In an extract from his new book, JC Larreche tells the story of the Novartis drug Glivec as an example of how to ignite exceptional growth
What does it take to make a CEO jump? Dr. Daniel Vasella, chairman of Novartis, one of the world's largest pharmaceutical firms, found out in April 1999 when he was handed a report on a new drug developed by his oncology division. The results before his eyes were sensational - 100% efficacy. The drug had real potential to prolong patients' lives.
It was the first phase of research on a product then known as STI571, later renamed Glivec, developed to treat a form of cancer called chronic myelogenous leukaemia, or CML. At the time, there were about 40 000 known CML sufferers worldwide, with a life expectancy of just four or five years after diagnosis. Given the high costs involved and the small patient population, a purely financial calculation would have shown that it was not worth developing the drug.
Despite the seemingly small business opportunity, Vasella made Glivec an urgent priority. Normally it would take more than a decade to move a new drug from phase one research to launch. By engaging employees, customers and important stakeholders to share his passion, Vasella managed to build an internal and external momentum that saw Glivec come to market in less than three years.
The potential for the new drug Glivec was wide-ranging: for patients, their families and caregivers, for the medical community at large, and for Novartis - although apparently small in terms of economic potential, it was great in terms of social responsibility and employee pride.
This is a crucial point. Momentum-powered firms focus on key stakeholders and understand that the concept of 'customer' is much wider than simply the product purchaser. Vasella made sure that everyone in the company was aware of the new drug's importance. The Novartis Technical R&D team committed itself to beating senior management's deadlines, many of them volunteering to work overtime.
CML patients condemned to death from an incurable cancer - began writing to Vasella in masses begging to take part in clinical trials. With such a rare condition, it would normally take over three years to recruit enough patients for large-scale trials. Novartis did it in four months. The US Food and Drug Administration approved the drug in just ten weeks - the FDA's fastest ever sanctioning of a new cancer drug.
This momentum gave Novartis a reputation as one of the most exciting places to work in the field of cancer treatment research. The brightest and best flocked towards the firm where the action was, adding more momentum.
For Glivec customers, the value was even greater - they can survive for longer, with a treatment that is more effective and less unpleasant than chemotherapy. The longer patients survived, the longer they would be buying the drug. Glivec was also approved as treatment for other forms of cancer as well.
In 2002, analysts had estimated that sales of Glivec would reach $800 000 by 2006. In fact, by 2005 they were already in excess of $2 billion. At the same time, a patient assistance programme was put in place that by 2006 had helped 18 907 needy people in different parts of the world.
This is an edited extract from The Momentum Effect by JC Larreche, published by Wharton School Publishing, 2008. Professor J.C. Larreche is The Alfred H. Heineken Chair at INSEAD. Marketing Society members can benefit from 30% discount. (www.pearson-books.com/TheMomentumEffectOffer) A longer version of this article is available on the Read section of the website.