Blood transfusion sale set to give Novartis a £1bn shot in the arm

 
City A.M. Reporter
SWISS healthcare group Novartis has agreed to sell its blood transfusion testing unit to Spain’s Grifols for $1.68bn (£1.05bn), in an increasingly buoyant market for deals in the sector.

The sale comes as Novartis carries out a broad review of operations following the departure of veteran chairman and one-time chief executive Daniel Vasella, the architect of the merger of Ciba-Geigy and Sandoz that created Novartis in 1996.

The acquisition will give critical mass and a significant US presence to Grifols’ previously small diagnostics business, which in future will account for a fifth of its revenues.

The deal with Grifols also gives Novartis a good price for the US-based blood transfusion diagnostics unit, which was acquired in 2006 as part of Chiron and which had net sales in 2012 of around $565m.

The healthcare industry is undergoing a wave of mergers and acquisitions as large drugmakers shed non-core activities, while simultaneously trying to bolster their new drug pipelines by buying up smaller firms.

Current Novartis chief executive Joe Jimenez and new chairman Joerg Reinhardt have both stressed they will only hang on to businesses that are among world leaders.

Jimenez said yesterday he started the review of Novartis’s businesses – including the blood unit which carries out tests to ensure blood transfusions do not contain infections – in the spring and the matter had gone to the board over the summer.

He said other potential sell-offs were possible as Novartis examines whether three sub-scale businesses – vaccines and diagnostics, over-the-counter (OTC) products and animal health – have a long-term future in the group.

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