Corporate Banner
Satellite Banner
Scientific Community
Become a Member | Sign in
Home>News>This Article

Novartis Announces Portfolio Transformation

Published: Wednesday, April 23, 2014
Last Updated: Wednesday, April 23, 2014
Bookmark and Share
Company launches a major overhaul of its business, unveiling a series of multibillion-dollar deals with GSK and Eli Lilly.

Novartis announced that it has reached a definitive agreement with GlaxoSmithKline plc (GSK) to exchange certain assets, building global leadership in key segments and focusing the company's portfolio. Under the agreement, Novartis would strengthen the company's innovative pharmaceuticals business by acquiring GSK oncology products, and would divest Vaccines (excluding flu) to them. The two companies would also create a joint venture, combining their consumer divisions to create a world-leading consumer healthcare business. Separately, the company announced a definitive agreement with Eli Lilly and Company (Lilly) to divest the Animal Health Division, further focusing its portfolio on the leading businesses of innovative pharmaceuticals, eye care and generics.

"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," said Joseph Jimenez, CEO of Novartis. "We have also created a world-leading consumer healthcare business in our joint venture with GSK. We believe the divestment of our smaller Vaccines and Animal Health Divisions will enable us to realize immediate value from these businesses for our shareholders, and those divisions will benefit from being part of large, global businesses that are also leaders in their segments. Patients will benefit from even higher levels of innovation that this focus may afford. Looking ahead, this positions Novartis well for future healthcare industry dynamics."

Deal terms and financials

Acquisition of GSK oncology products
Novartis has agreed to acquire GSK oncology products for a USD 14.5 billion payment and up to USD 1.5 billion contingent on a development milestone. Under the terms of the transaction, Novartis would have opt-in rights to GSK's current and future oncology R&D pipeline.

Divestment of Vaccines to GSK
Novartis has agreed to divest its Vaccines business to GSK, currently excluding its flu business, for USD 7.1 billion plus royalties. The USD 7.1 billion consists of USD 5.25 billion upfront and up to USD 1.8 billion in milestones. As a part of a value-maximization strategy in the context of the portfolio review, Novartis has initiated a separate sales process for its flu business.

Combination of Novartis OTC with GSK Consumer Healthcare in a joint venture
Novartis and GSK have agreed to create a world-leading consumer healthcare business through a joint venture between Novartis OTC and GSK Consumer Healthcare. Upon completion, Novartis will own a 36.5% share of the joint venture and will have four of eleven seats on the joint venture's Board. Furthermore, Novartis will have customary minority rights and exit rights at a pre-defined, market-based pricing mechanism.

Divestment of Animal Health Division to Lilly
In a separate transaction, Novartis has agreed to divest its Animal Health Division to Lilly for approximately USD 5.4 billion. This transaction is the result of a competitive process, which upon completion would create a leading animal health business under Lilly's ownership and would optimize the value of the asset in the interest of Novartis shareholders.

The overall financing for Novartis' obligations in the transactions is planned to be provided through a combination of excess liquidity at the time of closing, short-term financing instruments and limited new bond issues if needed.

Novartis continues to be committed to a double-A credit rating.

The elements of the transaction with GSK are inter-conditional and subject to approval by GSK shareholders. All transactions are subject to closing conditions, including anti-trust approvals. The Novartis Board unanimously believes that the transactions with GSK and the transaction with Lilly are in the best interests of Novartis and the Novartis Shareholders as a whole. The transaction with Lilly is expected to close by the end of the first quarter of 2015 and the transaction with GSK is expected to close during the first half of 2015.

Substantial exceptional gains are expected for the divested businesses at the time when the respective transactions close. Further details on the discontinuing operations classification will be provided during the second quarter of 2014.

2013 actual net sales results of Novartis' Vaccines (including flu) were approximately USD 1.4 billion[2]. Net sales of OTC were USD 2.9 billion and Animal Health were USD 1.1 billion.

Building leading businesses with enhanced innovation for patients
Novartis' acquisition of GSK oncology products is expected to further reinforce its leading Oncology business and improve the growth profile of the combined portfolio. Novartis has one of the industry's largest and most robust oncology pipelines, with more than 25 new molecular entities targeting key oncogenic pathways and 24 pivotal trials underway exploring 16 new products and indications. The addition of the GSK products is expected to expand Novartis' position in targeted therapies and small molecules.

