GSK and Novartis to exchange assets and form new consumer healthcare business
GSK to sell cancer portfolio to Novartis for $16bn and buy Swiss company\'s vaccines business for $7.1bn
GlaxoSmithKline and Novartis have agreed to exchange a series of assets in a multi-billion dollar deal that will see the two pharmaceutical giants pool their consumer products in a new joint venture.
GSK will sell its portfolio of cancer drugs to Novartis for US$16bn and buy the Swiss company's global vaccines business (excluding flu vaccines) for $7.1bn, including $5.25bn upfront and up to $1.8bn in milestones.
Novartis says it has initiated a separate sales process for its flu vaccines business.
The two companies will combine their consumer healthcare businesses in a joint venture majority controlled by GSK. It will have strong positions in nutrition, skincare and oral health.
The deal is expected to complete during the first half of 2015, subject to approvals.
Opportunities to build greater scale and combine high quality assets in vaccines and consumer healthcare are scarce
GSK's Chief Executive Sir Andrew Witty said: 'Opportunities to build greater scale and combine high quality assets in vaccines and consumer healthcare are scarce. With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders.'
Joseph Jimenez, CEO of Novartis, said 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,' he said.
The acquisition of Novartis' vaccines business will significantly enhance the breadth of GSK's vaccines portfolio and pipeline, particularly in meningitis, with the addition of Bexsero, a new vaccine for prevention of meningitis B. It will also strengthen GSK's manufacturing network and reduce supply costs, adding Novartis' secondary packaging and supply facilities in Rosia, Italy and Marburg, Germany. GSK would also acquire new manufacturing sites in India and China.
As a result of the transaction, GSK's late-stage development pipeline would be strengthened with the addition of four new candidate vaccines from Novartis.
GSK said the proposed deal would increase its annual revenues by £1.3bn to £26.9bn, with 62% coming from pharmaceuticals, 24% from consumer healthcare 24%, and 14% from vaccines.
GSK estimates that total annual cost savings of £1bn could be achievable by the fifth full year following closing.
In a separate announcement, Novartis said it has agreed to sell its animal health business to Eli Lilly for $5.4bn.
