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Novartis buys GSK's cancer drugs for $14.5 billion in a 3-way deal
LONDON: Amidst a flurry of consolidation in the pharma industry, global pharmaceutical giants GlaxoSmithKline and Novartis announced a massive three way deal that will see the rivals exchanging asset portfolios, and merging the consumer health businesses in a new joint venture.
GSK will sell its portfolio of cancer drugs to Novartis for $14.5 billion, plus another $1.5 billion, depending on trials in progress.
Novartis in turn, sells its vaccines portfolio, except flu, to GSK for $5.25 billion.
Separately, Novartis also sold its animal health business to the American Eli Lilly for $5.4 billion, which will make Eli Lilly world number 2 in animal health.
GSK and Novartis will pool their assets in consumer health with a new JV, with pro-forma combined turnover of $6.5 billion, in which GSK will have majority control with 63.5%.
However, a spokesperson for GSK clarified that GSK's India consumer health business is not included in the new JV, and will continue to operate as usual. Its acquisition of Novartis' vaccine business will also give GSK new manufacturing facilities in India.
GSK said that the proposed transaction will boost GSK's annual revenues by £1.3 billion to £26.9 billion (on a 2013 pro-forma basis), split across pharmaceuticals 62%, consumer healthcare 24% and vaccines 14%.
The mega deal comes even as global pharma majors are struggling with low growth, and streamlining their operations as governments cut down on health spending. GSK is not a world leader in oncology, and analysts said it made sense for the company to exit the highly competitive cancer arena.
Similarly, Novartis hopes to benefit from exiting low-margin vaccine business for high margin cancer drugs. In India, this news sent Novartis stock price soaring by 10% during intraday trading. At the end of Tuesday's trade the company's stock closed at Rs 497 up 6% at BSE.
Novartis buys GSK's cancer drugs for $14.5 billion in a 3-way deal - The Economic Times
