The exec who decides which drugs Novartis will develop

Dr. Yaron Daniely (left) and Dr. Ronny Gal  credit: Cadya Levy
Dr. Yaron Daniely (left) and Dr. Ronny Gal credit: Cadya Levy

Dr. Ronny Gal, Novartis's Chief Strategy and Growth Officer: Our aim is that half our innovative products should come from outside the company.

At the beginning of 2023, Dr. Ronny (Aharon) Gal, one of the best known and longest-serving analysts in the biopharmaceuticals, surprised the market when he announced a change of career. Gal, who had worked as a senior analyst at investment bank Sanford Bernstein, crossed the lines and joined pharmaceuticals company Novartis as its Chief Strategy and Growth Officer and a member of its executive committee.

The appointment was part of the strategy of Novartis CEO Vasant Narasimhan, who declared at the time that he didn't want to bring the largest number of drugs to the market, but the most innovative drugs, with the greatest impact on patients' lives.

This week, as part of that strategy, Novartis held a conference under the slogan "Ignite Your Curiosity", in collaboration with venture capital firm aMoon and Startup Nation Central. For several years now, the company has held such conferences, at which it presents its vision and the areas and ways in which it seeks to collaborate with Israeli biopharmaceutical companies and with academic institutions in Israel.

"I wanted the excitement of Wall Street"

In conversation with Dr. Yaron Daniely, a general partner at aMoon, Gal indicated the directions on which the company currently wishes to focus, but before that he talked about how he arrived at his present position. "The CEO, Narasimhan, would invite me to give lectures to the company’s management on the state of the market, and at some stage he said to me ‘Come and work with us full time.’"

Gal, who was born and raised in Israel, holds a doctorate in biochemistry from MIT. "I wanted to continue to post-doctoral work at the Weizmann Institute, but then consultancy BCG came to make a presentation to our class at MIT, and I liked it. I said, ‘I’ll try it for a couple of years and perhaps I’ll return to academia.’" It ended up being seven years in the US and Shanghai. "I realized that if I were to return to Israel, I would probably limit my career to this place, and I wanted to try the excitement of Wall Street."

Gal was recruited to Sanford Bernstein and stayed there for seventeen years. Daniely, who in the past served as CEO of Alcobra, a small pharmaceutical company, recounted in their conversation: "Our feeling was that he had a crystal ball. I came to him with my presentation in advance of an offering and he told me, ‘Forget it, it won’t work.’ I invested five years of my life only to discover that he was right."

For his part, Gal responded jokingly that 95% of the products at the stage at which Alcobra began never reach the market, and so his gamble wasn’t all that risky, but Daniely was impressed.

"Innovation has to come from the outside"

When Narasimhan recruited Gal, he stressed that the aim was for Gal to continue challenging the thinking at the company. ""I think the company could benefit from having an independent view on whether the assets we take forward either internally or externally... can really generate that multibillion-dollar potential we’re looking for and have that voice in the room so that we can then say ‘no’ to the projects that aren’t going to make it and have the resources available to really invest in the ones that we believe do," he said at the time.

Today, Gal does much more than say what won’t succeed. He manages business development, the new products strategy, and the strategy for the portfolio of products in development - some 400 drugs at various stages. He reports directly to the CEO.

"The unique characteristic of the drugs field is that innovation has to come from outside as well," says Gal. "Today, 30% of Novartis’s products started off outside the company, and CEO Narasimhan wants to raise that proportion to 50%. The model whereby innovation goes from academia to venture capital funds, which know how to help in setting up young companies and then with close mentoring and after that with passing the baton to us when the products or technologies are sufficiently mature, is a model that has undergone optimization that has brought it to near perfection, but it’s not perfect for everyone."

It’s an interesting model, considering the fact that a substantial proportion of the young companies fail financially or scientifically, but there’s logic to it. Given that the huge risk in drug development is unavoidable (and for the foreseeable future, that’s how it is), it makes sense to share the risk among several players at different stages.

