Novartis: How a leader in healthcare was created out of Ciba, Geigy and Sandoz

By Novartis Pharmaceuticals

The Swiss pharmaceutical industry is world-famous, and of today's top five global pharmaceutical businesses, two are Swiss - Roche and Novartis. Novartis was created in 1996 from a merger between three other major companies, Ciba, Geigy and Sandoz (the merger was the biggest ever in business history worldwide up to that point), but despite being a relatively new name, it is rooted in over 150 years of history. Focusing on the emergence of Novartis, this authoritative book is also the fascinating story of how Switzerland's pharmaceutical industry grew out of early dye-production for textiles in the mid nineteenth century, scored major triumphs with the introduction of products such as DDT and Valium in the twentieth century, and developed into the far-reaching international healthcare providers of today.

• Language: English
• Publisher: Profile Books
• Release date: Apr 3, 2014
• ISBN: 9781782830740

Novartis Pharmaceuticals

Novartis, based in Basel, Switzerland, is the only global company with leading positions in innovative medicines, eye care, cost-saving generic pharmaceuticals, preventive vaccines and diagnostic tools, over-the-counter and animal health products. Novartis Group companies employ approximately 131,000 full-time-equivalent associates and operate in more than 140 countries around the world.

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NOVARTIS

HOW A LEADER IN HEALTHCARE WAS CREATED OUT OF CIBA, GEIGY AND SANDOZ

NOVARTIS

HOW A LEADER IN HEALTHCARE WAS CREATED OUT OF CIBA, GEIGY AND SANDOZ

Foreword Joerg Reinhardt

Conception and text Walter Dettwiler

Contributions Philipp Gafner and Carole Billod

With special thanks to

Matthias Leuenberger

Claudio Beccarelli

Ursula Bucher-Herz

Marcel Hugener

Stephen Paul Lander

Romeo Paioni

Frank Petersen

Michael Plüss

Wolfdietrich Schutz

All product names in italics are trademarks owned by or licensed to Novartis Group Companies.

First published in this English-language translation in 2014 by

Profile Books Ltd

3a Exmouth House

Pine Street

London EC1R 0JH

www.profilebooks.com

Copyright © 2014 Novartis International AG, Basel

The moral right of the authors has been asserted.

All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the publisher of this book.

A CIP catalogue record for this book is available from the British Library.

ISBN 978 1 78125 265 9

eISBN 978 1 78283 074 0

Design Focus Grafik, Karin Rütsche, Basel, Switzerland

Repro Bildpunkt AG, Münchenstein, Switzerland

Printed by Heer Druck AG, Sulgen, Switzerland, on Profibulk 135gm²

Bound by Buchbinderei Burkhardt AG, Mönchaltorf, Switzerland

Contents

Foreword Joerg Reinhardt

1  Ready for lift-off

The founding of Basel’s dye factories | 1859–1908

The golden age of dyestuff labels

2  Export and expansion

International and innovative from the outset | 1881–1914

3  The First World War

Holding firm in troubled times | 1914–1918

Ergot alkaloids

4  The interwar period

A boom in pharmaceuticals | 1918–1939

Early hormone products from CIBA

Calcium-Sandoz

5  The Second World War and the early postwar period

Stagnation and modernization | 1939–1951

The battle against malaria

6  Two decades of growth

Global expansion and a marriage | 1950–1970

Geigy design

Tofranil

Voltaren

7  First one merger, then another

Focus instead of diversification | 1970–1996

Sandimmune

Tegretol and Trileptal

8  Novartis

From life sciences to focus on healthcare | 1996–2013

Diovan

Gleevec | Glivec

Bexsero

The Novartis Campus

Appendix

Prix Galien

Sources and Bibliography

Index

Photo credits

Joerg Reinhardt

Chairman of the Board of Directors

When Novartis was founded in 1996, it was the starting point of an entrepreneurial endeavor that helped form one of the world’s leading healthcare companies. But the merger of Ciba-Geigy and Sandoz also symbolized the historical peak of countless scientific and commercial achievements that stretch back more than 150 years.

Without these past efforts Novartis would be unthinkable. When our forerunners started out in the dyestuff business in the 19th century, there was little sign that their enterprises would culminate in the creation of one of the world’s largest healthcare companies. Yet the determined actions of the founding fathers of CIBA, Sandoz and Geigy, as well as the work of generations of successors, laid the foundation for a unique success story.

Although much of the old industrial heritage has disappeared since the first factories were built in Basel along the banks of the river Rhine, the values of our forerunners have survived. These principles, which still guide our global workforce today, have become part of our identity and are expressed in our unfaltering dedication to the pursuit of innovation in order to address as-yet unmet medical needs.

As our corporate history shows, the leaders of our predecessor companies had the talent to react quickly to economic swings, and they cultivated an open and inquisitive attitude from the start. Their curiosity and longterm vision prompted them to venture beyond the borders of Switzerland early on, founding outlets as far away as Russia and the United States more than a century ago. These outlets would later become the launch pads for the internationalization of Novartis.

But history is never a seamless chain of events. More often than not the past is broken up by sudden reverses and unexpected failures. This holds true for our predecessor companies too. When the dyestuff business lost momentum, its leaders were forced to look for more promising business areas, even in the face of world wars and economic crises. Their decision to step up their fledgling chemical production and venture into the nascent pharmaceutical sector was fraught with high risks and was hit by repeated setbacks. But thanks to their determination, stamina and dedication, they eventually succeeded in building the basis for a world-renowned pharmaceutical hub that today helps develop therapies for millions of people to live longer and healthier lives.

