Novartis Center in Cambridge Producing New Drug Research

Six years after the Swiss drug giant Novartis AG built a major research center in Cambridge, Mass., the move is bearing fruit, corporate executives say.

Chief executive Daniel Vasella said the Basel, Switzerland, company has developed a pipeline of experimental drugs in Massachusetts to treat cancer, diabetes, and other diseases.

“There are plenty of good things coming out of Cambridge,” Vasella said last week at Harvard Business School, where he was attending its Centennial Global Business Summit. “We have a flow now of new products coming into the pipeline which is very promising.”

Vasella said Novartis is likely to continue growing in Cambridge, though not at the same pace as it has in the past few years. “I don’t see a stop in growth, but I see a significant slowdown,” he said.

Three of the experimental drugs, which still have internal code names and were discovered in Cambridge, are being tested in humans: LCZ-696 and LCI-699 are in mid-stage clinical trials for hypertension. And LBH-589 is in early trials for two types of cancer, multiple myeloma and advanced solid tumors.

In addition, Novartis said it has several other promising compounds that are still being tested in the laboratory or on animals, including for cancer, diabetes, and cardiovascular disease.

But Vasella cautioned that the treatments are still years away from being approved by federal regulators.

And industry analysts frequently note that the vast majority of experimental drugs are never approved because they turn out to be less effective than hoped, have serious side effects, or other complications.

Scientists in Cambridge also oversee much of the company’s drug research around the world, including a dozen new drugs that could potentially be submitted for approval in the next few years. Novartis plans to provide more details for analysts and investors on Nov. 19 in Cambridge. It’s also scheduled to report quarterly earnings today.

In May 2002, Novartis decided to make Cambridge the headquarters for its global research unit, called the Novartis Institutes for Biomedical Research, housed in the old Necco candy factory near Central Square. In 2006, the company decided to locate its vaccines and diagnostics division in Cambridge, too. Novartis now has roughly 2,000 employees in the city, making it one of the region’s largest life sciences employers.

Vasella said Novartis was primarily drawn to Massachusetts because of world-renowned research universities like Harvard University and the Massachusetts Institute of Technology.

“You are so spoiled with good schools and great academic centers,” Vasella said. “You have to do whatever you can to maintain that.”

But Novartis passed up Massachusetts a year ago when it decided to build a new drug manufacturing plant.

Vasella also said the state has some drawbacks, including the high cost of property, that make it a less attractive place to build a plant. He noted that some countries, such as Ireland and Singapore, where Novartis also scouted for sites for its new plant, offer lower tax rates. The company ultimately decided to build in Singapore.

Vasella also had mixed reaction to the state’s recent decision to force drug companies to disclose payments of at least $50 to doctors and restrict some payments altogether.

“It’s fine with me to be transparent,” he said, adding that the law wouldn’t deter his company from continuing to invest in research and clinical drug trials in the state. He said companies shouldn’t be making payments to doctors if they are worried about them being disclosed.

But Vasella found the $50 threshold odd.

“You don’t have a lot of respect for your physicians. If you can be bought for $50, you are really becoming cheap,” he said.

And he a warned that the regulations could create a mountain of additional paperwork, ultimately adding to the cost of drugs without providing anything tangible in return.

A spokeswoman for the state Department of Health, which is drafting regulations to implement the law, said the rules are an important part of the state’s effort to improve the quality and cost of healthcare.

Some healthcare advocates warn that doctors who are paid by drug companies could potentially steer patients toward expensive brand medicines instead of cheaper or better alternatives.