Good morning.
Shares in Alcon—Novartis’ eye care business—will start trading on the New York Stock Exchange today. Alcon was bought from Nestle in 2011 for $52 billion, but has become a trouble spot for Novartis. It’s expected to be worth about $25 billion today.
The sale marks the biggest move in an amazingly rapid transformation of the Swiss drug company under Vas Narasimhan, who has been in the top job for only 14 months. With the Alcon spin-off, he’s now done a total of $50 billion in transactions, aiming to transition the company from a Johnson & Johnson-style health care conglomerate to what Narasimhan calls a company focused on “transformational innovation” in medicine.
Narasimhan has been in Fortune’s sights since 2015, when as head of development at Novartis he made our 40 Under 40 list. A former McKinsey consultant, he entered the pharmaceutical world with a focus on public health. His purpose-driven approach is consistent with Novartis’ history—the company was No. 4 on Fortune’s 2017 Change the World list for its efforts to reduce prices for poor customers. He wants to push that mission-driven culture even further.
“My background started in malaria and HIV AIDS,” he told me Friday. “I come at everything in my life with a sense of purpose. I want to transform the lives of millions of people.” Rather than aggressive price increases, Novartis has pushed for value-based pricing, and said that every new product at time of launch has to have a plan to get to emerging markets as fast as possible. The company is also one of the leading makers of generic drugs.
But perhaps the most distinctive change being championed by Narasimhan is his leadership style—moving to what he calls an “unbossed” culture, more common to Silicon Valley than Switzerland. He sits in open seating, has abandoned ties and suits, encourages open conversation on the company’s internal social media, and has adopted a system for employees to provide “upward feedback” to managers. He’s also moved away from the company’s “perfectionist culture,” embracing risk and even failure.
You can see Narasimhan’s interview on corporate culture with Fortune’s Susie Gharib here. More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Ghosn Video
Carlos Ghosn, who was officially ousted as Nissan chairman yesterday, has released a video message summing up what he wanted to say at a Thursday press conference, but couldn't because he was re-arrested on fresh financial misconduct charges. Key points: he's innocent; the accusations are all a conspiracy by Nissan execs who fear for the company's independence in the context of its alliance with Renault and Mitsubishi; and he loves Nissan very much. Japan Times
U.S. and Europe
The U.S. is threatening to impose tariffs on roughly $11 billion of EU imports, including aircraft and cheese, because of European subsidies for Airbus. The value of the goods targeted will be worked out in arbitration at the World Trade Organization, which has already agreed that the Airbus subsidies harm the U.S. This is a 14-year-old case, but new tariffs would of course exacerbate the current trade disputes between the U.S. and EU. BBC
Europe and China
Today Chinese Premier Li Keqiang is holding trade-related talks with EU leaders in Brussels. The Europeans are annoyed that China is limiting their access to its markets and overly subsidizing its own companies. Spain's top envoy to China said before the summit that Chinese investments helped the Spanish economy but did not solve the massive trade imbalances. South China Morning Post
China Wariness
How did China go from being no problem to a "systemic rival" in the EU's eyes? A piece in Politico chalks it up to a series of issues: China taking over the market for solar panels; China taking over German robotics firm Kuka and abandoning its European suppliers for Chinese ones; and now the prospect of China developing a serious rival to Airbus (and Boeing for that matter.) Politico
Around the Water Cooler
Browder Letter
Russia has for the seventh time sent a letter to Interpol requesting the arrest of Kremlin antagonist Bill Browder, for alleged tax evasion and "deliberate bankruptcy." The Hermitage Capital Management CEO has long been campaigning—with some success—for sanctions on Russia in relation to the death of his lawyer, Sergei Magnitsky. Reuters
Saudi Aramco
Saudi Aramco's bond sale was expected to be worth around $10 billion, but it has reportedly already attracted over $85 billion in bids. The oil firm's newly-disclosed status as the world's most profitable company has its attractions. Reuters
Facebook Terms
The EU has forced Facebook to change its T&Cs, as part of a consumer-protection crackdown on the social network. The terms will now make it clear that Facebook's business model is to exploit user data for targeted advertising. Facebook will also accept liability in cases of negligence—including Cambridge Analytica-style mishandling by third parties—and is giving up its claim that it can unilaterally change its T&Cs whatever the impact on consumers. Wall Street Journal
5G Patents
Charles Duan, the director of technology and innovation policy at the R Street Institute, writes for Fortune that the Peter Thiel-backed open-access 5G company Rivada stands to be the biggest beneficiary from the White House's push for open-access 5G. That's because of the patents it holds. Duan: "A patent owner playing gatekeeper to 5G does not make for a competitive or innovative market, despite the superficial appearance of competition among those who must pay tribute to the gatekeeper." Fortune
Apologies for misspelling the name of the German city of Duisburg in yesterday's newsletter.
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
