Novartis AG’s (ADR) (NYSE:NVS) CEO Joe Jimenez is looking for a buyout in the range of $2 billion to $5 billion. The news comes a month after Novartis completed its big asset swap with GlaxoSmithKline plc (NYSE:GSK).
Mr. Jimenez stated that the company has put the mergers and acquisition people back to work. The company is expecting approval for the heart drug LCZ696. The lookout for a potential buyout might be to combat loss of a franchise to generic competition.
In the asset swap, Novartis gave its portfolio of underperforming vaccine assets to Glaxo in exchange for Glaxo’s lacklustre cancer drug portfolio. Both pharmaceutical companies expect to perform better if they focus more on their core assets.
One of Novartis’ core assets is its cancer therapy division. Concentrating on cancer therapy, the company formed a new immune oncology division in Cambridge under Glenn Dranoff, a former Dana Farber researcher. A few weeks back, Novartis made a $750 million tie-up with Aduro. The deal, according to Jimenez strengthens the company’s presence in immune oncology. Mr. Jimenez is also a supporter of CAT-T research operation at the University of Pennsylvania. CAR-T is a therapy where T cells in the body are re-engineered to fight tumour cells.
There are expected to be more mergers and acquisitions in the coming months. Most big pharmaceutical companies are not looking for big acquisitions. This is so because past high-end mergers did not deliver sustainable growth or appreciable pipeline value. The new focus is on sub $10 billion assets.
The swap with Glaxo is expected to ruffle a few feathers. Though the deal was well received by Wall Street, the swap could mean large scale layoffs. This can be seen in Glaxo’s closing of its organizations in Boston and Philadelphia with hundreds of employees. It is unknown how Novartis plans to integrate its oncology division with the company, but layoffs are likely.
