Novartis

• 1. New Skills

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  Novartis takes its name from the Latin phrase novae artes, which means new skills. The Swiss pharmaceutical company is based in Basel, and by revenue it ranked eighth among the world's drug makers in 2024. Its medicines include clozapine for treatment-resistant schizophrenia, imatinib for leukemia, and valsartan for high blood pressure. Yet the company itself is a patchwork. Its ancestors began as dye makers in Basel, and its history since then is a long run of mergers, spin-offs and sales. Why did rival Swiss firms join forces? What did researchers at one of them discover that the world still debates? And how did a company of this size end up spending so much time in court?

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• 2. Two Dye Houses

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  In 1859, Alexander Clavel began producing the dye fuchsine at his silk-dyeing works in Basel. By 1873 he had sold the dye factory to the firm Bindschedler and Busch. That firm became a joint-stock company in 1884 under the name Gesellschaft für Chemische Industrie Basel, which means Company for Chemical Industry Basel. Its acronym, CIBA, was adopted as the official company name only in 1945.

  Two years before Clavel started, in 1857, Johann Rudolf Geigy-Merian and Johann Muller-Pack bought a site in Basel. There they built a dyewood mill and a plant for extracting dyes. In 1859 they began making synthetic fuchsine, so the two future partners were producing the same dye in the same city in the same year. The business became the public limited company Geigy in 1901 and was renamed J. R. Geigy Ltd in 1914.

  In 1970, CIBA and Geigy merged to form Ciba-Geigy Ltd. That name would later be tied to a chemical plant in New Jersey.

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• 3. Sandoz and LSD

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  The Chemiefirma Kern und Sandoz, or Kern and Sandoz Chemistry Firm, was founded in 1886 by Alfred Kern and Edouard Sandoz. Its first products were the dyes alizarinblue and auramine. After Kern's death, the partnership became the corporation Chemische Fabrik vormals Sandoz in 1895. That same year it began making antipyrin, a fever-reducing drug. The sugar substitute saccharin followed in 1899.

  Pharmaceutical research began in 1917 under Arthur Stoll, who founded the company's pharmaceutical department that year. In 1918 Stoll isolated ergotamine from ergot. The substance was eventually used against migraines and headaches, and it reached the market as Gynergen in 1921. Calcium-Sandoz arrived in 1929.

  In 1943, Stoll and Albert Hofmann discovered the psychedelic effects of lysergic acid diethylamide, known as LSD, in the Sandoz laboratories. From 1947 until the mid-1960s the company marketed it as Delysid, a psychiatric drug thought useful against a wide range of mental ailments, including alcoholism. Its marketing literature suggested that psychiatrists take the drug themselves, to better understand what schizophrenia felt like. Many did, and so did other scientific researchers. A Time magazine feature brought mass publicity as early as 1954.

  The American intelligence agency, the CIA, bought quantities of LSD from Sandoz for MKUltra, an illegal human experimentation program. Sandoz withdrew the drug from the market in 1965. By then the psychologist Timothy Leary, at Harvard University, had begun promoting it for recreational and spiritual experiences, and it became a cultural novelty of the 1960s.

  Sandoz opened its first foreign offices in 1964. In 1967 it merged with Wander AG, known for Ovomaltine and Isostar. It also acquired Delmark, the Swedish crisp bread maker Wasabröd, and the baby food company Gerber Products Company. On the 1st of November 1986, a fire broke out in a storage room at a production plant. The resulting Sandoz chemical spill released a large amount of pesticide into the upper Rhine and killed many fish and other aquatic life. In 1995, shortly before its own merger, Sandoz spun off its specialty chemicals business as Clariant.

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• 4. Toms River

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  In the mid-1990s, health and environmental agencies in New Jersey and in Washington found more childhood cancers in Toms River, New Jersey, than expected across the years 1970-1995. Several investigations pointed to contamination as the likely source of the added risk. The suspects were the Toms River Chemical Plant, then run by Ciba-Geigy and operating since 1952, and the Reich Farm site tied to Union Carbide.

  The United States Environmental Protection Agency had designated the area a Superfund site in 1983, after an underground plume of toxic chemicals was identified. A year later, a discharge pipe was shut down once a sinkhole at the corner of Bay Avenue and Vaughn Avenue revealed that it was leaking. The plant ceased operation in 1996.

  A follow-up study covering 1996-2000 found more cases than expected, but rates had fallen sharply. The gap from normal statewide cancer rates was statistically insignificant. Since 1996, the Toms River water system has faced the most stringent water testing in New Jersey and is considered safe to drink. Dan Fagin examined the pollution at the site in detail in Toms River: A Story of Science and Salvation, which won the Pulitzer Prize in 2014.

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• 5. Merger and Reshaping

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  Novartis was created in March 1996 and began operations on the 20th of December that year, when the Swiss companies Ciba-Geigy and Sandoz combined. At the time it was regarded as the largest corporate merger in history. Only the pharmaceutical and agrochemical divisions of the two firms formed the new company.

