Embrace operational excellence
We are improving the effectiveness and efficiency of our operations to free up resources that can help bring more and better treatments to patients more quickly. We are addressing cost management and productivity, simplifying our operations, and using digital technologies to help enhance processes across the enterprise. We are also improving how we launch new products as we prepare to potentially bring 10 innovative medicines to market in the next two years.
Transforming business services
Our global Novartis Business Services (NBS) organization continues to make progress on improving efficiency and supporting our business units as they implement our strategy.
NBS is helping our teams pursue the company’s priorities more effectively, for instance by building the IT infrastructure and technical capabilities that are the backbone of our data and digital transformation. In 2019, we began building an enterprise-wide, cloud-based data and analytics platform to replace more than 400 different analytics services across the company. The platform is designed to support more than 20 000 users globally and help us discover, develop and launch new treatments more quickly and efficiently. We aim to complete it in 2020.
We’re rethinking how we deliver services inside the company to simplify and improve routine tasks our employees perform every day. For instance, we streamlined the process of booking travel and getting reimbursed for business expenses. In the area of human resources, we are simplifying the process of hiring new people and automating the creation of employment contracts.
The streamlined approach was piloted in Mexico and is being rolled out worldwide. In Germany, for instance, instead of 40 different contracts we now have one harmonized template as a basis for different employment situations. Such steps have a significant impact because we hire thousands of people annually.
One part of our efficiency effort involves consolidating NBS operations into five global service centers. We are well advanced in the relocation of about 1 800 service jobs that were previously spread across individual countries. We are managing this transition with respect for the affected employees, supporting them as they look for new roles at Novartis or other organizations.
We are also making more efficient use of our real estate. We are discontinuing leases on some facilities we don’t own and moving people to underutilized offices and labs at our campuses in Switzerland, China and the US.
We have taken steps to instill greater spending discipline and are on track to meet our target of reducing outlays for goods and services across the company.
To make buying of routine supplies more efficient, we are standardizing specifications and consolidating suppliers. The example of laboratory gloves illustrates our progress: We went from 100 different types of laboratory gloves worldwide to just 14, and from 55 suppliers to one, saving USD 0.6 million.
We are also building a database to provide a more comprehensive view of our purchasing and are starting to use data analytics to help us better manage what we buy, when and from whom.
In some aspects of our operations we realized we must fundamentally change how we work in order to achieve significant savings or improve performance. So we’re streamlining and automating several company-wide processes to improve efficiency and free our people for tasks that add greater value to the enterprise.
One area is how we prepare and use marketing materials across the company, a complex process that involves about 17 000 employees globally in some way. We are shifting from a fragmented approach to a common enterprise-wide one for sharing advertisements, videos and other marketing materials for key products among marketing teams at the global, regional and local levels. We are creating a central digital repository for these materials so that they can be repurposed and reused globally. We anticipate this effort will save about USD 130 million over five years and reduce by 5-13% the time some employees spend creating and managing marketing materials.
We are creating a more flexible and agile manufacturing network of our more than 60 production facilities globally, complemented by an external network of strategic partners. Across our network, we continue to adapt our manufacturing capabilities to facilitate our shift toward making more specialized medicines, such as cell and gene therapies, as well as expanding our capacity to make complex biologic drugs.
For instance, in 2019 we began producing Kymriah, a cell therapy for blood cancers, at a new facility in Stein, Switzerland. We also completed the acquisition of CellforCure, whose facility near Paris, France, augments our capacity to produce cell and gene therapies.
At the same time, we continued to consolidate and divest some production sites. In 2019, we sold a California facility that makes cystic fibrosis medicines, a sterile filling and packaging operation in Switzerland and a facility in China. We also announced plans to close two manufacturing facilities and a packaging operation in Turkey between 2019 and 2021.
The transformation of our manufacturing network continues, and we are evaluating which activities are core to our business and which ones can be most effectively managed by our suppliers and partners. We are consolidating manufacturing support services such as supply chain management, engineering and quality assurance in operations centers in Slovenia and India. We believe this approach will help us develop deeper expertise and promote innovation.
We’re also using digital technologies to help harmonize our processes and data collection around the world. For instance, quality assurance reporting is now standardized across our sites and all data is collected digitally. For more on how we are using digital technologies to improve manufacturing operations, please see the section “Go big on data and digital.”
While pursuing our transformation, we maintained a focus on quality. Of 177 inspections of our facilities by health authorities around the world, all but seven were found to be good or acceptable (96%). In cases where inspectors identified areas for improvement, we agreed on actions with the relevant health authorities to reinforce our systems in product quality, patient safety, clinical trial monitoring and manufacturing compliance.
Strengthening product launches
We are reinforcing our approach to product launches to become more consistent across markets and ensure we deploy our resources more effectively. For our most promising potential products, we are investing in earlier preparations, including talking with doctors, patients and insurers to better understand their needs and help us develop medicines to address them.
For example, we took several steps before Adakveo was approved by the US Food and Drug Administration in late 2019 to treat sickle cell disease, a painful and deadly genetic blood disorder. To better understand how the disease affects people, in late 2018 we launched an extensive ethnographic study. Researchers accompanied patients in their normal routines for two or three days – including visits to doctors – to capture their feelings about living with the cycles of pain associated with the disease.
We also created ways for people with sickle cell disease to show how it affects their lives. We commissioned a series of videos of patients from around the world talking about their experience with the disease. And we launched a campaign called Generation S whereby patients can share their own videos online, with more than 1 000 submitted so far.
These efforts, along with outreach to physicians, aim to raise awareness about sickle cell disease and its impact on patients as well as healthcare systems.