Novartis open to JVs, sales, spinoffs, buyouts in strategic review

After Novartis' investor day, the spotlight quickly moved to the company's $5 billion buyback plan. Naturally, that's something inquiring investors want to know. But CEO Joe Jimenez and his team also unveiled some details--a few, at least--about the company's strategic review.

Novartis CEO Joseph Jimenez

Novartis ($NVS) has been sifting through its operations since the spring, as chairman Daniel Vasella made his exit. Which are on the right track--and which aren't? So far, the company has identified a few businesses in need of a boost, or, failing that, a home somewhere else. That's been catnip to market-watchers already jazzed by sales and spinoffs at other Big Pharma companies.

But as Jimenez noted Friday, the assets Novartis is weighing for sale represent only about 15% of the company. That's a far cry from Abbott Laboratories' ($ABT) huge spinoff of its pharma business, AbbVie ($ABBV). And with plans to keep the other 85% intact--pharma, generics and the ophthalmology business Alcon--Novartis isn't following up on Pfizer's ($PFE) hints at a possible big-scale breakup to come.

For that 15%, though, Novartis is open to suggestion. For animal health and over-the-counter drugs, it's considering some options it has never used in the past, namely spinoffs and joint ventures. The Swiss company might even consider joint ventures with a minority share, Leerink Swann analyst Seamus Fernandez points out, showing just how open-minded it's willing to be.

Plus, as Jimenez said during his presentation, the company isn't just looking at entire divisions, but at assets and operations within its various groups. Some could be built up via acquisitions or joint ventures, but others probably aren't good candidates for expansion, Jimenez told the Financial Times. That's because any real acquisition targets in those areas are "embedded" in larger companies and thus would be too expensive to buy.

All of this opens up the field rather than narrows it down. One limiting factor is this: Novartis is aiming to wrap up the strategic review in 12 months.

- get the investor day transcript
- see the FT story (sub. req.)

Special Report: Top Pharma Companies by 2012 Revenues - Novartis

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