Drug giants complete £13bn asset swaps

GlaxoSmithKline and Novartis said yesterday they had completed a series of asset swaps worth more than £13bn that will reshape both drugmakers.
By The Newsroom
Published 2nd Mar 2015, 15:46 BST

GSK is forming a consumer health joint venture with Novartis, while at the same time buying the Swiss company’s vaccines business and divesting its cancer drugs portfolio to Novartis.

The two companies originally announced the transactions in April 2014 to bolster their best businesses and exit weaker ones as the drugs industry contends with healthcare spending cuts and increased generic competition.

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GSK, which now plans to return £4bn to shareholders, said it would provide an in-depth view of its prospects at an investor meeting to be held when it reports first-quarter results on May 6.

The complex deals are more significant for GSK than for Novartis, reflecting the fact that the British group’s market value is less than half that of its Swiss rival.

After holding off from providing financial guidance for this year when it reported annual results last month, GSK said it would provide 2015 earnings guidance and “profile the medium and long-term shape and opportunities” of the group on May 6.

The transactions come at a critical time for the drugmaker, which will see new chairman Philip Hampton take over on May 7.

Hampton takes the reins following a tough year at GSK.