|Novartis CEO Joe Jimenez|
Remember how Novartis ($NVS) CEO Joe Jimenez vowed to improve the Swiss drugmaker's margins? Would have been there and done that, if the company's recent spate of deals had been done last year--by 2.5 percentage points, Novartis now says.
The margin improvements were among a constellation of developments Novartis talked up for investors at an event in Basel Wednesday. "We have shaped this company in a way that positions us incredibly well for next 10 years," Jimenez said (as quoted by Reuters).
Of course margins weren't the only driver for the $25 billion dealfest that gave GlaxoSmithKline's ($GSK) cancer portfolio to Novartis in exchange for the latter's vaccines business, tossed Novartis' animal health unit to Eli Lilly ($LLY), and set up a consumer-health joint venture between Novartis and GSK. The new structure also cuts away distractions to focus Novartis more tightly on three key areas: branded drugs, eye care products, and generics.
The Novartis overhaul is one among many in the pharma business these days, with Pfizer ($PFE), Merck ($MRK), GlaxoSmithKline, AstraZeneca ($AZN) and Sanofi ($SNY) all either hiving off business units or selling less-promising product portfolios--or both. The Novartis-GSK-Lilly transactions together amount to the biggest set of makeovers yet.
"[W]e have shaped Novartis to win in a future world in which innovation and scale are expected to be critical to meet demand," Jimenez said in a statement. Once the deals are done, "The new Novartis will be more focused, more profitable, with the potential to grow faster."
The Sandoz generics business can help Novartis gin up more growth in emerging markets, Jimenez figures; it already has a 28% share in those countries, which is "twice as high as the equivalent figure for its closest global competitor," the company said in a statement. Plus, bringing GSK's cancer drugs under its pharma umbrella can help offset any sales erosion once the blood cancer treatment Gleevec goes off patent in 2016.
That doesn't mean Jimenez is completely happy with the businesses he has left. The Alcon eye care unit isn't growing fast enough, he said at the event, so he's pushing to ramp up sales without sacrificing profits. Plus, he intends to slash costs associated with back-office functions--currently about $6 billion--by consolidating business services into one internal unit.
He is happy, however, with the company's $16 billion stake in Roche ($RHHBY), he said, to the perennial question of whether Novartis plans to unload that stock. Once again, Jimenez said Novartis doesn't plan to sell out of Roche. At least not now.
- get the release from Novartis
- read the Reuters news
- here's FierceBiotech's take
Special Reports: Top 10 pharma companies by 2013 revenue - Novartis - GSK | Top 10 drugmakers in emerging markets - Novartis