Sector News

Novartis in no rush to sell down stake on GSK consumer venture

July 20, 2016
Life sciences

Novartis is happy with the performance of its consumer health joint venture with GlaxoSmithKline, in which the Swiss drugmaker has a minority stake, and is in no rush to exit the collaboration early, its chief executive said.

There has been speculation that Novartis might look to try and sell its 36.5 percent holding before an agreed trigger date of 2018, but Joe Jimenez played down the idea in a post-results call with analysts on Tuesday.

He noted the consumer business was doing well, with profit margins now improving, suggesting a bright outlook for the business.

“There’s a put (option) in 2018 but as long as there’s value that’s going to continue to be generated here, we are happy to participate in it,” Jimenez said.

Some analysts have suggested that Novartis could use funds from selling its stake to help pay for any acquisitions, including in the hot area of cancer immunotherapy. Jimenez, however, said he did not feel any pressure to do deals in the immunotherapy field as Novartis had a promising early-stage pipeline of immune system-boosting medicines.

On the broader M&A front, Jimenez reiterated that Novartis had the flexibility to see its credit rating move down for the right deal, although he said the current focus was on smaller bolt-on acquisitions.

By Ben Hirschler

Source: Reuters

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