UPDATE 4-Novartis taps Jimenez as CEO for industry challenges

* Drugs chief replaces long-serving CEO Vasella

* New CEO says to maintain strategy

* Considers bid for Alcon minorities as fair

* Q4 net profit $2.3 billion vs forecast $2.4 billion

* Shares up 1.5 percent

(Adds detail on strategy, new CEO comment, analyst)

By Sam Cage and Katie Reid

BASEL, Switzerland, Jan 26 (BestGrowthStock) – Novartis AG (NOVN.VX: )
handed drugs head Joe Jimenez its top job on Tuesday with a
mission to guide the Swiss drugmaker through ever-increasing
competition to its key medicines.

The chatty 50-year-old American steps up after just over two
years running Novartis’s dominant drugs unit and faces a tough
industry landscape as more blockbuster medicines lose patent
protection and the sector struggles to generate new products.

He takes over from Swiss Daniel Vasella, a medical doctor
and the longest-serving CEO among big European drug companies,
who steps down on Feb. 1 after overseeing the acquisition of
U.S. eyecare group Alcon Inc (ACL.N: ).

Vasella will remain as chairman.

“One thing we are aligned on is the strategy of the company,
which is … one of focused diversification,” Jimenez told
Reuters. “We both believe that the portfolio now is broadly
right to help us grow into the future so I don’t anticipate
seeing significant changes there.

“I’m going to step back and think through how we’re going to
set the agenda for the next few years.”

The departure of Vasella, who headed Novartis since the
merger that created it 14 years ago, marks the completion of a
changing guard at the top of the European industry after rivals
GlaxoSmithKline (GSK.L: ), Sanofi-Aventis (SASY.PA: ), AstraZeneca
(AZN.L: ) and Roche (ROG.VX: ) all brought in new CEOs.

Novartis Chief Operating Officer Joerg Reinhardt, who had
been tipped as a possible successor to Vasella, will leave the
company and his position will disappear.

Jimenez joined Novartis’s consumer health unit in 2007 and
soon took over the pharmaceuticals business, overseeing the
progression of several promising new medicines including
multiple sclerosis pill FTY720, or Gilenia, and cancer drug

His appointment at the head of a slimmed-down executive
board came as the company reported a 54 percent rise in
fourth-quarter net profit to $2.3 billion, helped by sales of
its H1N1 swine flu vaccines — not far from analyst expectations
of a 53 percent jump to $2.4 billion. [ID:nLDE60J1YS]

Novartis shares rose 1.5 percent to 56.50 Swiss francs by
1030 GMT, outperforming a slightly stronger DJ Stoxx European
healthcare sector (.SXDP: ).


“We see this as positive, placing a well respected
progressive thinker as CEO,” Deutsche Bank analysts said in a
note. “Together with new CFO Jon Symonds we expect Jimenez
to tackle pharma costs.”

Shareholder group Ethos welcomed Novartis’s decision to give
shareholders a vote on executive pay, a hot topic during tight
economic times and particularly for the drugmaker as Vasella’s
salary of over 20 million Swiss francs ($19 million) often draws
criticism from the press and investors.

Novartis has agreed to buy a majority of Alcon from Nestle SA
(NESN.VX: ), using the acquisition to insulate against losing
exclusivity on treatments like top-selling blood pressure drug
Diovan, and has since come under fire for its lowball offer to
minority shareholders.

Jimenez said he was happy with the current line up of new
drugs and wide spread of the business into areas such as
emerging markets and eyecare, which could all help offset lost
Diovan sales when it loses patent protection in 2012.

The group still considered its Alcon offer — originally
worth $11.2 billion but dependent on share price moves — as
fair, Vasella said. Novartis has had no negative feedback from
its own shareholders on the Alcon deal, said Vasella.

Novartis expects group sales to grow at a mid-single-digit
percentage rate this year, but said profit was difficult to
predict given the Alcon deal.

Sector investors will be closely eyeing results from another
diversified healthcare group, Johnson & Johnson (JNJ.N: ), due
later on Tuesday, for more clues on whether tapping new markets
away from prescription medicines is helping some drugmakers.

Novartis trades at a premium to GlaxoSmithKline, AstraZeneca
and Sanofi-Aventis thanks to promising new drugs such as
multiple sclerosis pill FTY720 and a broad business base, but
lags Swiss rival Roche.

Stock Market Analysis

(Additional reporting by Paul Arnold; Editing by Dan Lalor and
David Cowell)
($1 = 1.044 Swiss francs)

UPDATE 4-Novartis taps Jimenez as CEO for industry challenges