Swiss and British pharmaceutical giants Novartis and GlaxoSmithKline (GSK) have swapped assets and agreed on creating a joint venture that will focus on consumer healthcare. The news comes amid troubling times for GSK, as the company has recently been involved in bribing scandals.
The deal will see Novartis buying GSK’s oncology portfolio for $16 billion (£9.5 billion), while the British firm would acquire Novartis’ vaccine business for $5.25 billion (£3.1 billion).
The two will also work together to create a consumer healthcare business, with GSK having greater control with an equity interest of 63.5%.
Novartis has also sold its animal health division to Eli Lilly and Company.
Joseph Jimenez, CEO of Novartis said the deal would strengthen the company financially.
“We believe the divestment of our smaller vaccines and animal health divisions will enable us to realise immediate value from these businesses for our shareholders, and those divisions will benefit from being part of large, global businesses that are also leaders in their segments”, he said.
“Patients will benefit from even higher levels of innovation that this focus may afford. Looking ahead, this positions Novartis well for future healthcare industry dynamics.”
CEO of GSK Sir Andrew Witty added that the deal would boost the company’s strategy to “generate sustainable, broadly sourced sales growth and improve long-term earnings”.
GSK has been involved in bribery scandals in China and Poland, along with other alleged cases in Iraq, Jordan and Lebanon. According to investigators, the company’s sales representatives were paying doctors to make them promote GSK’s drugs to patients.
However, ethical investors have said that they remain on the firm’s side, as long as it is committed to cleaning up its operations.
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