  Everything else had to go. Ciba Specialty Chemicals was spun off as an independent company. Sandoz's construction chemicals producer, Master Builders Technologies, was sold to SKW Trostberg, a subsidiary of the German energy company VIAG. Its North American corn herbicide business went to the German chemical maker BASF. The Sandoz name vanished after the merger. It returned in 2003, when Novartis gathered its generic drugs businesses into one division and gave it that old name.

  In 1998, the company signed a biotechnology licensing agreement with the Department of Plant and Microbial Biology at the University of California at Berkeley. Critics feared it would weaken academic objectivity or lead to the commercialization of genetically modified plants. The agreement expired in 2003. In 2000, Novartis exited agrochemicals and genetically modified crops by creating Syngenta, in partnership with AstraZeneca, which also divested its own agrochemical business.

  In 2005, Sandoz grew sharply through the US$8.29 billion purchase of Hexal, one of Germany's leading generic drug companies, and Eon Labs, a fast-growing American generics firm. The next year Novartis acquired the California-based Chiron Corporation. Chiron's biopharmaceutical unit joined Novartis Pharmaceuticals, while its vaccines and blood testing units became a new Novartis Vaccines and Diagnostics division. Also in 2006, Sandoz became the first company to win European approval for a biosimilar drug, a recombinant human growth hormone.

  In 2007, Novartis sold Gerber to Nestlé, part of a continuing effort to shed old Sandoz and Ciba-Geigy businesses and focus on healthcare. That focus pointed next toward the world's largest eye-care company.

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• 6. Deals and Divestments

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  Novartis had bought 25 percent of Alcon in 2008. In 2010 it offered US$39.3 billion to take the rest, including a majority stake held by Nestlé, and the total cost of Alcon came to $60 billion. When Novartis bought it, Alcon had annual sales of $6.5 billion and net income of $2 billion. Novartis placed its CIBA VISION subsidiary and Novartis Ophthalmics under a new Alcon division, which became its second largest.

  In 2012, the company cut roughly 2,000 positions in the United States, mostly in sales. The hypertension drug Diovan was losing patent protection, and its hoped-for successor, Rasilez, was failing in clinical trials. Earlier rounds of cuts had removed about 2,000 jobs in Switzerland and the United States in 2011 and about 1,400 in the United States in 2010. That same year Novartis agreed to buy Fougera Pharmaceuticals for $1.525 billion in cash, making it the biggest maker of generic skin care medicine.

  In April 2014, Novartis announced it would buy GlaxoSmithKline's cancer drug business for $16 billion and sell its own vaccines business to GlaxoSmithKline for $7.1 billion. It also moved consumer health assets worth $3.5 billion into a joint venture with the same partner, keeping a 36.5 percent stake. In 2018, GlaxoSmithKline agreed to buy that stake for $13 billion.

  In late October 2017, Novartis announced it would acquire Advanced Accelerator Applications for $3.9 billion. In April 2018 it used some of the GlaxoSmithKline proceeds to buy AveXis for $218 per share, or $8.7 billion in total. That deal brought AVXS-101, a treatment for spinal muscular atrophy. Endocyte followed for $2.1 billion, strengthening its radiopharmaceuticals business. In late November 2019, it agreed to buy The Medicines Company for $9.7 billion, gaining the cholesterol-lowering therapy inclisiran.

  On the 9th of April 2019, Novartis completed the spin-off of Alcon, which listed on the SIX exchange in Switzerland and the New York Stock Exchange. Late that year it announced a five-year artificial intelligence alliance with Microsoft. The aim was to organize data from laboratory experiments, clinical trials and manufacturing plants, and to apply artificial intelligence to generative chemistry for drug design.

  In August 2022, Novartis announced plans to spin off Sandoz. The unit had generated US$9.69 billion in 2021, so the spin-off would create the biggest generic drugs company in Europe by sales. Shareholders approved the plan in September 2023, and they received one Sandoz share for every five Novartis shares. The spin-off was completed on the 4th of October 2023, with Sandoz listed on the SIX Swiss Exchange at a market capitalization between $18 billion and $25 billion.

  In February 2024, Novartis announced it would acquire the German biotech firm MorphoSys for €2.7 billion, and Germany's Federal Cartel Office approved the takeover in March. In April 2025 it announced plans to spend $23 billion building and expanding 10 facilities in the United States. In October 2025 it acquired Avidity Biosciences in a deal valued at $12 billion.

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• 7. The Gleevec Patent Fight

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  Novartis fought for seven years to win an Indian patent on Gleevec, its cancer drug, and took the case all the way to India's Supreme Court. The application was filed in 1998, after India agreed to join the World Trade Organization and to follow the worldwide intellectual property standards of the TRIPS agreement. Until India changed its patent law, patents on products were not allowed. The changes took effect in 2005, so Novartis' application sat in a so-called mailbox with others until then. Amendments passed just before that date would prove decisive.

