The two pharma giants announced that they were strategically swapping assets aimed at bolstering each company’s best business portfolios while exiting weaker sectors as the drugs industry reshapes to cope with healthcare spending cuts and generic competition.
Oncology products will transfer over to Novartis and, in exchange, Novartis Vaccines unit will become part of GSK. The two companies will also create a joint venture in the consumer healthcare space.
A spokesperson for GSK said that about half of their 1,500 Irish employees were in the consumer healthcare space.
“Approximately half of our Irish employees are based at our consumer healthcare manufacturing site in Dungarvan where they produce oral care and over-the-counter products including Panadol, Polygrip and NiQuitin,” the spokesperson said.
A spokesperson for Novartis said it was too early to say what effects yesterday’s announcements would have on jobs.
“As with transactions of this size, it is too early to comment on what the combined organisations will look like or whether there will be headcount reductions. We will establish an integration office to work on detailed plans for arranging the transfer of the associates and the business. We are committed to keeping associates informed on a regular basis on the progress made,” the spokesperson said.
A spokesperson for Novartis said that the new joint venture will have $10bn in annual revenues.
“Novartis and GSK will create a joint venture, which is expected to create a world leading consumer healthcare business with $10 billion in annual revenue, and leading positions in four key OTC categories — pain, cough and cold, dermatology and oral health,” he said.
In addition, it is selling its animal health arm to Eli Lilly for approximately $5.4 billion.
“Novartis has agreed an elegant set of transactions that either removes or strengthens its under-performing assets, while boosting its oncology portfolio,” Jefferies analysts said.
They added the deals also looked good for GSK, which as well as strengthening its vaccines and consumer health businesses will return $6.7bn to shareholders.