Novartis, GSK and Lilly now a joint venture

Mumbai: Novartis has now signed a definitive agreement with GlaxoSmithKline plc (GSK) to exchange certain assets, building global leadership in key segments and focusing the company's portfolio.

Under this agreement, Novartis would strengthen the company's innovative pharmaceuticals business by acquiring GSK oncology products  for a USD 14.5 billion payment and up to USD 1.5 billion contingent on a development milestone. It will also divest vaccines, currently excluding its flu business, for USD 7.1 billion plus royalties to them as well.  Novartis would have opt-in rights to GSK's current and future oncology R&D pipeline. Official reports also stated, ‘The two companies would also create a joint venture, combining their consumer divisions to create a world-leading consumer healthcare business’. As per the agreement, Novartis will own a 36.5% share of the joint venture and will have four of eleven seats on the joint venture's Board. 

It has also taken up the initiative of signing a definitive agreement with Eli Lilly and Company (Lilly) to divest the Animal Health Division for approximately USD 5.4 billion, further focusing its portfolio on the leading businesses of innovative pharmaceuticals, eye care and generics.

The net sales results of Novartis' Vaccines (including flu) were approximately USD 1.4 billion in 2013. Net sales of OTC were USD 2.9 billion and Animal Health were USD 1.1 billion.

These transactions represent a transformation for Novartis. We have leading positions in our core businesses in high-growth segments of healthcare. This will enable us to continue to build the world's most respected and successful healthcare company. Our strategic focus on science-based innovation and our global scale position the company well to meet the changes in the healthcare industry for the coming decade and beyond.

"We have also created a world-leading consumer healthcare business in our joint venture with GSK. We believe the divestment of our smaller Vaccines and Animal Health Divisions will enable us to realize immediate value from these businesses for our shareholders, and those divisions will benefit from being part of large, global businesses that are also leaders in their segments. Patients will benefit from even higher levels of innovation that this focus may afford. Looking ahead, this positions Novartis well for future healthcare industry dynamics," concluded Joseph Jimenez, CEO of Novartis.