Novartis struggling to find vaccine acquisition targets for $5B war chest

Novartis CEO Joseph Jimenez

Long-running speculation about the future of Novartis' ($NVS) struggling vaccine business now appears to be nearing an end. One way or another, Novartis CEO Joe Jimenez expects the future of the unit to be settled in the coming months.

Exactly what will happen to the business is still unclear, though. Speaking to the Financial Times ahead of a company investor day, Jimenez revealed Novartis is willing to spend $5 billion on bolt-on acquisitions to turn the vaccine and consumer health units from also-rans into market leaders. In this scenario, Novartis would keep the vaccine unit and try, once again, to build the business it envisaged when it bought Chiron for $5.4 billion in 2006.

However, while Jimenez is willing to spend on the vaccine business, he doubts there is anything to buy. Potential acquisition targets are "embedded" in larger companies, Jimenez said, and buying them would be expensive. If Novartis is unable to grow the business through acquisition, it will push ahead with plans to sell or partner the unit. Even in this scenario, there are multiple possibilities, some of which could see Novartis keep a toehold in the vaccine game.

"I wouldn't rule anything out. We would consider any option that would allow us to participate in the growing of a business that could significantly increase its performance if it were a good financial proposition for the company and if it was right for that business," Jimenez told investors. The CEO listed joint ventures, in which Novartis could hold a significant or minor stake, as possibilities for the struggling units.

- read the FT article (sub. req.)
- here's the investor day transcript