GlaxoSmithKline, Novartis complete asset-swap transactions

GlaxoSmithKline and Novartis announced Monday the completion of a series of transactions disclosed last year, including the sale of the UK company's oncology business to the Swiss drugmaker for $16 billion in cash. As part of the completed deals, GlaxoSmithKline acquired Novartis' vaccine business, excluding influenza vaccines, for an initial cash payment of $5.25 billion, while the companies created a consumer healthcare joint venture.

GlaxoSmithKline CEO Andrew Witty said "completion of this transaction represents a major step create a stronger and more balanced set of businesses across pharmaceuticals, consumer healthcare and vaccines." The company indicated that following the deals, it plans to use the proceeds to fund a previously announced capital return of 4 billion pounds ($6.2 billion) to shareholders. GlaxoSmithKline added that "in light of the timing of closing the transaction," it will provide 2015 earnings guidance at an investor meeting on May 6.

Meanwhile, Novartis CEO Joseph Jimenez remarked the "transactions focuses Novartis, and further establishes our leading positions in key growing business segments." He added "we expect this evolution of our strategy to improve margin performance and position us well to meet future changes in the healthcare industry."

The US Federal Trade Commission cleared the proposed transactions last month, with Novartis agreeing to divest all assets related to its experimental BRAF and MEK inhibitors to Array BioPharma. In addition, regulators in Europe approved the deals in January after both companies agreed to divest certain products.

As part of the sale of GlaxoSmithKline's oncology portfolio, Novartis is eligible to receive up to $1.5 billion from the UK drugmaker in milestone payments if "certain conditions" relating to the COMBI-d trial are not met. However, GlaxoSmithKline said Monday that following positive results reported last month, showing that the combination of the BRAF inhibitor Tafinlar (dabrafenib) and the MEK inhibitor Mekinist (trametinib) significantly reduced the risk of death compared to Tafinlar alone in patients with metastatic melanoma, the drugmaker said it "believes these conditions will be satisfied."

On top of the transactions with GlaxoSmithKline, Novartis also recently sold its animal health unit to Eli Lilly for $5.4 billion and its influenza vaccine business to CSL for $275 million.

For related analysis, see ViewPoints: Asset-swap completed, GlaxoSmithKline and Novartis face different outlooks.

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