Novartis contacts 5,000 managers over Cohen review

By James Paton

A week after Novartis had to explain its entanglement in US Special Counsel Robert Mueller’s investigation, CEO Vas Narasimhan dialled into a conference call of epic proportions. On the receiving end: 5,000 of his top managers.

Mr Narasimhan’s urgent message was that Novartis needs to regain public trust and rethink the way it does business with consulting firms, lobbyists, and other business groups.

That is after the surprise disclosure that the Swiss pharmaceutical company paid $1.2m (€1m) to a consulting firm led by Donald Trump’s personal lawyer, Michael Cohen, an arrangement the CEO later called a mistake.

In Ireland, the drugmaker operates three bases in Cork and Dublin.

Novartis is completing a review to determine its next steps after an internal investigation — conducted with outside advisers and completed in November — found the company did opt do anything illegal, said a source.

The controversy poses a challenge for Mr Narasimhan, a 13-year company veteran who replaced Joe Jimenez atop the Swiss drugmaker in February.

An American, Harvard-trained physician, Mr Narasimhan is seeking to reshape Novartis’s culture after a series of allegations of improper sales practices, while accelerating efforts to find breakthrough products to replace aging blockbusters. Novartis declined to comment.

Mr Narasimhan is grappling with questions about a one-year, $100,000-a-month agreement with Mr Cohen’s Essential Consultants that was aimed at gaining insight into health-care policies under the new US administration.

Novartis said it hired the company in 2017, while Mr Jimenez was still CEO. The drugmaker said that even though it determined after a single meeting that the firm would be unable to provide the services it anticipated and decided not to engage further, it was contractually bound to keep making monthly payments.

Mr Narasimhan had no involvement in the arrangement with Mr Cohen’s firm, Novartis said.

Mr Jimenez, who couldn’t be reached for comment, was chosen in January 2017 as chairman-elect of Pharmaceutical Research and Manufacturers of America, the US lobbying group.

Bloomberg


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