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Portfolio swaps between Novartis and GSK involve oncology, vaccines, and consumer products.
Novartis and GlaxoSmithKline plc (GSK) have announced a major swap of assets in which Novartis will acquire the oncology products business of GSK and divest its vaccines business (excluding flu) to GSK. In addition, the two companies will create a joint venture, combining their consumer divisions.
Novartis will make a $14.5 billion payment and up to $1.5 billion contingent on a development milestone for the GSK oncology products. Under the terms of the transaction, Novartis would have opt-in rights to GSK's current and future oncology R&D pipeline.
Novartis has agreed to divest its Vaccines business to GSK, currently excluding its flu business, for $7.1 billion ($5.25 billion upfront and up to $1.8 billion in milestones). In addition, Novartis reports it has initiated a separate sales process for its flu business.
Novartis and GSK have agreed to create a consumer healthcare business through a joint venture between Novartis OTC and GSK Consumer Healthcare. Novartis will own a 36.5% share of the joint venture and will have four of eleven seats on the joint venture's Board.
"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," said Joseph Jimenez, CEO of Novartis in a company statement.
"This proposed 3-part transaction accelerates our strategy to generate sustainable, broadly sourced sales growth and improve long-term earnings. 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," said Sir Andrew Witty, Chief Executive Officer, GSK in a statement.
The Lilly/Novartis transaction is expected to close by the end of the first quarter of 2015 and the GSK/Novartis transaction is expected to close during the first half of 2015.