“I’m always on the lookout for new ideas and meaningful innovations in financial markets.” - Daniel Weiss
Published on 01/11/2021
As a financial specialist leading the treasury unit of Novartis, which manages the company’s liquidity and balance sheet, Daniel Weiss has been responsible for the launch of new bonds, share buybacks and other financial transactions for years. While most people would falter under the pressure of handling multibillion-dollar trades, he stays calm, rational and prudent.
Executing large trades and monitoring market moves not only requires nerves of steel. Curiosity and openness to test new ground are equally important. Without these qualities, Weiss would never have collaborated with the Novartis Chief Commercial Officer for Sub-Saharan Africa, Emmanuel Akpakwu in the access to medicines arena.
“I’m always on the lookout for new ideas and meaningful innovations in financial markets,” Daniel Weiss explained when we connected with Emmanuel Akpakwu to discuss Novartis’ and the healthcare industry’s first so-called sustainability-linked bond issuance, which was aimed at underlining the company’s strong commitment to its environmental, social and governance (ESG) activities.
Sustainability-linked bonds are a new class of corporate debt instruments. In contrast to standard debt issuances, these instruments tie interest rate payments to business outcomes in areas such as environmental protection and social engagement, among others. As part of its own effort, Novartis chose to tie interest payments to its core competency – ensuring patient access to our medicines. If the selected outcomes are not achieved, investors automatically get a higher interest payment.
“I first heard about such instruments in 2012, but back then it was not a fitting vehicle for our needs,” Weiss explained. The issuance size of the instruments was too small and too narrowly focused for the needs of Novartis, which usually issues debt in the range of 3 to 5 billion US dollars for general finance requirements. “Given the size of our normal transactions, the idea to have bonds to finance a narrow project, say the installation of solar panels, was not appropriate.”
But as the market for these new instruments evolved by decoupling the bonds from a specifically defined business purpose, Weiss saw an opportunity for Novartis. “In 2019, the Italian energy company Enel launched a bond that was not linked to a specific project but was tied to other performance indicators. This is when I saw the chance for Novartis to launch such a bond and I started to discuss the idea with my peers and management.”
Go bold
While Daniel Weiss discussed his idea with a broad range of internal stakeholders, Emmanuel Akpakwu, who at the time was working in the corporate strategy team focusing on improving the company’s trust and reputation, was tackling a similar idea. Both were unaware at the time that they were digging the same tunnel from other sides and would soon meet.
“As part of our mandate to strengthen reputation and trust, we were looking for solutions that really showed that our efforts to improve access to medicines across the globe were serious and that we were prepared to go beyond just financial targets and focus on patients,” Akpakwu said, explaining how his team tackled the challenge of living up to the company’s pledge to give back more to society.
The global health efforts of Novartis are massive and span more than five decades, starting with a small training center in Ifakara, Tanzania, for healthcare staff. In the 1960s, this early engagement led to the creation of the Basel Foundation for the Promotion of Developing Nations, which was followed by a dedicated Africa Policy in the 1970s.
Since then, the company’s global health activities have grown in size and scope, including the company’s Malaria Initiative and its Leprosy Program, which were started around the turn of the millennium. Through these large drug access ventures, Novartis has reached millions of patients and helped healthcare systems in developing countries to combat some of the most crippling infectious diseases.
In recent years, Novartis has also launched an access program focusing on chronic diseases in developing countries, opened a sickle cell disease program in Africa and invested in new ways to make its innovative medicines reach developing markets much earlier than in the past. On top of that, during the pandemic, Novartis launched a comprehensive portfolio of generic drugs to treat patients with COVID-19 symptoms in low- and middle-income countries, an initiative that was led by Emmanuel and the Global Health Chief Medical Officer, Nicola Lister.
“Our stakeholders know that our global health efforts are broad. But we aimed higher and wanted not only to reach bold goals. Our thinking in the strategy team reached a point where we were prepared to put our reputation on the line if we failed to achieve these goals. We wanted more than words and to show our stakeholders that we aim to live up to our targets,” Akpakwu said.
Sometime in 2019, Akpakwu started to think about a bond issuance and presented the idea to the Global Health Leadership committee a few months later. This internal committee steers the access efforts of Novartis and includes the Head of Corporate Affairs and Global Healthcare Lutz Hegemann, and Patrice Matchaba, a company veteran who oversees a large portion of the corporate responsibility efforts of Novartis.
“When we shared the idea with the leadership group, they were not only enthusiastic. They also put me in touch immediately with Daniel, since they knew that he was working on a similar idea from the financial side,” Akpakwu said to explain the sequence of events that led to his first meeting with Weiss.
Soon after, both of them were sitting together and working on the structure of the bond, which would not only help Novartis meet its financial needs but above all also show the company’s willingness to achieve its bold global health targets and exert a major impact on healthcare systems in developing countries.
