Tencent Pact With Novartis Shows Big Pharma's Ambitions in China

(Bloomberg) -- Two giants from the pharma and tech industries are teaming up to take advantage of rapid growth in China’s health-care market.

Novartis AG, the Swiss drugmaker, said it signed a partnership agreement with Shenzhen-based Tencent Holdings Ltd. and is keen to pursue more deals in the digital realm as it expands in the world’s second-biggest drug market.

The collaboration will focus on heart disease and give patients access to Tencent’s health services, including reminders to take their medication and information about their condition, Bertrand Bodson, Novartis’s digital strategy leader since January, said Wednesday in an interview. Medicine-tracking systems, meanwhile, will help patients avoid counterfeit products, according to Novartis.

Chief Executive Officer Vas Narasimhan, who took over in February, aims to more than double Novartis’s sales in China over the next five years and gain faster reimbursement for cutting-edge cancer drugs as the country speeds up approvals. In an interview with Bloomberg in July, Narasimhan said the company plans to expand its efforts in China to scout for new business opportunities, partly focused on data.

“It’s remarkable how fast they are moving on optimizing patient care,” he said then.

Target Market

The agreement with Novartis follows a pact earlier this year between Tencent and British drugmaker AstraZeneca Plc. China, with a population of 1.4 billion people and trailing only the U.S. among pharma markets, has become a main target as changes in diet, pollution and heavier workloads increase rates of obesity, diabetes and other diseases.

Tencent operates the WeChat messaging and payment app, while Novartis, based in Basel, is betting on new drugs including heart medicine Entresto, psoriasis treatment Cosentyx and breakthrough cancer therapies aimed at curing lethal diseases to drive its growth in the coming years.

“There’s a clear appetite” to pursue additional partnerships in China, Bodson said. “This is a step in a journey.”

Beyond China, Narasimhan is moving quickly to adopt tech industry practices, narrow the focus on cutting-edge products and tap data to try to accelerate the pursuit of new medicines. Bodson, a former Amazon.com Inc. and J Sainsbury Plc executive, is seeking to improve the way Novartis uses that information and interacts with doctors and patients.

Novartis’s therapy Kymriah last year became the first in a new type of treatments known as CAR-T to win approval in the U.S., and Narasimhan has said China wants to be a leader in that field. A string of Chinese companies have jumped into CAR-T, which involves extracting a patient’s immune system cells and modifying them to attack cancer.

©2018 Bloomberg L.P.