Drug giants Novartis and GlaxoSmithKline have sealed a multi-billion-dollar deal which will see the companies exchange assets and form a new consumer healthcare joint venture (JV).
Under the move, GSK is selling its portfolio of cancer drugs to Novartis for up to $16 billion ($14.5 billion upfront, $1.5 billion in milestones), and is buying the Swiss drug giant's vaccines unit for up to $7.1 billion ($5.25 billion upfront, $1.8 billion in milestones), excluding flu jabs, for which the firm has initiated a separate sales process.
Novartis and GSK have also agreed to create "a world-leading consumer healthcare business" via a JV between Novartis OTC and GSK Consumer Healthcare, giving Novartis a 36.5% share and four of eleven seats on the Board.
And separately, Novartis said it is also divesting its Animal Health segment to Lilly for around $4.5 billion, allowing a greater focus on its core areas of innovative pharmaceuticals, eye care and generics.
According to the Basel-headquartered group, the acquisition of GSK oncology products will further reinforce and expand its leading oncology business, particularly in targeted therapies and small molecules, as well as improve growth opportunities for the combined portfolio.
Its scale in oncology development and commercial capabilities will create the potential to optimise the launch of two of GSK's recently approved products for metastatic melanoma, Tafinlar and Mekinist, it said, adding that Votrient is also expected to reach more patients with renal cell carcinoma in its hands.
On the other hand, shedding its vaccines unit to GSK will give Novartis Vaccines the opportunity to become part of "a world leader in the vaccines segment", giving the combined portfolio a particularly strong standing in the paediatric and meningitis areas.
Also, GSK's position in the market is further likely to strengthen the commercial launch power behind the meningitis B jab Bexsero, and the UK drug giant has the financial muscle to fully fund the vaccines pipeline to expand the portfolio, Novartis noted.
JV to rake in $10bn a year
The joint venture of Novartis OTC and GSK Consumer Healthcare will establish a global consumer healthcare giant with around $10 billion in annual sales, and leading positions in four key OTC categories - Wellness, Oral Health, Nutrition and Skin Health.
GSK said the combined deals will boost its annual revenues by £1.3 billion to £26.9 billion (on a 2013 pro forma basis) and fundamentally re-shape its revenue base. These revenues would be split across Pharmaceuticals 62%, Consumer Healthcare 24% and Vaccines 14%.