Novartis Overhauls Japanese Unit after Drug Scandal

Novartis  said it had overhauled management operations and sanctioned key staff in Japan after a scandal involving research into its Diovan blood pressure drug in the country.

The Swiss company's pharmaceutical head David Epstein said the episode would not have a significant impact on the group's profits, although he acknowledged sales of the drug had fallen.

"Overall Diovan is a relatively small part of our portfolio, given the breadth of the medicines that we have, so the impact should not be significant," Epstein said. Epstein told a news conference that oversight at its Japan unit had fallen short and, as a result, Novartis was setting up a compliance advisory panel to prevent future such problems.

"Clearly there should have been more control as well as better training in Japan," Epstein said. "Unfortunately that was not the case. Those controls are now in place so that this cannot happen again." He also acknowledged, in response to a reporter's question, that the company should have paid more attention to questions raised by some outside experts about the studies into Diovan.

A Japanese health ministry panel this week called for the ministry to investigate Novartis Pharma, the company's Japanese arm, saying it may have violated the law when it cited studies based on allegedly manipulated data.

Japan accounted for around a quarter of Diovan's global sales before the scandal and, overall, it made up 9 % of total group sales in 2012, or $5.36 billion. Diovan was once Novartis' top-selling product but its importance is declining and the patent on the medicine is due to expire in Japan this year.