Novartis clear to focus on prescription drugs with completion of Alcon spin-off

Novartis announced Tuesday that it completed the spin-off of its Alcon eye care devices business into a standalone company worth up to 28 billion Swiss francs ($28 billion). Novartis decided to split off the unit last year as it looks to solely focus its resources on medicines.

Under the spin-off, Novartis shareholders each received one Alcon share for every five shares in the drugmaker they held at the close of business on April 8. Alcon's shares began trading Tuesday on the Swiss and New York stock exchanges under the symbol ALC.

Commenting on the restructuring, Novartis CEO Vas Narasimhan said "we are well positioned for the future," adding "we continue to reimagine ourselves as a leading medicines company powered by breakthrough medicines, data science and advanced therapy platforms." Last year, the drugmaker also sold its stake in a consumer healthcare joint venture to GlaxoSmithKline for $13 billion, whilst additionally divestingparts of its Sandoz operations in the US to Aurobindo for $900 million.

Novartis indicated that following the Alcon spin-off, it "is well-positioned for sustained top- and bottom-line growth and plans to improve innovative medicines core margins into the mid-30s by 2022." According to the company, the split gives Novartis a financial profile closer to its pharmaceutical industry peers, including higher group margins. "In the long run, I want to be a company that's consistently in the top half of the industry in terms of TSR [total shareholder return]. I think the companies that perform best…are the ones that demonstrate that consistency over five years, seven years, 10 years," Narasimhan remarked.

The company said that it is targeting 10 potential blockbuster drug launches over the next two years, with a further 20 additional potential blockbusters on the horizon. Novartis noted that four of these medicines are planned to launch this year, including brolucizumab from its ophthalmology pharmaceuticals business.

The drugmaker added that despite losing revenue from its eye care device unit, which generated sales of $7.1 billion last year, it aims to continue paying "a strong and growing annual dividend…with no adjustment for the Alcon spin-off." Novartis added that it will also continue with its "disciplined" approach to capital allocation, with Narasimhan suggesting that spending on mergers and acquisitions will be limited to "around 5 percent of our market cap which would be…in the range of $10 billion a year."

Last week, Novartis agreed to pay $310 million upfront under a deal potentially worth up to nearly $1.6 billion to acquire IFM Therapeutics' IFM Tre unit, gaining rights to a number of programmes targeting the NLRP3 inflammasome. Narasimhan cited the purchase as an example of "a much more focused" acquisition strategy, which bolstered the company's position in a class of drugs "which we believe will be a very important area of medicine."

Register as Visitor to CPhI China 2019!

-----------------------------------------------------------------------
Editor's Note:

To apply for becoming a contributor of En-CPhI.cn,

welcome to send your CV and sample works to us,

Email: Julia.Zhang@ubmsinoexpo.com.