Wed, Apr 23, 2014 - Page 15 News List

Novartis revamping via asset exchange with GSK and Lilly

Reuters, ZURICH, Switzerland

Swiss drugmaker Novartis AG is transforming its business by exchanging certain assets with GlaxoSmithKline PLC (GSK)and divesting its animal health business to Eli Lilly & Co in deals worth billions of dollars.

The revamp, announced yesterday, is the result of a keenly awaited strategic review at the company.

Novartis chief executive Joe Jimenez said the changes would focus the company on innovative businesses with global scale.

“They also improve our financial strength, and are expected to add to our growth rates and margins immediately,” he said.

GSK DEAL

Novartis said it had agreed to acquire GSK’s oncology products for a US$14.5 billion payment.

The Swiss drugmaker will also divest its vaccines business, excluding flu, to GSK for US$7.1 billion plus royalties.

GSK chief executive Andrew Witty said his company’s agreements with Novartis — expected to be completed during the first half of next year — accelerates the British firm’s “strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings.”

ELI LILLY

In a separate transaction, Novartis said it had agreed to divest its animal health division to Eli Lilly for approximately US$5.4 billion.

The deals mark a major reorganization for GSK too, which is to return £4 billion (US$6.72 billion) to shareholders following the changes.

GSK will take the lead in running a future consumer health business with Novartis, but will effectively give up its ambitions to be a global leader in oncology.

GSK said the company would in future have a balanced business centered around consumer health, vaccines, respiratory and HIV medicines, which together would account for about 70 percent of revenues.

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