By Suzanne Hodsden
Philips and Novartis are looking to revitalize growth with strategic executive hires. Former Hospira CEO Michael Ball will be taking over as chief of Alcon, Novartis’ vision business, and Jean Botti, formerly an executive at Airbus, will join Philips as chief innovation and strategy officer. CEOs from both companies commented that the executive level shake-ups were aimed at boosting innovation to meet long-term growth targets.
Novartis CEO Joe Jimenez is calling 2016 a “transition year” for the company, which is gearing up to combat a five percent drop in core net income. Alcon, which represents 20 percent of Novartis’ revenue, dropped 13 percent in the fourth quarter of 2015. Jimenez told Reuters that failure to innovate was the primary cause of Alcon’s sluggish sales.
“If you look at the mistakes that were made that have led to the slowdown, we were not vigilant enough…on ensuring that the innovation pipeline would result in continued growth,” said Jimenez.
During an earnings call, Jimenez laid out a strategy that he projected would produce a single digit turnaround for the struggling vision business by the end of 2016, said Bloomberg. Ophthalmic medications will be moved from Alcon into Novartis’ pharmaceutical unit, which allows Alcon to refocus on its core businesses: devices, surgical equipment, and vision care. On Feb. 1, 2016, Ball replaced Jeff George as CEO; he will be given $200 million by Novartis to orchestrate Alcon’s turnaround.
Ball comes to Alcon from Hospira, where he engineered the $15 billion deal to sell the business to Pfizer last year. Bloomberg speculated that Ball might spend some of the $200 million on mergers and acquisitions to strengthen innovation in Alcon’s portfolio.
At this time, Jimenez said he plans to hold onto Alcon but told Financial Times that if the company had not achieved a return to growth by the end of next year, he would revisit the option of selling.
Continued investment in innovation and restructuring has paid off for Philips this year, which reported a 55 percent increase in net profit compared to 2014, reported the Economic Times. Philips CEO Frans van Houten called 2015 a “solid year” for Philips and remained cautiously optimistic, predicting “moderate comparable sales growth” in 2016.
Moving forward, Philips has hired Jean Botti, who has served as chief technical officer for Airbus since 2006, to head up innovation efforts and strategy. In a statement, Van Houten cited Botti’s experience improving “innovation capabilities and building intelligent systems.”
Ken Berta, who is Philips Group Innovation’s head of commercial operations in North America, told MDO that Philips’ innovation strategy over the next decade will focus on informatics and developing a platform that will support innovation in multiple directions.
Once the platform is perfected, said Berta, innovation will mature into “the ability to create applications that layer on top of the platform…The pace at which that will evolve, assuming the regulatory process remains neutral, will make today’s innovation look super slow.”
Botti said he was drawn to Philips’ “strong track record” in innovation and advanced design capabilities, adding that his background in “digital transformation and process optimization will support Philips’ ambitions to drive the personalization and industrialization of care.”