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GlaxoSmithKline swaps oncology for vaccines with Novartis AG

Apr 23 2014, 08:53 IST
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GSK Plc will sell oncology for $16 bn, buy the vaccines piece for $7 bn GSK Plc will sell oncology for $16 bn, buy the vaccines piece for $7 bn
SummaryGlaxoSmithKline Plc will sell oncology to Novartis AG for $16 bn, buy the vaccines piece for $7 bn.

GlaxoSmithKline Plc, the fifth largest company by revenue globally, said on its website on Tuesday it will sell its oncology business to Novartis AG; in a simultaneous transaction the Swiss drug major will shed its vaccines portfolio — except flu vaccines — to the British drugmaker. The net transaction value will be $9 billion — while GSK will sell the oncology business for about $16 billion, it will buy the vaccines arm for $7.05 billion, which includes milestone payments.

The move is expected to give the vaccines portfolio of GlaxoSmithkline Pharma, the Indian subsidiary of the British multinational, a boost. Currently, this segment is very small at R149.6 crore in FY14, according to AIOCD-AWACS data. Novartis India's vaccines portfolio registered sales of R81.1 crore in FY14. The vaccines market in India is valued at a little over R1,000 crore currently, but is tipped to grow at around 10% annually.

EY India partner Murali Nair believes that in the long run, the vaccines segment will grow faster than the overall pharma market. “Right now the vaccines segment should be growing at least as fast as the overall market, at 10-12%, perhaps. However, given that awareness levels are rising, the use of vaccines to prevent diseases will go up,” Nair told FE.

“Glaxo already has a strong vaccines portfolio in India. It caters to a different market, not the national immunisation programmes and this segment is also growing fast,” said Utkarsh Palnitkar, head of life sciences at KPMG, adding that although low-value products, vaccines were a high-volume business.

“The acquisition of Novartis' vaccines portfolio certainly is positive for GSK Pharma since it focuses on that space. Since GSK has a policy of launching all new products through the listed entity, chances of these new vaccines being available here are high. However, it may take a couple of years for the launches,” an industry watcher observed.

Novartis India's top-selling vaccine in the country is Rabipur, a rabies vaccine that earned about Rs 81 crore in annual sales for the company. For GSK Pharma, its top-selling vaccines include Synflorix, a vaccine against respiratory diseases, Havrix, a Hepatitis A vaccine and Varilrix, a vaccine against chicken pox.

In February, GSK completed a Rs 6,400-crore open offer that raised the British parent's stake in its Indian arm to 75% from 50.67%. The open offer indicated the parent company’s willingness to invest in India, which it believes is a promising

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