Novartis Expands Strategic Partnerships in China, Aiming for Top 3 Position

Novartis, the Swiss pharmaceutical giant, has taken significant steps to strengthen its presence in the Chinese market through a series of strategic collaborations and investments. These moves align with the company's goal of becoming a top-three multinational pharma company by sales in China, a target that CEO Vas Narasimhan suggests may be achieved as early as this year.

Collaboration with Shanghai Pharma Expands to Ophthalmology

Novartis has signed a strategic agreement with Shanghai Pharma to help market its mature ophthalmic products in China. This partnership will leverage Shanghai Pharma's omni-channel integrated marketing services and broad market coverage to accelerate the reach of Novartis drugs for ocular infections and glaucoma in smaller territories not currently targeted by Novartis.

While specific products covered by the deal were not disclosed, this collaboration builds upon an existing relationship between the two companies. The partnership also extends to other therapeutic areas, as evidenced by the recent unveiling of a cardiovascular health management platform. This cloud-based service offers patients continuous support, including medication guidance, test results tracking, and follow-up visits.

Investments in Radiotherapy and Manufacturing

In November 2024, Novartis China expanded its collaboration with Shanghai Pharma and C.Q. Pharmaceutical to build a supply chain for its radioligand therapies. This agreement followed Novartis's July announcement of a 600 million Chinese yuan ($83 million) investment in a radioligand therapy manufacturing facility in Zhejiang province. The facility is expected to be operational by the end of 2026, further solidifying Novartis's commitment to the Chinese market.

Market Performance and Recent Approvals

Novartis's focus on China as a priority geography, alongside the US, Germany, and Japan, appears to be paying off. In 2024, the company saw sales from China grow 21% at constant exchange rates year-over-year, reaching $3.9 billion. Recent regulatory wins have further bolstered Novartis's position in the market, with Chinese approvals for Kisqali as an adjuvant treatment for early-stage HR-positive, HER2-negative breast cancer and for Scemblix in newly diagnosed Philadelphia chromosome-positive chronic myeloid leukemia.

Expanding Network of Strategic Partnerships

Novartis's strategy in China relies heavily on partnerships with local pharmaceutical companies. In addition to its collaborations with Shanghai Pharma, Novartis has been working with Sinopharma, China's state-owned pharmaceutical behemoth, since 2023. Sinopharma markets Novartis's Gleevec (also known as Glivec) in the country. In January, the two companies signed a strategic collaboration focusing on oncology drugs for the future.

These partnerships are crucial for Novartis's growth in China, as local companies like Shanghai Pharma bring extensive distribution networks and market knowledge. In 2024, Shanghai Pharma's contract sales organization (CSO) business managed 65 drugs, contributing to 8 billion Chinese yuan ($1.1 billion) of those products' annual revenue, a 177% year-over-year increase.

As Novartis continues to expand its presence in China through strategic collaborations and investments, the company appears well-positioned to achieve its goal of becoming a top-three multinational pharmaceutical company in one of the world's largest and fastest-growing healthcare markets.