Novartis reshapes business via deals with GSK and Lilly

Tue Apr 22, 2014 7:56am EDT
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By Caroline Copley and Paul Sandle

ZURICH/LONDON (Reuters) - Swiss drugmaker Novartis announced a multi-billion dollar revamp on Tuesday, swapping assets with GlaxoSmithKline and selling its animal health arm in a bid to simplify its business and increase its focus on high-margin cancer medicines.

The overhaul is part of a major realignment in the global pharmaceuticals industry as it strives to cope with a clampdown in health spending by cash-strapped governments.

"The transactions mark a transformative process for us," said Novartis Chief Executive Joe Jimenez, who has been undertaking a strategic review of the once-sprawling business.

"They also improve our financial strength, and are expected to add to our growth rates and margins immediately."

Novartis said it had agreed to buy GlaxoSmithKline's oncology products for $14.5 billion, while selling to GSK its vaccines, excluding flu, for $7.1 billion plus royalties and creating a joint venture with GSK in consumer healthcare.

Novartis also said it had agreed to sell its animal health arm to Eli Lilly for approximately $5.4 billion.

The global pharmaceuticals sector has seen a flurry of deal-making recently as large companies seek to focus on a small number of leading businesses, while smaller specialty and generic producers seek greater scale.

Cancer is a particular focus for some drugmakers, thanks to novel medicines that show promise by boosting the body's immune system. Tuesday's deal will see Novartis strengthen its world No.2 position in cancer behind cross-town rival Roche.   Continued...

A British Airways airplane flies past a signage for pharmaceutical giant GlaxoSmithKlein (GSK) in London April 22, 2014. REUTERS/Luke MacGregor