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news.Swiss pharmaceutical firm Novartis has entered into a definitive agreement to acquire the oncology unit of Britain's GlaxoSmithKline (GSK) for about $14.5bn and up to $1.5bn contingent on a development milestone.
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As part of the deal, Novartis would have opt-in rights to GSK’s current and future oncology R&D pipeline.
The deal will see Novartis divest its Vaccines business (excluding flu business) to GSK for $7.1bn (including $5.25bn upfront and about $1.8bn in milestones) plus royalties.
As a part of a value-maximization strategy in the context of the portfolio review, Novartis has initiated a separate sales process for its flu business.
Both the firms have also agreed to create a Consumer Healthcare joint venture (JV) by combining GSK’s Consumer Healthcare business and Novartis’ over-the-counter (OTC) Consumer Healthcare business.
In the new JV, GSK will have a controlling 63.5% equity interest, while Novartis will own a 36.5% share in it.
In a separate deal, Novartis has agreed to sell its animal health division to Eli Lilly and Company for about $5.4bn, in order to further focus its portfolio on the leading businesses of new pharmaceuticals, eye care and generics.
The deal with GSK is expected to close during the first half of 2015, while the transaction with Lilly is expected to be completed by the end of the first quarter of 2015.
Novartis CEO Joseph Jimenez 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," Jimenez said.
"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."
Image: Novartis AG headquarters in Basel, Switzerland. Photo: courtesy of Andrew