708-486 Global Talent Management at Novartis
additional changes or innovations needed to be made to further improve the culture. He alsowondered how the company should best respond to new challenges in managing global talent,particularly given new talent management issues that the company faced in the dynamic markets ofChina, Russia and India.
In late 2007 Novartis was the third-largest pharmaceutical company in the world and had over100,000 employees across 140 countries. Formed in 1996 through the merger of Ciba-Geigy andSandoz, Novartis under Vasella’s leadership had developed into a
healthcare company byspinning off its specialty chemicals business (Ciba SC) and its agrochemicals business (Syngenta) andits consumer nutrition business (e.g., Ovaltine). This refocusing of the company had been completed by the sale of the Gerber and medical nutrition business to Nestle in 2007. In recent years Novartishad significantly expanded its investment in vaccines (by acquiring the 51% of Chiron that it did notalready own), a move that went against the popular tide in the industry to divest vaccine businessesfor fear of product liability, and a common perception that vaccines were low-priced commodities.Novartis had also gone against the conventional wisdom by becoming the second largest producer ofgeneric drugs, bolstering its position by acquiring Hexal and other generics producers, believing thathigh-quality, low-cost generics were an important treatment modality for patients and physicians inan increasingly cost-containment driven healthcare system. The company was also somewhat uniquefor its diversification in the OTC consumer health and animal health businesses. Together theseinvestments made Novartis one of the most diversified healthcare companies in the world. Thecompany spent nearly 15 percent of sales, or $5.4 billion, on research and development in the lastfiscal year, and its main pharmaceutical research activities were based in Cambridge, Massachusetts,and Basel, Switzerland, with other research activities also being conducted in Emeryville and La Jolla,California, Shanghai, China, and Horsham, United Kingdom.One of Vasella’s other primary initiatives had been, in fact, to create a research headquarters inCambridge, Massachusetts, and to base core R&D activities out of the new center, hiring a new headof Research, Mark Fishman, away from Harvard to lead and transform Novartis’ discovery efforts.Core to Novartis’ competitive advantage and the company’s superior and consistently improvingfinancial performance over the prior 10 years had been the creation of a strong incentive, pay-for-performance, and related talent management culture, in which the focus on patients, competitiveness,ambition and integrity were cascaded throughout the company. Since the creation of Novartis in1996, the company’s performance over the subsequent decade was among the best in its industry. In2007 the company earned $13 billion in operating income (and $12 billion in net income) on $39.8 billion in sales. The company in 2007 gave free and heavily discounted medicines to over 33 millionpatients in poor countries, for an estimated value at factory cost of $755 million. The company stoodout relative to its peers in late 2007 for the large size of its pending pharmaceutical product pipelineand the relatively small number of drugs about to come off patent.
Leadership Development and Philosophy behind Novartis’ Global TalentManagement System
One of the goals of any talent management system was to develop talent for leadership positionsfrom within. The idea was that the company could often know more about the individual bygrowing him or her over time. It was easier to build a company culture when its employees came upthrough the ranks with shared values and experiences. Also, it was often less expensive to promotefrom within than to outbid an outside competitor for someone already holding a comparable