GSK deal's done. Now, Novartis has to deliver on cancer-growth pledge

Novartis ($NVS) has been rubbing its hands together in anticipation of taking over GlaxoSmithKline's ($GSK) cancer portfolio. Now it can. The two drug giants wrapped up their big sale-and-swap, putting Novartis in charge of GSK oncology meds, from Arzerra to Votrient.

The Swiss drugmaker paid $16 billion to add GSK's cancer treatments--which brought in £1.2 billion ($1.85 billion) in sales last year--to its own solid portfolio. Novartis also gets some pick-and-choose rights to the pipeline of potential meds Glaxo will continue to develop. The oncology deal was part of a complex, multi-unit deal, among the top M&A transactions in pharma last year.

Just what sort of short-term payoff can Novartis expect from GSK's cancer meds? Glaxo's meds aren't the megablockbusters Novartis can boast, that's true. But the U.K.-based company's 2014 oncology sales beat 2013's by a 33% margin, despite sliding sales of older meds such as Tykerb/Tyverb and off-patent drugs, including Hymactin. Votrient, for kidney and soft tissue cancers, and Promacta, which treats anemia and platelet disorders, each grew by about one-third, to £191 million and £91 million, respectively. Then there were its new melanoma fighters, Tafinlar and Mekinist, which together turned in £203 million ($312 million).

Novartis figures it can parlay its own oncology marketing power into faster growth for the portfolio. Particularly Tafinlar and Mekinist, which Novartis says it can use to position itself as a leader in melanoma meds. In early February, GSK announced positive top-line results from a key melanoma trial, COMBI-d, which tested Tafinlar and Mekinist together; full data are expected later this year.

Analysts have questioned the $16 billion price, so sales will be watched closely to see how well the drugs are measuring up. There's no question that Novartis has made its own cancer meds into top performers. Consider Gleevec, the leukemia powerhouse, which brought in $4.75 billion last year, and its follow-up Tasigna, with $1.5 billion. The kidney cancer med Afinitor is also well past the blockbuster threshold, with $1.6 billion in 2014 sales. And Novartis will have fewer distractions now, too, what with its troubled vaccines unit out of the way--sold to GSK for $7.1 billion--and consumer health handed over to a GSK-led joint venture.

- read the Novartis release

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