Based on the depth and breadth of Novartis' R&D capabilities, it is anticipated that Novartis will be able to optimize these compounds. In particular, Novartis' scale in oncology development and commercial capabilities would additionally create the potential to optimize the launch of these two recently approved products for metastatic melanoma, Tafinlar®, a B-RAF inhibitor, and Mekinist(TM), a MEK inhibitor, positioning Novartis as the leader in treating melanoma. Votrient®, a VEGFR inhibitor for renal cell carcinoma, is also expected to reach more patients in our hands. Votrient has shown significant efficacy as first-line treatment for renal cancer, and also has potential for the adjuvant setting. Additional products included in the transaction include Tykerb® for HER2+ metastatic breast cancer, Arzerra® in chronic lymphocytic leukemia, and Promacta® for thrombocytopenia. Novartis will have opt-in rights for GSK's current and future oncology R&D pipeline, which could be a source of new compounds and new targets. Sales of the acquired GSK oncology products in 2013 were approximately USD 1.6 billion[3].

The joint venture of Novartis OTC and GSK Consumer Healthcare would establish a global consumer healthcare leader with approximately USD 10 billion in annual sales, and leading positions in four key OTC categories - Wellness, Oral Health, Nutrition and Skin Health. The joint venture would have several strong brands with almost half of the sales derived from brands larger than USD 300 million in annual revenue. The geographic footprint would span all regions, with scale and commercial presence in the developed world as well as in key emerging markets, such as Brazil, China, Mexico and Russia.

Novartis Vaccines would become part of a world leader in the vaccines segment, under GSK's ownership. The combined business is expected to have a compelling position in pediatric and meningitis franchises. GSK's position in the market is further likely to strengthen the commercial launch power behind Bexsero®. In addition, GSK has the capacity to fully fund the vaccines pipeline to potentially expand the R&D efforts of the rich vaccines pipeline portfolio.

Further Information
Access to this exclusive content is for Technology Networks Premium members only.

Join Technology Networks Premium for free access to:

  • Exclusive articles
  • Presentations from international conferences
  • Over 2,600+ scientific posters on ePosters
  • More than 3,800+ scientific videos on LabTube
  • 35 community eNewsletters

Sign In

Forgotten your details? Click Here
If you are not a member you can join here

*Please note: By logging into you agree to accept the use of cookies. To find out more about the cookies we use and how to delete them, see our privacy policy.

Related Content

EU Approves Novartis's laBCC Therapy
Novartis has announced that the European Commission has approved Odomzo® 200 mg capsules for the treatment of adult patients with locally advanced basal cell carcinoma (laBCC) who are not amenable to curative surgery or radiation therapy.
Monday, August 24, 2015
New Data Show Zometa® Enhances Impact of Chemotherapy on Reducing Breast Tumor Size
Adding Zometa to chemotherapy prior to surgery led to an additional 33% reduction in tumor size, resulting in fewer mastectomies.
Monday, December 15, 2008
Scientific News
Enzyme Malfunction May be Why Binge Drinking Can Lead to Alcoholism
A new study in mice shows that restoring the synthesis of a key brain chemical tied to inhibiting addictive behavior may help prevent alcohol cravings following binge drinking.
Developing a Gel that Mimics Human Breast for Cancer Research
Scientists at the Universities of Manchester and Nottingham have been funded to develop a gel that will match many of the biological structures of human breast tissue, to advance cancer research and reduce animal testing.
Lung Repair and Regeneration Gene Discovered
New role for hedgehog gene offers better understanding of lung disease.
New Gene Therapy for Vision Loss From a Mitochondrial Disease
NIH-funded study shows success in targeting mitochondrial DNA in mice.
Self-Propelled Powder to Stop Bleeding
UBC researchers have created the first self-propelled particles capable of delivering coagulants against the flow of blood to treat severe bleeding, a potentially huge advancement in trauma care.
Tension Helps Heart Cells Develop Normally in the Lab
Stanford engineers have uncovered the important role tension plays in growing heart cells out of the body.
Controlling Body Temperature in Response to 'Fight or Flight'
New research in The FASEB Journal suggests that blocking TRPV1 protein causes an increased release of noradrenaline, leading to an increase in core body temperatures.
Inroads Against Leukaemia
Potential for halting disease in molecule isolated from sea sponges.
Researchers Disguise Drugs As Platelets to Target Cancer
Researchers have for the first time developed a technique that coats anticancer drugs in membranes made from a patient’s own platelets.
A Fundamental Protection Mechanism Against Formalin In Mammals is Revealed
Formaldehyde, or formalin, is well known to all of us as a common chemical used in many industrial processes and also as a preservative, remarkably we also produce formaldehyde in our bodies.

Skyscraper Banner
Go to LabTube
Go to eposters
Access to the latest scientific news
Exclusive articles
Upload and share your posters on ePosters
Latest presentations and webinars
View a library of 1,800+ scientific and medical posters
2,600+ scientific and medical posters
A library of 2,500+ scientific videos on LabTube
3,800+ scientific videos