Novartis and GSK agree $16bn oncology deal

Harriet Green
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Another pharmaceutical deal this morning.

Swiss drug maker Novartis has announced that it’s doing an exchange of certain assets with GlaxoSmithKline (GSK), as part of its company overhaul.

It’ll buy the latter’s oncology unit for $14.5bn (£8.6bn), with up to $1.5bn also being paid to reach an agreed development milestone.

The deal will also see the two firms form a global consumer healthcare venture with around $10bn in annual sales.

In a separate transaction, GSK will pay $7.1bn plus royalties for Novartis’ vaccines business.

Meanwhile, Novartis is shedding its animal health business to Eli Lilly for around $5.4bn.

Joseph Jimenez, Novartis’ chief executive who began a review of the firm’s smaller businesses last year, said:

The transactions mark a transformational moment for Novartis. They focus the company on leading businesses with innovation power and global scale. They also improve our financial strength, and are expected to add to our growth rates and margins immediately.

And Sir Andrew Witty, chief executive of GSK, said of the deal:

Opportunities to build greater scale and combine high quality assets in Vaccines and Consumer Healthcare are scarce. With this transaction we will substantially strengthen two of our core businesses and create significant new options to increase value for shareholders.

GSK shareholders will receive a £4bn capital return from the deal, which'll be delivered via a B share scheme, the company said.