Many of the values that were developed during the long history of our predecessor companies have become part of the DNA of Novartis. Innovation and entrepreneurial resolve were crucial in building a patient-centered healthcare organization with state-of-the-art research facilities that span the globe and in which thousands of talented scientists work toward developing effective therapies and medicines. The same lucidity also led Novartis to embark on its strategy of focused diversification, which reflects our conviction that healthcare companies need to be flexible and able to respond quickly to a fast-changing economic, demographic and regulatory environment.

Thanks to this determined focus on innovation, Novartis has been able to launch breakthrough therapies such as cancer medicine Gleevec/Glivec, hypertension treatment Diovan and multiple sclerosis drug Gilenya, to name but a few major medical achievements. At the same time the diligent expansion of our research and development facilities and the gradual extension into other healthcare areas such as generics and eye care have produced excellent results. Determination, courage and an unwavering focus on progress also helped Novartis foster this culture of innovation, which today pulses throughout the company and is most visibly expressed in our research and knowledge campuses in Basel, Cambridge (Massachusetts, USA), Shanghai and East Hanover (New Jersey, USA). There, a unique work atmosphere furthers and supports creative collaboration, inspiring and motivating our associates to seek novel solutions that promise to change the practice of medicine.

The ability of Novartis to provide reliable, high-quality medicines to more than one billion patients every year is the result of the collective effort of generations of associates who were and are dedicated to putting their work to the service of people in need. This book pays tribute to some of the great achievements of the past. And even though many important milestones remain unmentioned, it is clear that every single associate has contributed to the success of Novartis during the long history of this company.

These achievements fill me with pride and gratitude to those who were and are part of this great endeavor and make me confident that we will successfully continue our mission of caring and curing in the future.

January 2014

1READY FOR LIFT-OFF

THE FOUNDING OF BASEL’S DYE FACTORIES 1859–1908

Europe first shone in artificial night-light 200 years ago. Instead of candles, gas now lit the houses of the well-off. Gas lights soon lit up the streets of the towns as well. The gas was obtained from coal, which produced large quantities of unpleasant, smelly tar as waste: this was tipped into rivers, resulting in severe environmental pollution. In 1834, the German chemist Friedlieb Ferdinand Runge investigated the possible uses of tar and discovered aniline in the process. In 1856, the English chemistry student William Henry Perkin conducted experiments with this colorless, oily liquid. He was hoping to produce synthetic quinine, for this efficacious antimalarial agent was very much in demand in the British colonies. Instead of white quinine, Perkin obtained an almost black product, from which he isolated a substance that dyed silk a violet color. He named it mauveine, after the French for mallow blossom. Perkin had his invention patented and founded a production site close to London with support from his family. But mauveine did not remain the only synthetic dye for long. In 1858, the French chemist Emanuel Verguin discovered aniline red. He sold his process to the silk dyeworks of Renard frères et Franc in Lyon (France). They patented the new dye, named fuchsine after the red blooms of the fuchsia, and started production. Fuchsine was easier to manufacture than mauveine and it was more productive and versatile. The product triggered a veritable gold rush: dyers and dye merchants, manufacturers and chemists tried to discover similar substances or at least to acquire formulations. Compared with the natural vegetable, animal or mineral-based dyes used since ancient times, these synthetic dyestuffs allowed greater fastness, lower costs and also the possibility of producing textiles in every conceivable shade of color.

CIBA Just three years after the discovery of mauveine, aniline dyes were being produced in Basel. In 1840, Alexandre Clavel (1805–1873) from Lyon (France) had taken over a silk dyeworks in Lesser Basel. Thanks to family connections with Renard frères et Franc he was able to acquire the license for the fuchsine process. He immediately began to produce dyes in a laboratory close to the dyeworks. Due to increasing complaints from the population about the pollutant emissions, production was forbidden in 1863. The operation had to be moved outside the city. Clavel built his new factory in what was then a rural district on Klybeckstrasse alongside the Rhine. In 1873, he sold this to the chemist Robert Bindschedler (1844–1901) and the businessman Albert Busch (1836–1884). The new owners quickly expanded the company: within a year the workforce of about 30 people had more than doubled. In 1884, Bindschedler & Busch became a modern corporation. It now called itself Gesellschaft für Chemische Industrie in Basel. The abbreviated form CIBA, which was initially used only for products, became the official company name in 1945.

Basler Chemische Fabrik In 1892, Robert Bindschedler left CIBA, which he had first run as a Director from 1884–1889 and subsequently helped to shape as a member of the Board of Directors. In 1893, he founded Basler Chemische Fabrik (BCF) in Kleinhüningen, also on the Lesser Basel side of the Rhine. This company became a listed stock corporation in 1898 with capital of 1.5 million Swiss francs. Six years later, BCF acquired an additional production facility in Monthey (Canton of Valais, Switzerland). In 1908, the Board of Directors of BCF began to consider a merger with CIBA. Initial negotiations began in June, and just six weeks later representatives of both companies signed the merger agreement. According to this agreement, BCF merged retrospectively into CIBA from July 1, 1908. In November of the same year the General Meeting of BCF approved the merger. For every five BCF shares held, the shareholders received three CIBA shares. To finance the takeover, CIBA had to increase its share capital by 3.5 million Swiss francs. With the merger, the patents held by BCF were transferred to CIBA.

J.R. Geigy The trading company J.R. Geigy was founded in 1758. It traded raw materials used in the