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Novartis and GSK swap assets in pharma industry reshape

Novartis and GSK swap assets in pharma industry reshape
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There has been a major shake-up in the drugmaking world. Swiss firm Novartis is selling its animal medicines division and swapping assets with Britain’s GlaxoSmithKline.

It means GSK will no longer make anti-cancer drugs and it will acquire Novartis’ vaccines division.

The aim is to bolster their best businesses and exit weaker ones as part of the reshaping of the drugs industry:

Mike Ingram, Market Analyst, BGC Partners said: “It’s positive news for shareholders, clearly what’s going on in terms of the big picture is these pharma companies are trying to rationalise their portfolios, they’re trying to do less, better. Scale, critical mass and better pipeline are absolutely important.”

The moves are in response to healthcare spending cuts by governments and competition from makers of generic drugs which are no longer protected by patents.

This is the latest in a flurry of deals among global pharmaceutical firms which includes Pfizer’s reported interest in taking over AstraZeneca.

According to one newspaper report AstraZeneca has turned down a $101 billion (73 billion euro) bid approach from Pfizer – a story that sent shares across the sector surging.

Novartis said it had agreed to buy GlaxoSmithKline’s oncology products for $14.5 billion (10.4 billion euros), while selling to GSK its vaccines, excluding flu, for $7.1 billion (5.14 billion euros) plus royalties and creating a joint venture with GSK in consumer healthcare.

GSK boss Andrew Witty said the firm did not have sufficient scale to compete in cancer drugs, so it made sense to put them into “the hands of somebody who is a world leader in oncology”.

Novartis has agreed to sell its animal health arm to Eli Lilly for approximately $5.4 billion (3.9 billion euros).