HIGHLIGHTS: Vasant Narasimhan - CEO of Novartis

0:01Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi everyone, I'm Nikolaj Tangen, the CEO of the Norwegian Sovereign Wealth Fund, and today I'm in really good company with Vaz Narasiman, the CEO of Novartis. Vaz has one of the most fascinating backgrounds in pharma. He is a trained physician who also worked in the front lines fighting tuberculosis and malaria in developing countries before rising to lead one of the world's largest pharmaceutical companies. We own 2.3 % of Novartis, and that's worth more than$5 billion, roughly 10 ,000 Norwegian kroner per Norwegian citizen.

0:43So, Vaz, big thanks for joining us. Great to be here, Nikolai. Just briefly to kick off, for those who are not familiar with Novartis, in 10 seconds, just what are your areas of focus? Yeah, we're one of the largest biopharmaceutical companies in the world, focused on innovative medicines in oncology, cardiovascular disease, neuroscience, and immunological diseases. Now, you have a different background compared to many other pharma CEOs. How do you think that has shaped your approach to leading Novartis? Well, I think it's helped in many dimensions. I mean, coming from being a physician, coming from a scientific background, I'm definitely steeped in the R &D elements of the work we do.

1:26So I'm always thinking about the medicine, how the medicines impact patients, very data-driven, always thinking about how these medicines might fit into clinical practice. And given that the core of what a biopharmaceutical company does is find breakthrough innovations that matter for patients in the long run, I think it's a really helpful background. I had to learn a lot about business. I didn't go to business school. I had to learn all of the ins and outs of capital allocations and balance sheets, P &Ls, running businesses. But I think the combination of a medical background and business background has served me well.

1:59Yeah, absolutely. Absolutely. Well, to be frank, business is not so difficult compared to medicine. We are living at a time where there are more miracles than normal because of the way science is moving, right? So when you look at everything you are involved with, what are the most significant scientific breakthroughs on the horizon that you are excited about? Yeah, I think a couple of things, and they range across the whole spectrum. I think on one part in terms of population health, our ability to intervene earlier and earlier in disease to hopefully prevent diseases from even getting to later stages, I think will be incredibly important.

2:39Demography in the world is only getting more challenging. Huge aging populations, healthcare systems under strain, not enough young people always with the fertility rate falling to actually fund these healthcare systems. So we're going to have to prevent disease. In our experiences, you can go earlier. We're working very hard to find how can you intervene earlier and earlier in various cancers. We just had another important data set in prostate cancer intervening early. And the idea is how can you intervene so that the cancer doesn't get to a stage where ultimately it requires hospitalizations.

3:12So I think early intervention is a huge area of focus. I think another exciting area clearly is the idea of can you completely reset diseases. This all comes out of the world of cell and gene therapies, where we already learned that for certain genetic diseases, and Novartis is one of the leaders here, we're able to almost deliver a cure or a dramatic response by using the gene therapies to actually replace a gene in the body. So now what we've learned, and there's actually data coming out just this week, that you can actually use cell therapy to reset the immune system. And there's a whole range of immunological diseases that are very severe, affecting young people and old people.

3:51And the idea here is with these therapies, using cell therapy, you can reset the immune system and turn back the clock on their disease by 15 or 20 years. And so this is, I think, a staggering innovation that will change the lives of, hopefully over time, millions and millions of people. Moving on, AI and digital, you really have been a champion in the digital transformation in pharma. Now, you mentioned briefly in the beginning some of the digital initiatives, but what would you say are the most important ones that you have? I think clearly AI's impact in research and development in our industry will likely have the longest lasting impact.

4:33There's a lot that's happening in operations, manufacturing, supply chain, finance. And that, I think, is important, clearly having an impact already, but ultimately will become, I think, standard across our sector and other sectors. The biggest question here is, can you use AI to either discover what is a drug target? So think of it as the key lock that we need to unlock. So find those key locks. And then can you also use AI to optimize the key into the lock so that that key can ultimately unlock the biological process that we're talking about? Now, as to where we are today, we're already using AI with Isomorphic Labs, the Google DeepMind company, other partners to optimize those keys.

5:17So we have some ideas for the keys. AI takes all of the information known out there and inside the company and optimize those candidate drugs. And that helps us speed up the process by predicting how it will ultimately do in preclinical safety, toxicology, in terms of its pharmacokinetics, its manufacturability. That process is now, and that's really happening now at scale in companies like ours and at other companies. And I think that will hopefully shorten the drug development, early drug development process by years. And that's, I think, really exciting. And then the bigger question is, could you actually unlock biological processes with AI and actually understand?

5:56And that I think we're further away from. So you work with Microsoft, Palantir, but you mentioned the Isomorphic Labs, which is Hasabi's venture, right? You got the Nobel Prize inside Google. Just how do you work with them? What do they do for you? Yeah, so it's a very, I think we're one of their two partners. And basically what we do is we give them, again, to take the key lock and the key analogy. we give them some locks that we know or we hypothesize are very important in diseases like cancer or heart disease that we simply have not been able to drug or i.e. find the key for. And we say we've struggled with our traditional methods.

6:39Can AI, can their capabilities ultimately enable us to find those keys? And so what they do is they use AI to design new drugs. What's been very interesting is AI comes up with drug structures that we've not thought about or really explored. And so we're starting to see the early results. I think we now have over six different projects going with them and hopefully to expand more into the future. And we'll see if AI can solve what we call our undruggable targets. So can the AI help us drug the undruggable? That's the question. So Vas, I'm giving you this magic wand. You can change three things in European pharma.

7:17What would you change? I would say that we should have a European-wide list price system that then countries can adjust based on GDP per capita that then gives us a framework for list prices across Europe. I think second, there should be no allowance for capping growth of the pharmaceutical sector. So basically, like if you take a country like Italy, our entire growth in Italy is paid back to Italy at the end of the year. And so it's very hard to grow a business if you're always paying back your growth to many countries out of this. So we've got to end this practice. And then third, I think Europe has to end also its practice of propping up the generics industry.

8:03Go to the U.S. model where we have high innovation and then generics prices that are the lowest in the world. And then you'll find the fiscal space to invest in innovation. These are three, I think, very doable changes. We wrote about it in the Financial Times, and let's see. You mentioned also your own physical health and so on, just nutrition, and what are the kind of things you are particularly about? Oh, yeah. Yeah, so look, I got taught very early on from a coach that I work with today, his name is Scott Pelton, this approach, mindset, movement, nutrition, and recovery, and I stick with it.

8:38Um, so mindset, you know, clearly mindfulness, meditation, observing yourself, observing why you think the things you think, why you feel the things you do, uh, and then setting yourself up in the right mindset each day and for each interaction or each moment, uh, even when I have to show up on the in good company podcast, um, you know, nutrition, you know, I think you have to think, why do you eat the things you eat and how you eat will affect your performance, even in small ways. So something I always think about, obviously movement. I mean, exercise has a lot of impact on the nervous system.

9:12Over the years, I've learned that exercise can reset your sympathetic and parasympathetic nervous system. By the way, so much of leadership comes down to managing your nervous system. You're likely not going to make a good decision when you're on high sympathetic drive. When you're more balanced, parasitic, sympathetic, you're more likely to get all the inputs that you need. So observing that in yourself is hugely important. And then recovery, I've learned over the years the power of sleep. I mean, I'm obsessed with trying to optimize my sleep. I've got technology, sleep technology, sleep supplements, all kinds of things to really say, how can I get seven plus hours of very high quality sleep and recover?

9:52And all of those things compound over time and then give you the energy.

9:59You