Can Novartis recover from a PR nightmare in Japan?

Pharmaceutical giant Novartis’ woes are unending. Even as the company battles allegations that it may have violated Japanese laws promoting blood pressure drug Diovan, it face fresh claims that employees of Novartis violated clinical trials for its cancer drug.

The news has already caused a chain reaction of consequences including falling sales. Some hospitals have stopped prescribing the drug, while employee morale is presumably down. According to a report in the WSJ, the Japanese Association of Hypertension has received calls from worried consumers.

Japan is a big market for Novartis. With an aging population, it accounts for a quarter of Diovan’s global sales and represented 9 per cent of the company’s sales in 2012.

Two weeks ago, Japan’s Health Ministry filed a criminal complaint against Novartis for misleading consumers through advertisements that used research that was later found to be false. It was also found that an employee of the company had participated in those studies.

For its part, Novartis has denied its involvement in the research. But there’s no denying the blow to the brand.

“Having lived in Japan and done PR for pharma companies there, I am acutely aware of the importance placed upon the attention to detail of such studies,” said Robert Pickard, Asia-Pacific chairman with Huntsworth. “If promotional data is inaccurate, products are seen as flawed in a country where quality matters above all else. Trust is compromised and can be challenging and expensive to restore.”

Aman Gupta, managing partner at Strategic Partners Group, agreed. “Novartis and its brand will suffer negative impact in the short term and, if the situation is not managed quickly, its effect could go on longer.”

The issue could cause an impact well beyond Japan. The promotional materials Japan objected to were based on data published in reputable international journals and peer-reviewed studies—despite the thorough sign-off procedures in place to ensure scientific integrity. “It is the fact that these results got to publication at all that is worrisome,” Pickard observed.

Pharmaceutical companies often don't work on crisis preparedness proactively, despite operating in such a sensitive sector, according to Gupta, whose company manages communications for pharma clients. How should Novartis respond to the current crises? And can it bounce back in its second-largest market?

According to published reports, when news of the tampered data first surfaced in September last year, David Epstein, a divisional head at the company’s Switzerland headquarters, apologised to the company's Japanese consumers, acknowledged that an employee had acted inappropriately and agreed to cooperate with the ministry. The company revamped management operations and sanctioned key staff in Japan.

Gupta recommends that companies create a systematic and in-depth crisis preparedness module, which looks into possible crisis situations and ensures a quick response.

If at fault, Pickard believes it’s best that Novartis accept its mistakes and make meaningful and rigorous reforms to ensure that such a thing never happens again.