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Novartis Business Model

Novartis Business Model Canvas
Photo by Pixabay, Edited By Grey Knight

A Brief History of Novartis

Novartis AG is a Swiss multinational pharmaceutical company that was formed in 1996 through the merger of Ciba-Geigy and Sandoz, two Swiss chemical and pharmaceutical companies with a rich history.

Ciba-Geigy was founded in Basel, Switzerland in 1758 as a dyestuffs company. Over the years, it expanded into the pharmaceutical industry and became known for its development of groundbreaking drugs, including the antihistamine drug Benadryl and the anti-malarial drug Lariam. Sandoz, on the other hand, was established in 1886 as a chemicals manufacturer in Basel and later ventured into the production of pharmaceuticals. It gained international recognition for being the first company to mass-produce LSD and for introducing the first oral contraceptive pill.

Following their merger, Novartis AG became one of the largest pharmaceutical companies in the world, with a focus on research, development, and production of innovative drugs and healthcare products. The company has a diverse portfolio of medications, including treatments for cancer, cardiovascular diseases, and infectious diseases, as well as consumer health products and generic medications.

Novartis continues to be a key player in the pharmaceutical industry, with a strong emphasis on investing in research and development to address global health challenges. The company has also made significant efforts in corporate social responsibility, including initiatives to increase access to essential medicines in developing countries.

Overall, Novartis AG has a long and impactful history in the pharmaceutical industry, and its commitment to innovation and improving global health continues to drive its success and influence.

Who Owns Novartis?

Novartis AG is a multinational pharmaceutical company based in Switzerland. The company’s ownership is dispersed among a wide range of institutional and individual investors. Some of the top 10 shareholders of Novartis AG include The Vanguard Group, Inc., BlackRock, Inc., Norges Bank Investment Management, Dodge & Cox, Credit Suisse Group AG, Capital Group Companies, Inc., UBS Group AG, Massachusetts Financial Services Co., and Wellington Management Company, LLP. These shareholders collectively account for a significant portion of the company’s ownership, reflecting the diverse and global nature of its investor base.

Novartis Mission Statement

Novartis AG’s mission is to discover new ways to improve and extend people’s lives. They strive to develop innovative medicines and healthcare solutions that address the evolving needs of patients and societies worldwide. The company is committed to conducting business in a responsible and sustainable manner, while also contributing to the betterment of global health and well-being. Through their dedication to research, innovation, and collaboration, Novartis aims to make a positive impact on the world and advance healthcare for all.

How Novartis Makes Money?

Novartis AG operates as a global healthcare company with a diverse revenue stream. The company primarily makes money through the sale of patented pharmaceuticals, generic drugs, and over-the-counter medicines. Additionally, Novartis has a strong presence in the research and development of new drugs, investing heavily in innovation to bring new products to market. The company also generates revenue through its eye care and generic division, as well as through the sale of consumer health products. Additionally, Novartis has a growing presence in the field of digital healthcare and data analytics, further diversifying its revenue streams. Overall, Novartis AG’s business model is focused on innovation, research, and commercialization, allowing it to generate substantial revenue from a variety of sources within the healthcare industry.

Novartis Business Model Canvas

The Business Model Canvas is a strategic management tool that allows businesses to visually map out and analyze their key business activities and components. It consists of nine essential building blocks that help organizations to understand, design, and execute a business model. This tool is particularly useful for businesses to identify and clarify their value proposition, target customer segments, and key activities that are crucial for their success.

Customer Segments:

1. Novartis AG targets various customer segments including pharmaceutical wholesalers, hospitals, healthcare providers, and patients.
2. The company caters to a wide range of therapeutic areas such as oncology, cardiovascular, respiratory, and ophthalmology, which target specific patient populations.

Value Propositions:

1. Novartis offers innovative pharmaceutical products and healthcare solutions that focus on improving patient outcomes and quality of life.
2. The company delivers value through its commitment to research and development, as well as its strong focus on sustainability and ethical business practices.


1. Novartis utilizes a multi-channel approach to distribute its products, including direct sales to healthcare providers, pharmacies, and wholesalers.
2. The company also leverages digital channels to engage and educate patients and healthcare professionals about its products and services.

Customer Relationships:

1. Novartis builds and maintains strong relationships with healthcare providers and patients through educational programs, patient support services, and disease awareness campaigns.
2. The company also engages in collaborative partnerships with healthcare organizations to improve patient care and access to treatments.

Revenue Streams:

1. Novartis generates revenue through the sales of pharmaceutical products, as well as royalties and licensing fees from its intellectual property portfolio.
2. The company also earns revenue from strategic collaborations and partnerships with other key industry players.

Key Resources:

1. Novartis relies on its extensive research and development capabilities to innovate and develop new drugs and treatments.
2. The company’s strong brand reputation and intellectual property portfolio are also key resources that drive its success.

Key Activities:

1. Novartis focuses on research and development to discover and develop new drugs and therapies for various diseases and conditions.
2. The company also engages in marketing and sales activities to promote and distribute its products globally.

Key Partners:

1. Novartis collaborates with academic institutions, research organizations, and other pharmaceutical companies to drive innovation and bring new treatments to market.
2. The company also partners with healthcare organizations and advocacy groups to improve patient access to treatments.

Cost Structure:

1. Novartis incurs costs in research and development, clinical trials, and regulatory compliance to bring new products to market.
2. The company also invests in sales and marketing activities, as well as distribution and supply chain management to support its global operations.

Novartis’s Competitors

Novartis AG faces stiff competition in the pharmaceutical industry, competing with major players who also focus on the research, development, and commercialization of innovative medicines. Some of its top competitors include Pfizer Inc., Roche Holding AG, Merck & Co., Inc., Sanofi SA, and GlaxoSmithKline PLC. These companies are also global leaders in the pharmaceutical market, constantly innovating and delivering new treatments to patients worldwide. The competition in the pharmaceutical industry is fierce, with each company striving to bring new and effective therapies to market.


1. Strong presence in pharmaceuticals, generics, and eye care businesses.
2. Diverse product portfolio.
3. Robust research and development capabilities.
4. Global reach and established presence in key markets.
5. Strong financial performance and resilient business model.


1. Dependency on a few key products for a significant portion of revenue.
2. Increasing competition in the pharmaceutical industry.
3. Patent expirations leading to generic competition.
4. Regulatory and compliance challenges.
5. Limited presence in certain therapeutic areas.


1. Expanding into emerging markets.
2. Collaboration and partnerships for drug development.
3. Increasing demand for specialty and biologic drugs.
4. Growing focus on personalized medicine and targeted therapies.
5. Investments in digital health and innovative technologies.


1. Pricing pressures and healthcare cost containment measures.
2. Regulatory scrutiny and changing healthcare policies.
3. Intense competition from generic and biosimilar drugs.
4. Potential impact of Brexit and trade tensions on operations.
5. Emerging infectious diseases and public health crises.

Concluding Analysis

In conclusion, Novartis AG has successfully established itself as a leading pharmaceutical company with a strong business model that focuses on innovation and delivering value to patients and healthcare providers. As an analyst, I am optimistic about the future of the business, especially considering their strategic focus on research and development, as well as their efforts to expand into emerging markets. With a strong pipeline of new drugs and a commitment to addressing unmet medical needs, I believe that Novartis AG is well-positioned for continued success in the pharmaceutical industry. Their dedication to driving healthcare forward gives me confidence that the company will thrive in the years to come.

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