Novartis has agreed to sell its Gerber baby food business to fellow Swiss firm Nestle in a deal which leaves the firm’s “business portfolio now entirely focused on healthcare.”
Nestle will pay $5.5 billion in cash to take control of Gerber which has a 75% share of the US prepared baby food market and is a household name there. Last year the unit, which is present in over 50 countries and is based in Parsippany, New Jersey, posted sales of around $1.6 billion and operating income of $307 million, and the transaction is expected to be completed by the second half of 2007.
Explaining the rationale behind the deal, Novartis chief executive Daniel Vasella noted that "over the past decade we have continuously invested in R&D, strengthening our innovation power and building our healthcare businesses, particularly pharmaceuticals, while divesting over 50% of our non-core, non-healthcare businesses." He added that the deal is also the right move for Gerber, as it will become a priority business in a leading global nutrition company." Nestle recently bought Novartis’ medical nutrition business for just over $2.5 billion.
Positive Gleevec data in GIST
Meantime, Novartis has published details of a trial of its oncology agent Gleevec/Glivec (imatinib) which show that the drug dramatically reduce the risk of cancer returning after surgery for Kit-positive gastrointestinal stromal tumours (GIST).
The 600-patient study, sponsored by the National Cancer Institute (NCI), which is part of the US National Institutes of Health, revealed that 97% of patients in the study who were given Gleevec for one year after surgery to remove tumours did not have a recurrence of their cancer compared to 83% who underwent surgery but received a placebo. Novartis said that it will now work with the investigators on the trial on a submission to gain regulatory approval for Gleevec, which is most commonly used as a treatment for chronic myeloid leukaemia, as adjuvant treatment for GIST.
India asks Novartis to call off patent legal challenge
Staying with Gleevec, India’s Health Minister Anbumani Ramadoss has urged Novartis to end its legal bid to win patent protection in the country for the anti-cancer drug.
Novartis is testing India's new patent protection regime that was established two years ago which differs from other countries in that it only protects completely new compounds that were discovered after 1995. Gleevec falls foul of this clause because its active ingredient is deemed to be a modification of an existing compound.
The Madras High Court, which began looking at the case in January, last week reserved judgement on Novartis' challenge but Mr Ramadoss said that any decision in the Swiss company’s favour could have the knock-on effect of choking the supply of affordable drugs in India, adding that the Indian government could follow the Thailand example and overrule existing patents through compulsory licences.