GSK and Novartis asset swap: a tale of two companies.

This month GSK and Novartis finalised their unprecedented decision to swap $20bn worth of assets. 

 At first glance, it appears that GSK has got the best outcome: it gains $16bn from Novartis upfront, and pays the firm $7.1bn for its vaccine business (minus influenza products) and gains a joint share in a new OTC and consumer business.

GSK will now become number one in vaccines and consumer health and gains 12,000 employees from Novartis, whereas 2,000 of its staff will be moving over from GSK Oncology to the Swiss firm.

“This transaction represents a major step forward for GSK,” said the firm’s CEO Sir Andrew Witty.

Meanwhile, Novartis will gain nearly all of GSK’s cancer drugs, excluding therapeutic vaccines.

This could be a major coup for the Swiss firm, even though GSK’s entire oncology franchise made just £1.2bn ($1.8bn) last year. Considering that Roche’s oncology drug Avastin (bevacizumab) makes more than $7bn a year, this is not a major loss for GSK at the moment.

Short term, GSK defi nitely wins out. But longer term, Novartis will likely be theclear victor in this deal.

Oncology is a large growth area and while its portfolio is small now, Novartis’ drugs - including kidney cancer drug Votrient and melanoma treatments Mekinist and Tafinlar - are all set to be leaders in their field and major blockbusters. Sales of GSK’s oncology platform also jumped by 33% in 2014.

Novartis already has a large oncology presence and knows how to work the sales field in both big and emerging markets so can make the most of its new products.

And with GSK’s assets, it will now have 22 cancer medicines, as well as options on GSK’s oncology R&D pipeline, there by shoring itself up for future growth.(Más)