Social Business at Novartis: Arogya Parivar
In 2013, Novartis Group was a global pharmaceutical leader that sold patented and generic medicines, vaccines, diagnostics, and consumer health products to 1.2 billion customers in 140 countries. Headquartered in Basel, Switzerland, Novartis employed 128,000 people, generating 2012 revenues of $57 billion and profits of $9.6 billion.
In a 2005 presentation to the Novartis executive committee, management thinker C. K. Prahalad had challenged the company to move beyond its conventional approach to corporate responsibility of donating medicine to the indigent. Instead, he encouraged the company to develop a profitable way to serve what he called “the bottom of the pyramid”—the four billion people who each lived on less than $5 per day.
Although the executive committee did not make any commitment at the time, Novartis’s India country head Ranjit Shahani, together with Udit Batra, Novartis’s head of corporate strategy, Paul Choffat, head of the Consumer Health Division, and Richard Saynor, head of Novartis’s emerging markets generics business, set up an informal steering committee to quietly explore the idea. In 2007, the steering committee began to experiment with a shared value approach to serving low-income populations in rural India.
Novartis and the Pharmaceutical Industry
Novartis operated through five businesses in what the company called a strategy of focused diversification (see Exhibit 1 for financial data by business).
- Pharmaceuticals (Pharma) developed and sold a broad portfolio of patented prescription medicines.
- Alcon specialized in eye care, offering surgical devices and lenses, pharmaceuticals, and consumer products.
- Sandoz focused on generics and bio-similar3 prescription medicines.
- Vaccines and Diagnostics developed and sold vaccines and blood screening products.
- Consumer Health comprised Novartis’s over-the-counter (OTC) medicine and animal health businesses.
Assignment Questions:
1. Clarify the challenges that faced Novartis and ultimately triggered their interest in CSV?
2. How Novartis CSV? What was the impact of CSV?
3. explain the key reasons that made Novartis CSV Strategy a success? what from what you understand from CSV, what are some of the potential risks that Novartis need to be aware of when implementing CSV?
4. Explain how Novartis adopted a collaborative approach in relation to their CSV strategy and also outline any relevant international aspects of their strategy?
