Novartis unloads last piece of vaccines puzzle to CSL for $275M

After a lengthy strategic review and a handful of divestments, Novartis' ($NVS) slim-down effort is finally coming to a close. The company has sold off its flu vaccines business--the only piece of the vaccines unit it hung onto after a multibillion-dollar April transaction with GlaxoSmithKline ($GSK)--to Australia's CSL.

CSL will pay $275 million for the Swiss drugmaker's offerings, Novartis announced Sunday. That's not such a great deal for the Basel-based pharma, which will take an impairment charge of $1.1 billion on the deal. But not to fear, investors: The company expects to record a "substantial" one-time income gain from the GSK deal, which will "more than compensate" for the impairment charge.

While the CSL transaction may not offer a whole lot of financial benefit, it will help Novartis completely exit a troublesome business. The vaccine space has given Novartis fits since it formed the unit in 2006 with the $7.5 billion buyout of Chiron. The division foundered through several years as the company pinned hopes on the meningitis B vaccine Bexsero. But last year, the unit posted a $165 million operating loss.

Combined with the $7.1 billion vaccines sales to GSK, the CSL move will allow Novartis to double down on its core areas of focus, including pharmaceuticals, its Sandoz generics unit, and Alcon, its eye-care division. Along with vaccines, divestments have taken units for blood diagnostics and animal health out of the picture, and consumer health has joined up with Glaxo under a JV that the British drug giant will control.

As for CSL, combining the Novartis unit with its own subsidiary, bioCSL, will create the No. 2 player in the $4 billion global flu vaccine industry, it said in a statement. It'll have some big guns--like Sanofi ($SNY), AstraZeneca ($AZN) and Glaxo itself--to contend with.

- read Novartis' release
- read CSL's release

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