Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • March 2008
  • Case
  • HBS Case Collection

Novartis AG: Science-Based Business

By: H. Kent Bowen and Courtney Purrington
  • Format:Print
  • | Pages:22
ShareBar

Abstract

Novartis is a science-based drug company, which has important implications for its business strategy. It is one of the largest pharmaceutical companies in the world with over $38B in sales in 2007. Pharmaceuticals account for slightly over $24B of that total. In 2007, corporate R&D spending was $6.43B, or almost 17% of net sales. Novartis executive leaders believe in scientific progress and that large-scale investments in science will therefore result in long-term pay-offs in terms of profits and discoveries that benefit mankind. Novartis' business strategy is closely tied to its research strategy, which emphasizes extensive internal discovery and development capabilities leading to organic growth along with explicit external alliances and collaborations to supplement its core capabilities. Like its competitors, Novartis faces many challenges in terms of moving research from the bench to the bedside. Five years after undertaking the restructuring of the discovery research organization, CEO Daniel Vasella is pleased with its progress, including many more development projects in the pipeline and new molecular entities. Nevertheless, the company faces a number of challenges, including generic drugs, patent infringements in developing countries, and pricing pressure from governments and health insurers in the United States. Given these challenges, Novartis must decide how much to spend on R&D overall, how to arrive at the right mix between organic growth and external collaboration and in-licensing, and how to measure success when it takes so many years to develop and launch a successful drug.

Keywords

Innovation and Invention; Resource Allocation; Product Development; Partners and Partnerships; Research and Development; Science-Based Business; Pharmaceutical Industry

Citation

Bowen, H. Kent, and Courtney Purrington. "Novartis AG: Science-Based Business." Harvard Business School Case 608-136, March 2008.
  • Educators
  • Purchase

About The Author

H. Kent Bowen

→More Publications

More from the Authors

    • November 2012
    • Faculty Research

    New Balance Athletic Shoe, Inc. (Abridged)

    By: H. Kent Bowen, Robert S. Huckman, Carin-Isabel Knoop and Matthew Preble
    • September 2009
    • Faculty Research

    Peter Schultz at The Scripps Research Institute

    By: H. Kent Bowen, Alison Berkley Wagonfeld and Courtney Purrington
    • June 2008
    • Faculty Research

    Gordon Williams: Clinical Research at Brigham and Women's Hospital

    By: H. Kent Bowen and Courtney Purrington
More from the Authors
  • New Balance Athletic Shoe, Inc. (Abridged) By: H. Kent Bowen, Robert S. Huckman, Carin-Isabel Knoop and Matthew Preble
  • Peter Schultz at The Scripps Research Institute By: H. Kent Bowen, Alison Berkley Wagonfeld and Courtney Purrington
  • Gordon Williams: Clinical Research at Brigham and Women's Hospital By: H. Kent Bowen and Courtney Purrington
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.