majority of diseases for which medicines exist.
Paul: But if another company was to create a treatment that was actually more effective than yours, would you be willing to adopt that if that is your ultimate aim?
David: I would not adopt it – but I would tell patients to use it if it is a better drug.
Paul: Do you think that is a genuine feeling among all your staff – or is that a David Epstein feeling?
David: They probably do not all feel the same way yet; there is a big culture change going on. We basically rewrote our entire values and behaviors. This is what we are starting this year. We are measuring employees on things like: collaboration; courage; integrity; quality; performance; and it is all around the patient. That becomes how employees get to mid-year and year-end reviews and how they get rewarded. This will continue to evolve. Last year, it was the change in values and behavior, this year it is the patient declaration. We are accelerating that pace of change.
Paul: So this is more than a declaration: incentives are aligned to it, the narrative is aligned to it in other parts of the organization and everybody is informed of that. I can see that will make a difference, but what specifically are you doing to not just lead Novartis Pharma, but to lead the industry?
David: Not a lot – at least not yet. I have always believed one must get one’s own house in order first. I sat with my Head of Communications during December last year and we started to talk about how we begin to make a bigger noise and take more of a leading role in shaping where the industry goes. We have not done a lot with it because we then realized there was a great deal we had to do within our company and that is where you are seeing all this stuff happen first. At some point there is an opportunity. What’s the best way to do that? I actually don’t know the answer – maybe you do?
Paul Simms. Eyeforpharma.