Novartis to Buy Cancer-drug Business from GSK and Sell Animal-Healthcare Division to Eli Lilly and Co.

Published By : 22 Apr 2014 | Published By : QYRESEARCH

Global pharmaceutical company Novartis has decided to buy GlaxoSmithKline’s cancer-drug business for as much as $16 billion and trade its vaccine business, excluding the flu operations, in return for $7.1 billion. The deal also includes royalties worth as much as $1.8 billion on reaching certain business goals. 

Novartis will also sale its animal-health division to Eli Lilly and Co. for an estimated $5.4 billion. 

Novartis has been in a process of strategically reviewing its business units of animal care, consumer health and vaccines for the past one year because these units were too small. Novartis’ new CEO, Joe Jimenez who has taken over the position in February 2010, planned either to make its businesses leaders in their respective categories or sell them. 

The joint venture between Novartis and GSK will have an estimated revenue of $10.9 billion, market experts forecast. GSK will have the major share, an estimated 63.5%, of the revenues. 

With its purchase of cancer medicines from GSK, Novartis will add to its store, which already includes a bestselling drug – Gleevac for cancer, GSK’s recently approved Mekinist and Tafinlar. 

GSK will gain Novartis’ Bexsero vaccine for meningitis with its purchase of the vaccine division of Novartis. GSK already has a popular vaccine for human papillomavirus – Cervarix – in its store. 

Sources of GSK have noted that the transaction of the deal will be finalized during the first half of 2015. 

Eli Lilly and Co. has cited that its deal with Novartis’s animal-healthcare unit, which recorded sales of approximately $1.1 billion in 2013, will result in the formation of the world’s second largest animal-healthcare company. Lilly has also stated that the purchase will be facilitated by a debt of $2 billion and the remaining payment in cash. The company estimates that it would be able to garner annual savings of nearly $200 million within a three year haul with this merger. 
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