IMS Company Profiles - Report Buyer

IMS COM PANY PRO FILES NOVARTIS
Re cent years have been dif fi cult for Novartis par tic u larly in 2007 when the com pany went through a com -
bi na tion of set backs and dis ap point ments that in cluded the un fore seen US ge neric com pe ti tion for four of
its prod ucts - Lamisil (terbinafine), Trileptal (oxcarbazepine), Famvir (famiciclovir) and Lotrel (amlodipine
+ benazepril), the with drawal of Zelnorm in many mar kets, and reg u la tory de lays for one of its most
prom is ing pipe line prod ucts, the antidiabetic Galvus (vildagliptin). And fi nally, the COX-2 in hib i tor
Prexige (lumiracoxib) re ceived a non-ap prov able let ter from the FDA in Sep tem ber 2007 and has been
with drawn from several markets due to safety concerns.
Back ground
• Re struc tured to Fo cus on Healthcare
Cre ated in 1996 by the merger of Ciba-Geigy and Sandoz, two Swiss-based chem i cal/life sci ences gi ants,
Novartis now con cen trates on healthcare. Since 2000, it has spun off its ag ri busi ness unit into a jointly
held com pany with AstraZeneca and sold its food and bev er age busi ness to As so ci ated Brit ish Foods. In
2005, Novartis sold the re main der of its for mer Health and Func tional Foods unit, a busi ness called Nu tri -
tion et Sante, head quar tered in Revel, France. ABN AMRO Cap i tal France bought the unit for
approximately $260 million.
In 2006/2007, Novartis sold its Med i cal Nu tri tion unit and Gerber, a baby food busi ness, to Nes tle (Swit -
zer land) for $2.53 bil lion and $5.5 bil lion, re spec tively. This com pleted Novartis’ di ves ti ture pro gram fol -
low ing its strat egy to fo cus on healthcare.
M&A Ac tiv ity
• Protez, Speedel Ac quired in 2008, Plus Alcon Stake
Novartis has a very ac tive M&A pro file. In June 2008, it ac quired the pri vate US biotech com pany Protez.
Protez is de vel op ing PZ 601, a new carbapenem an ti bi otic in phase II tri als in the treat ment of pa tients
with com pli cated skin and skin struc ture in fec tions. PZ 601 is a 1-beta-methylcarbapenem with an ex -
tended spec trum of ac tiv ity against multidrug-re sis tant Gram pos i tive patho gens, in clud ing MRSA, and
Gram negative bacteria.
In July 2008, Novartis took a 25% stake in the US oph thal mol ogy com pany Alcon, which is ma jor -
ity-owned by Nes tle (Swit zer land), for $10.4 bil lion. Novartis also gained rights to ac quire the re main ing
52% Alcon stake held by Nes tle be tween Jan u ary 2010 and July 2011 for up to ap prox i mately $28 billion.
Also in July 2008, Novartis be came the ma jor ity owner of Speedel Hold ings Ltd (USA), fol low ing the ac -
qui si tion of an ad di tional 51.7% stake. A man da tory pub lic ten der of fer be gan in Au gust 2008 to buy the
re main ing shares in the com pany. Novartis states that to tal ac qui si tion costs are es ti mated at around
$880 mil lion. Novartis has a long-stand ing col lab o ra tion with Speedel and states that Speedel’s R&D
pipe line is a strong fit with its lead ing po si tion in cardiovascular disease.
An a lysts have been di vided on the wis dom of the Alcon pur chase. Some view it as a strong de fen sive
move by Novartis, which makes a great deal of sense as it faces a num ber of ma jor pat ent ex pi ries, as
Alcon is a ma jor force in the mar ket for vi sion-re lated sur gi cal prod ucts and strong in con sumer prod ucts
such as eye drops and con tact lens care. And Dan iel Vasella, Novartis’ CEO has said that he ex pects
Alcon’s busi ness to ben e fit from the world’s ag ing pop u la tion, given that eye prob lems such as glau coma
and cat a racts are more com mon in the el derly. But oth ers have noted that in ac cept ing Nes tle’s wish to
sell the busi ness in two steps in stead of one sin gle trans ac tion, Novartis will not be able to take full ad van -
tage of the ac qui si tion and ex ploit syn er gies with its ex ist ing CIBA Vi sion oph thal mol ogy busi ness un til
2010 at the ear li est, while at the same time, it is com mit ting a large amount of cap i tal to a busi ness which
© 2009 IMS Health In cor po rated or its af fil i ates Page 8