Why Novartis Is One of Today's Most Innovative Companies

What makes Novartis stand out from the crowd?

Feb 14, 2014 at 6:30PM

Innovation is the lifeblood of the big pharma industry. Without a robust drug development pipeline and ground-breaking medications that make their way through the complex FDA approval process, pharmaceutical companies would not be able to survive. While each major drugmaker boasts a crown jewel in its pipeline, however, few can rival Swiss pharma company Novartis (NYSE:NVS) when it comes to developing innovative drugs. The company currently has three experimental drugs with the FDA's coveted "breakthrough therapy designation" and has several attractive assets in its pipeline.

In the following video, Bernard Munos, the founder of the InnoThink Center for Research in Biomedical Innovation, discusses the key to Novartis' (NYSE:NVS) success -- namely its culture of innovation -- with analyst Max Macaluso. A transcript follows the video.

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Max Macaluso: Do you think Novartis has maintained this culture of innovation, maintained this culture of looking for breakthrough therapies?

Bernard Munos: Very much so. Very much so. This is the old model, where the scientists have a lot of freedom to use all the creativity that they can muster to come up with drugs that will make a difference; drugs that will cause the physician to change their standard of care. They've contributed -- since Novartis was created in 1996 -- over 20 such drugs. They haven't had one approved this year yet ... we still have six weeks to go.

But it is still one of the most innovative pharmaceutical companies of the last 15 years, so it clearly has worked. It's the old pharma model: Hire the smartest scientists you can find and let them be as creative as they can. Bring their innovation to market and hope to do it often enough that you have a steady supply of new, breakthrough drugs. That's one model.

Max Macaluso, Ph.D. and Bernard Munos have no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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