Novartis CEO steps down

February 15, 2010

Just a few weeks after announcing a controversial plan to take over ophthalmic giant Alcon Laboratories, Novartis announced its chief executive officer is stepping down and the chief financial officer will retire.

Huenenberg, Switzerland -Just a few weeks after announcing a controversial plan to take over ophthalmic giant Alcon Laboratories, Novartis announced its chief executive officer (CEO) is stepping down and the chief financial officer (CFO) will retire.

Joe Jimenez, an American who most recently was head of the Novartis pharmaceutical unit, was named his successor.

"Dr. Breu's retirement was announced in July 2009, given the mandatory retirement age of 65 in Switzerland, and is not related to the Alcon transaction," the spokesperson said. "Likewise, Dr. Vasella's decision to focus on the chairman role simplifies our organizational structure, allows him to concentrate on strategic priorities, and completes the planned CEO succession process that began in 2008 with the creation of a transitional chief operating officer position and the appointment of new divisional management."

The departure of two key figures involved in the transaction raised eyebrows among some investment analysts, but those interviewed for this Ophthalmology Times article did not express concern.

"It might be indicative of a little bit of a softening from an operational perspective," said Christopher C. Cooley of FTN Equity Capital in Cleveland. "If you think about how that moves forward, there might be a greater willingness to get this [Alcon deal] done, and get it done promptly."

Jimenez, 50, has been with Novartis since April 2007, when he was named head of the consumer health division. In October that year, he became head of the pharmaceuticals division. He joined Novartis after serving as a non-executive director of AstraZeneca from 2002 to 2007; during that time, he also was president and CEO of H.J. Heinz Co. in Europe. He joined Heinz in 1998 and was named president and CEO of the North America business.

Jon Symonds, a commander of the British Empire who served 8 years as CFO of AstraZeneca, took over Feb. 1 as CFO at Novartis, the company said.

Initiatives

The leadership changes-two of several that were announced-are intended to simplify the organizational structure at a time of critical growth, Novartis said. The company saw double-digit net sales and earnings growth across all divisions, with sales just under $13 billion and 30 major regulatory approvals in 2009.

"Novartis is integrating the drive for greater productivity and increased efficiency into its operations, improving speed while freeing up resources to focus on customers and growth initiatives," the company said in a prepared statement.

Cooley said he believes the appointment of Jimenez to the CEO spot could help smooth the transition of Alcon into the Novartis fold.

"The fact that he ran pharma might play to a tie for Alcon in that regard," he said.

Among other things, Jimenez will be looking for specific ways in which the companies can increase synergies and cut costs to maximize profits from the Alcon deal, analysts said. One way of doing that would be to incorporate its CIBA Vision contact lens business into Alcon's much larger eye-care realm, even if there would need to be some tinkering with sales representatives, Cooley said.