Novartis Buys GSK's Cancer Drugs for $16 bn in Three-part Deal - The New Indian Express

Novartis Buys GSK's Cancer Drugs for $16 bn in Three-part Deal

Published: 22nd April 2014 04:38 PM

Last Updated: 22nd April 2014 04:38 PM

Global pharma major Novartis will acquire GlaxoSmithKline plc's (GSK) cancer drugs portfolio for USD 16 billion and sell its vaccines business in return for USD 7.1 billion, apart from forming a joint venture for the consumer healthcare business in a three-part transaction.         

In separate statements, the two companies said they will combine Novartis' over-the-counter (OTC)) division with GSK's consumer business, creating a new world-leading consumer healthcare business with USD 10 billion in annual sales.      

UK-headquartered GSK will have majority control with an equity interest of 63.5 per cent in the venture.   Novartis, based in Basel, Switzerland, agreed to acquire GSK's oncology products for USD 14.5 billion and up to USD 1.5 billion contingent on a development milestone. Novartis would have opt-in rights to GSK's current and future oncology R&D pipeline.       

On the other hand, Novartis will divest its vaccines business, excluding flu, to GSK, for USD 7.1 billion plus royalties. The upfront payment is USD 5.25 billion and up to USD 1.8 billion is in milestones.            

Separately, Novartis said it has initiated a separate sales process for its flu business as part of a value maximisation strategy in the context of the portfolio review.    

"The transactions mark a transformational moment for Novartis," CEO Joseph Jimenez said. "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."        

Stating that the deal is a win-win for both, GSK Chief Executive Officer Sir Andrew Witty said: "This proposed three-part transaction accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings."     

The Novartis OTC portfolio is highly complementary to GSK's and has brands such as Voltaren, Excedrin, Otrivin and Theraflu, he added.    

"Together, we will create the world's premier OTC business with clear opportunities to accelerate revenue growth," he said. The Swiss pharma major separately agreed to sell its animal health division to Lilly for about 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 optimise the value of the asset in the interest of Novartis shareholders, the company said.

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