GENEVA -- Swiss pharmaceutical giant Novartis (NVS) announced a series of multibillion-dollar deals Tuesday with other major pharmaceutical companies that it said would reduce sales but boost profitability, while affecting some 15,000 of its employees globally.
The Basel, Switzerland-based company said it has agreed to buy GlaxoSmithKline's (GSK) cancer-drug business for $14.5 billion, plus up to $1.5 billion more if certain milestones are met, and to divest most of its vaccines business to GSK for $7.1 billion, plus royalties.
The two drugmakers also are creating a new consumer health care business through a joint venture. It combines Novartis' over-the-counter drug business with GSK's consumer business to create a new entity that would generate $10 billion a year in revenue. Novartis would own 36.5% of the new business, focusing on pain management, coughs and colds and dermatology.
All the deals between Novartis and GSK are timed to close simultaneously.Separately, Novartis said it will sell off its animal health division to U.S.-based Eli Lilly (LLY) for about $5.4 billion. In a statement, Novartis CEO Joseph Jimenez said the deals mark "a transformational moment" for the company by refocusing its business around three core strengths: innovative drugs, eye care and generics. "They also improve our financial strength, and are expected to add to our growth rates and margins immediately," he said.