Is Novartis looking at divesting some of its respiratory drugs? Drugmaker says no

Novartis HQ cropped
Rumors abound that Novartis may look to boost its bottom line by selling off old medicines.

A year ago, Novartis inked a high-profile partnership with tech giant Qualcomm to develop a smart inhaler, in a clear bid to compete with its chief rival in the respiratory market, GlaxoSmithKline, which had formed a similar partnership with Propeller Health. But now a report out of India suggests Novartis may be looking to retreat from the increasingly competitive market for asthma and COPD drugs and is seeking to sell off some brands.

India’s Economic Times, quoting anonymous sources, reports that Novartis is weighing offers for its respiratory portfolio from top India-based generic drugmakers, including Cipla, Zydus Cadila, Sun Pharmaceutical and Lupin. The portfolio could be worth up to $500 million, the sources said, and it includes Tobi Podhaler, a drug to treat cystic fibrosis.

A spokesman for Novartis said the company does not comment on “rumors and speculation” and that it remains committed to its pipeline of respiratory drugs.

Novartis is certainly no stranger to casting off products to raise cash. Last March, Sun shelled out $293 million to acquire 14 brands that Novartis sold in Japan, a market where it had struggled to thrive. Before that, Novartis pulled off an asset trade with GSK and sold off its animal health unit to Eli Lilly.

In December of last year, rumors emerged suggesting that Novartis was looking to divest its older central nervous system drugs for as much as $496 million, including Exelon to treat Alzheimer’s and the ADD treatment Ritalin. That sale hasn't happened, and CEO Joe Jimenez has repeatedly cited CNS as a priority for Novartis’ pipeline. Novartis Chairman Joerg Reinhardt sparked speculation about the company’s eye unit, Alcon, late last year, when he commented that the business has been struggling for two years and that divesting it might be the best option. But that hasn’t happened yet, either.

As for Novartis’ respiratory portfolio, the company has three asthma compounds in phase 3 trials and a cystic fibrosis drug in phase 2. And it is collaborating with Qualcomm Life to develop the next generation version of its Breezhaler, the inhaler used with its COPD meds. The product will record real-time data from patients, such as when the inhaler is being used, and beam it to the cloud and smartphones to enable better coordination between patients and their doctors.

The Novartis spokesman says the collaboration is ongoing. Maybe so, but it’s clear the company is having some struggles in the respiratory market. In December, it announced it was out-licensing three of its COPD products to Sunovion for commercialization in the U.S. "Given the evolving market dynamics, we believe these products will have the greatest impact in the U.S. when commercialized by a company with an established presence in the COPD field," said Fabrice Chouraqui, president of Novartis, in a statement at the time.

And Novartis is clearly under pressure across its entire portfolio. In 2016, the company’s sales volume rose 6% year-over-year but net sales fell 2%, as pricing pressure took its toll. Jimenez warned investors during a conference call that 2017 would “look a lot like 2016.” Selling off assets, particularly Alcon, could be a good short-term Band-Aid. The company is expected to make a decision about Alcon by the end of this year.