  In 1993, before India allowed product patents, Novartis had patented imatinib in many countries, with its salts only loosely specified. It could not patent it in India. The 1998 application was narrower. It named the specific salt, imatinib mesylate, and it described the solid form, meaning how the molecules pack together when the drug is manufactured. That form is called beta crystalline.

  In November 2003, Novartis obtained Exclusive Marketing Rights for Gleevec from the Indian Patent Office and used them to win orders against generic makers already selling the drug. It priced Gleevec at US$2666 per patient per month. Generic versions sold for between $177 and $266. Novartis also launched a program to help patients who could not afford its version.

  When examination began in 2005, generic companies and advocacy groups attacked the application at once. The patent office and an appeal board rejected it. The key ground was Paragraph 3d, added in 2005, which allows patents on modifications of known drugs only if they differ significantly in properties with regard to efficacy. Novartis went to court to have the provision struck down as unconstitutionally vague and as a violation of TRIPS. It lost and did not appeal. It did appeal the patent rejection, and India's Supreme Court took the case.

  The Supreme Court held that the substance was a modification of a known drug, the raw form of imatinib, which had been publicly disclosed in the 1993 application and in scientific articles. Novartis had offered no evidence that the final form of Gleevec worked better than that raw form. The rejection stood. The court ruled narrowly and noted that the application dated from a time of transition in Indian patent law. Even so, the decision drew global news coverage and reopened debates about public good versus monopoly pricing, and about innovation versus affordability.

  Had Novartis won, it still could not have stopped Indian generic makers from selling the drug. It could have required them to pay a reasonable royalty under a grandfather clause. Ranjit Shahani, then vice-chairman and managing director of Novartis India Ltd, said: "This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options." He added that companies like Novartis would invest less in research in India. Novartis also stated that by 2013-95 percent of patients in India, roughly 16,000 people, received Glivec free of charge. It said it had supplied more than $1.7 billion worth of the drug through its support program.

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• 8. Courts and Settlements

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  On the 17th of May 2010, a jury in the United States District Court for the Southern District of New York awarded $3,367,250 in compensatory damages against Novartis. It found that the company had discriminated since 2002 against twelve female sales representatives and entry-level managers, in pay, promotion and treatment after learning they were pregnant. Two months later Novartis settled with the remaining plaintiffs for $152.5 million plus attorney fees.

  Federal prosecutors had opened an investigation in 2005 into how Novartis marketed several drugs, among them Trileptal, Diovan, Exforge, Tekturna, Sandostatin and Zelnorm. In September 2010, the company agreed to pay US$422.5 million in criminal and civil claims and to enter a corporate integrity agreement. Prosecutors accused it of illegal kickbacks to health care professionals through speaker programs, advisory boards, entertainment, travel and meals. Novartis pleaded guilty to one misdemeanor charge of mislabeling but otherwise denied wrongdoing. In April 2013, prosecutors filed two further suits under the False Claims Act over off-label marketing and kickbacks.

  In 2011, four National Health Service trusts in the United Kingdom approved the cancer drug Avastin for macular degeneration, because it cost far less than Novartis's Lucentis. Both drugs came from the same parent mouse antibody. In April 2012, Novartis announced it would sue the trusts. In July it offered significant, confidential discounts, the trusts changed their policy, and in November the company dropped the litigation.

  In the summer of 2013, two Japanese universities retracted publications of clinical trials suggesting that valsartan, sold as Diovan, had cardiovascular benefits. The statistical analysis had been manipulated, and a Novartis employee had taken part without disclosing his tie to the company. On the 1st of July 2014, Tokyo prosecutors formally charged the company and one of its employees.

  In January 2018, American and Greek authorities began investigating whether Novartis had bribed Greek public officials between 2006 and 2015. The scheme allegedly involved two former prime ministers and several former health ministers. A deputy minister called it the biggest scandal since the creation of the Greek state, and the Greek Judicial Council ruled that the scandal was real. In June 2020, Novartis settled all its Foreign Corrupt Practices Act investigations by paying $233.9 million to the Department of Justice and $112.8 million to the Securities and Exchange Commission.

  After the 2017 inauguration of Donald Trump, Novartis paid $1.2 million to Essential Consultants, a firm owned by Michael Cohen. The monthly payments were each just under $100,000. In July 2018, a Senate committee report showed the relationship was longer and more detailed than Novartis had first said. Then-chief executive Joseph Jimenez had exchanged emails with Cohen several times in 2017, including ideas for lowering drug prices.

  In 2019, AveXis, a Novartis company, told the Food and Drug Administration that some data behind its Zolgensma application was inaccurate. The company had known since the 14th of March 2019, almost two months before approval. In July 2020, Novartis agreed to pay $642 million to settle False Claims Act allegations. Of that sum, $591 million resolved claims about sham speaker programs, and $51.25 million covered money routed through charitable foundations to pay Medicare copays for Gilenya and Afinitor patients.

  Against that record, Novartis points to a commitment, held since 2000, to provide free multidrug therapy for leprosy to every country where the disease is endemic.

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