Post-Novartis deal, GSK's top dog in vaccines, consumer health. Now what?

It's been nearly a year, but GlaxoSmithKline ($GSK) and Novartis ($NVS) have finally closed the multibillion-dollar asset swap that's sending GSK's oncology portfolio to Switzerland in exchange for most of the latter's vaccines unit. Now, all eyes will be on the British pharma giant, who industry watchers agree has more to prove after exiting the fast-growing cancer field.

The way Glaxo sees it, the deal will allow it to bow out of an arena where it wasn't going to lead; its cancer sellers netted $1.85 billion last year, a far cry from the billions Big Pharma's major cancer players rake in. But considering the hurt declining Advair sales are putting on the drugmaker's flagship respiratory portfolio--it sank by 10% in 2014--the decision to ship off oncology meds has raised some eyebrows.

"Even if GSK received a high price, it let go of a strategic business that would be difficult to get back," Bernstein analysts wrote in a note seen by pharmaphorum. They compared the move to Pfizer's ($PFE) decision to hive off its consumer health unit to Johnson & Johnson ($JNJ) back in 2006--one the New York giant later regretted.

GSK CEO Andrew Witty

Glaxo insists it won't miss the cancer assets. For one, it still expects its newly launched respiratory products to step in and help fill the Advair gap. As CEO Andrew Witty said on the company's Q4 conference call, those new meds are primed to do a better job of that, now that they've picked up some market traction. And for two, GSK has leapfrogged into the global No. 1 spot in vaccines after folding in Novartis' offerings.

While vaccines may not be generating the buzz oncology does, it's a field GSK expects to grow by leaps and bounds. The company figures vaccines will be able to chip in 14% of sales going forward as the market expands by about 10% per year.

Helping it get there will be Bexsero, the newly U.S.-approved meningitis B vaccine and jewel of Novartis' portfolio--though it may be awhile before that help arrives. Right now, the jab is missing a key CDC committee recommendation for widespread use, which it needs to really rev up U.S. sales. Bexsero won't be able to secure that nod till June at least. And once it does, it will still have Pfizer's competing shot, Trumenba, to contend with in the marketplace.

Across the pond, things don't appear to be moving any faster, either. The U.K. has already agreed to provide Bexsero free for all babies if it can secure the vaccine at what it deems a reasonable price. Problem is, it hasn't come to an agreement on that price with Novartis in more than 7 months of negotiations.

Meanwhile, there's the consumer health joint venture--majority-controlled by Witty's company--which will also take its place at the top of the worldwide ranks. But Glaxo will have plenty of competition there, too; Bayer, for one, has said repeatedly it's got its eye on that lead position.

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