Novartis and GSK team in $14.5b IP exchange

Novartis and GSK have agreed to create a consumer healthcare business in a joint venture that involves the exchange of assets worth billions of dollars.

The deal combines Switzerland-based Novartis’s OTC unit with GSK’s Consumer Healthcare division.

As part of the agreement, Novartis will acquire GSK’s oncology products for $14.5 billion, then a further $1.5 billion depending on meeting a development milestone.

It would also have opt-in rights to GSK’s oncology R&D pipeline.

Novartis will also divest its vaccine business, with the exception of flu, to GSK for $7.1 billion plus royalties. Novartis has started a separate sales process for its flu business.

Novartis said on April 22 that it will divest its Animal Health division to Lilly in a separate transaction, allowing it to focus its portfolio on innovative pharmaceuticals, eye care and generics.

The chief executive of Novartis, Joseph Jimenez, said: “We believe the divestment of our smaller Vaccines and Animal Health Divisions will enable us to realise immediate value from these businesses for our shareholders, and those divisions will benefit from being part of large, global businesses that are also leaders in their segments.

“Patients will benefit from even higher levels of innovation that this focus may afford. Looking ahead, this positions Novartis well for future healthcare industry dynamics.”

Andrew Witty, chief executive of GSK, said that the Novartis OTC portfolio is “highly complementary to GSK’s”. He added: “Opportunities to build greater scale and combine high quality assets in Vaccines and Consumer Healthcare are scarce.”