Q&A Daniel Vasella

By Unmesh Kher, Bill Saporito

Novartis has been flying pretty high lately, despite delays and bad news about a major diabetes drug it hopes to launch next spring. The Swiss drug giant's 2005 income of $6.1 billion on sales of $32.2 billion set a record that CEO Daniel Vasella expects will be broken this year. He spoke with TIME's UNMESH KHER and BILL SAPORITO about vaccines, Democrats and why the firm is wading into China.

You expect another year of record earnings?

I think it will be a good year. We currently have five filings that are waiting [for approval], and that will create some pressure, accentuate the perpetual tension between short-term performance and long-term performance and investment into the future.

Which new classes of drugs interest you the most as a scientist?

We have now more than 50 or so new chemical entities in clinical development. In the past, I did choose darlings, you know, and they all failed. So I've stopped doing that. The only time I engage myself is when I see something getting orphaned within the company--and when I think it's very important, like Gleevec [a $2 billion cancer drug] was.

How do you think the Democratic victory in Congress will affect your industry?

Superbly [laughing]. We have seen that the pharmaceutical industry was part of the campaign. So that is not a very good sign. We know that Medicare Part D [the drug program] has been the center of attention for some Democrats ... [who are] saying that pharmaceutical companies are profiting from it in an undue way. But Medicare Part D, in my view, should have been introduced by Democrats, not by Republicans, because it's a fundamentally Democratic thought to give drug coverage to seniors who can't afford it--and the fact is that most seniors are very happy with the program.

What is the thinking behind a new $100 million research center in China?

China has invested massively in engineering and biomedical sciences, and we have now a breed of scientists who have come back from the U.S. and Europe who are very well educated ... so the human-resource pool we have tapped is the primary motivator for us going there.

Novartis bought Chiron and made a bold move into vaccines. Why?

The question is, Does one believe that vaccines are important and that there are more opportunities to develop vaccines that will have an impact on people's lives? I think yes because we have new infectious diseases that emerge from time to time. We have diseases that are viral and haven't been well mastered. And we have cancers induced by viruses, like cervical cancer, which is 70% associated with a viral infection. And maybe we can even come to vaccines for other cancers.

Have Chiron's production problems in the Liverpool [England] and Marburg [Germany] plants been fixed?

To a large extent. Liverpool is fine, and Marburg is almost fine. We should be able to sell 35 million doses of flu vaccine this year--which is a huge increase.

What's in the vaccine pipeline?

A very interesting meningitis vaccine and an H5N1-flu-pandemic vaccine, which we're working on in clinical trials. Then we have the new cell-culture-based vaccine technology, which we have developed in Germany, and it's basically ready; we need regulatory approval. We're building a very large cell-based manufacturing plant in North Carolina.

What's the benefit of a cell-based vaccine?

You aren't dependent on the chicken [eggs, for culturing]. In a bird-flu pandemic, the chicken would be done. You are also faster and cleaner in production.