Novartis: Strategic deal with GSK
23.04.2014 - In an effort to focus on key businesses, pharma giant Novartis is joining forces with long-time rival GlaxoSmithKline in a multi-billion Euro asset exchange and an OTC joint venture.
Swiss Novartis is taking over British GlaxoSmithKline’s oncology products, while handing over its global vaccines business excepting flu vaccines. GSK will initially pay €3.8bn for Novartis’ vaccines business, with subsequent potential milestone payments of up to €1.3bn plus ongoing royalties. The influenza business is excluded from this deal, but Novartis is planning on selling it in a separate process. With the transition, GSK is building on its position as the world’s leading global vaccines supplier. GSK’s oncology portfolio, related R&D activities and rights to its AKT inhibitor will change hands for a €10.5bn initial payment and up to €1.1bn contingent on a development milestone.
Meanwhile, both companies are combining their consumer divisions, selling over-the-counter meds, in a new consumer healthcare venture with 2013 pro forma revenues of €7.9bn. GSK will have have majority control with an equity interest of 63.5%. GSK’s CEO Andrew Witty commented: “The Novartis OTC portfolio is highly complementary to GSK’s and has many well-known, widely recommended brands such as Voltaren, Excedrin, Otrivin, and Theraflu. Together, we will create the world’s premier OTC business with clear opportunities to accelerate revenue growth.”
Beyond the deal with GSK, Novartis is also divesting its animal health division to Eli Lilly for €3.9bn. In a press release, the Novartis stated that it aims to focus on its key business of innovative pharmaceuticals, eye care and generics. Added Joseph Jimenez, CEO of Novartis: “The transactions mark a transformational moment for Novartis. They focus the company on leading businesses with innovation power and global scale. They also improve our financial strength, and are expected to add to our growth rates and margins immediately.”
The transaction with GSK is expected to complete during the first half of 2015, subject to approvals.