Diversification is definitely the top characteristic that makes Novartis an extremely attractive option. Novartis operates under a market cap of $130.83 billion. It's company is separated into four individual divisions:
- Pharmaceuticals,
- Generic,
- Alcon, and
- Consumer Health.
Alcon, is its eyecare division that was acquired in 2010. With the acquisition of Alcon, Novartis became the top producer of eyecare pharmaceuticals in the world. The choice to add the eyecare division for Novartis has paid off too as Alcon has been growing at a rate of 10% a year, mainly due to an increase in cataract procedures in emerging markets.
Sandoz, another terrific division of Novartis, focuses on the development of generic drugs. Prilosec and Lovenox are two examples of drugs that Sandoz focuses to market under a generic name. This division gives Novartis additional revenue by being able to market drugs created by other pharmaceutical companies after their patent expires. Novartis estimates that by 2020 the market for generic pharmaceuticals could be worth upwards of 100 billion.
The risk involved with Novartis is worrying whether or not they can continue to be attractive in emerging markets, and if they can continue to produce new drugs that will be efficient on the market, especially with their relatively new CEO Joseph Jimenez. Awaiting FDA approval on drugs can be a nerve racking process, Novartis recently had Gleevec, a drug for gout, turned down by the FDA because it was found to boost infection rates. While there are no more drugs ready to be tested for FDA approval in 2012, Novartis could have up to seven ready to be tested in 2013.
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