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pane 4 content

The Novartis Malaria Initiative: lessons from a
dramatic decade

November 17, 2011

(Page 3 of 6)

Important lessons can be drawn from the experience Novartis has gained through the Coartem program. Putting patients first has been our touchstone, shaping strategy and execution. Steady improvement of packaging to help patients is one example; development of the pediatric formulation yet another.

We also put patients first during the critical period of 2005-2006 when annual production of Coartem was scaled up from 4 million treatments to 62 million treatments in a mere 24 months. To keep pace with runaway demand, we made decisions as quickly as possible, sometimes without the luxury of carefully optimizing all financial dimensions of our investment.

Expanded production of Coartem was located at a Novartis plant in the United States with sufficient spare capacity to accommodate this scale-up that was virtually unprecedented in the pharmaceutical industry, especially for a medicine supplied at no profit. We might have preferred to build a new facility from scratch – but there are moments when companies are challenged to put lives of patients before net present value and internal rate of return.

At the same time, production planning has been hampered by notoriously unreliable market forecasts, partially driven by delays in funds disbursement. At the outset of the Coartem program, the WHO provided forecasts but consistently overestimated demand. In some cases, exaggerated projections sparked rampant speculation in markets, driving up the price of artemisinin and other raw materials. In recent years, we have stress-tested those forecasts through detailed consultations with national program managers in countries using Coartem.

Getting closer to customers has been an improvement – but is not a panacea. Competition from other manufacturers that have developed ACTs – has generated new uncertainties. In the early days of the program when Coartem was the only ACT available, virtually every order came to Novartis and overall market volume was the key variable. Today we have better projections of likely demand from individual countries – but we can’t be sure how much of that demand will translate into concrete orders for Novartis. Increasing use of tenders to award large orders representing millions of ACT treatments adds still more volatility to forecasting.