"When the patent expires, the drug has no value to the company"

"The pace of innovation in pharma and the impact on human life are astonishing," says Gal. "In another twenty years, heart disease will no longer be the leading cause of death in the world. Morbidity from cancer has already reached some kind of stability. It looks as though neurology is what will concern us, and also the urinary tract. It’s hard for old people to go to the toilet."

When Daniely says that he is concerned at the rise in the prices of drugs, Gal points an accusing finger at the structure of the health system in the US, and the patent registration process.

"Unlike other industries, pharma companies are subject to a range of types of regulation, and their growth as a percentage of GDP is limited. What you see is a rise in the price of registering the drug for reasons mainly connected to the structure of the health system in the US, but the true cost of the drugs to the health system is lower.

"Our strongest argument is the loss of the patent. I still pay Microsoft every year for the operating system for my computer, but a drug on which the patent has expired is worth practically nothing to the innovative company. I work at a drugs company and I’m not poor; these companies are profitable, but it’s not that we’re abusing the system. Today, when I’m on the inside, I can say that with certainty."

The vision: An injection once a year for several diseases

Gal says that Novartis now divides development of its drugs according to diseases and according to technologies. As far as diseases are concerned, the company mainly deals with heart disease, diseases of the brain, cancer, and immunology. In technologies, Novartis concentrates on classic chemistry, on developing antibodies, RNA-based products, cell therapy (using living cells as engines for producing drugs within the body), and focused radiation treatments.

"We’re seeing acceleration in innovation in neurology thanks to the use of RNA, because these drugs can reach the brain more easily," says Gal. "In the past, I would talk to neurologists, and they would laugh, sadly, at the fact that their role was ‘diagnose and adios’, that is, diagnosis and preparation for the inevitable dwindling away. Today, that is no longer the situation. They have what to offer even in the case of severe diseases like ALS."

In cardiology, he says the main challenge is persistence with the treatment. "We are bringing to market, and looking for more treatments, that can be administered with a long-term injection, in the hope that we can visit the doctor once or twice a year and receive with one injection treatment for reducing cholesterol, blood pressure, and perhaps weight." Novartis has yet to launch products in the hot obesity treatment category, but it has certainly put that on its agenda.

Even in such an imagined future, millions of people will still suffer from heart disease, despite the drug treatment. "From our point of view, this is a very attractive market, but the clinical trials that the regulators require in these markets are huge and long, and countries conduct tough negotiations on the price, because they know that these drugs will be given to very many people. All the same, we see this category as a significant source of growth, now and in the future, and we have 30-40 molecules in development in this field."

In cell therapy, Novartis was among the pioneers of CAR T treatments for blood cancer, and today it is working on expanding the treatment to other cancers and diseases. "At the same time, we very much want to improve the logistics of the treatment itself. Today, administering the cells is very complicated and there’s a risk to the patient. We want to reach much better control over these cells, so that the treatment will be much easier, much faster, and more accessible."

An R&D center in Israel? Not any time soon

Gal says that Novartis employs about 150 people whose job it is to create collaborations. "We have scouts who talk to the market all the time, and when they see a mature product, they bring it to the head of the relevant field in the company," he says of the work process. "After talks that go on for two or three weeks, if the response is positive, we set up a team of about ten people, who carry out a short due diligence examination. If it’s successful, we examine the product in the light of the company’s strategy."

The link with academia, he says, often begins from the scientists at Novartis, who follow the science in their fields and point out researchers who they think are doing interesting things.

Will Novartis consider setting up a development center in Israel? To this question from the audience, Gal replies: "That’s a fair question. We have a presence in Israel that goes beyond marketing, for example many collaborations and clinical trials, but an R&D group will be set up here only if we have the impression that it’s possible to do something here that can’t be done elsewhere. We won’t set up an R&D group here unless we see a differentiating factor here."

Novartis and Globes collaborated on coverage of the conference in accordance with editorial criteria and considerations of interest to Globes readers. The conference was held with the cooperation of healthtech and life sciences investment fund aMoon and Startup Nation Central. 

Published by Globes, Israel business news - - on May 23, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Dr. Yaron Daniely (left) and Dr. Ronny Gal  credit: Cadya Levy
Dr. Yaron Daniely (left) and Dr. Ronny Gal credit: Cadya Levy
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