Novartis, GSK announce multibillion-dollar overhaul of drug businesses
Swiss pharmaceutical titan Novartis AG on Tuesday announced an overhaul of its operations that involved several multibillion-dollar deals with GlaxoSmithKline intended to allow Novartis to focus on its oncology business and boost profitability, the companies said.
The spate of deals follows recent consolidations in the pharmaceutical industry with large price tags, including the $5.6-billion acquisition of an Anaheim specialty drug firm by Irish pharmaceutical company Mallinckrodt this month. More are expected to be announced in the coming months.
Novartis said Tuesday it has agreed to acquire GSK’s oncology products for $14.5 billion, and an additional $1.5 billion if it reaches a certain development milestone. Novartis would also have opt-in rights to GSK’s current and future oncology research and development pipeline.
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As part of its agreement, Novartis will divest its vaccines business, excluding its flu business, for $7.1 billion plus royalties. The companies said $5.25 billion of that would be paid upfront and the remaining in installments based on certain milestones.
The companies also announced a joint venture to run a consumer healthcare business, of which Novartis will own a 36.5% majority share. The venture will combine the companies’ well-known products, including Novartis migraine drug Excedrin and GSK’s Aquafresh toothpaste brand. The venture is expected to generate $10 billion in annual sales, the companies said.
Lastly, Novartis announced it will divest its animal health business to Eli Lilly & Co. for about $5.4 billion.
The flurry of deals by Novartis and others comes as patents for lucrative drugs expire and pharmaceutical companies find ways to stay profitable. On Tuesday, activist investor Bill Ackman and Canadian firm Valeant Pharmaceuticals International Inc. unveiled details of their bid for Irvine pharmaceutical company Allergan Inc., which makes the popular Botox wrinkle treatment.
