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Novartis is capable of spending $4-6 billion in m&a

Posted on 10 December 2013

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Swiss drugmaker Novartis can spend $4-6 billion per year on m&a to strengthen its core pharma, eyecare and generics businesses or its three smaller units, its chief executive officer said in an interview on Sunday.

"Novartis' cashflow is big enough each year for us to increase the dividend for shareholders and at the same time do bolt-on buys. We can spend $4-6 billion a year on these," CEOJoe Jimenez told Swiss newspaper Schweiz am Sonntag.

He said Novartis could spend $2-4 billion per m&a on targets that would strengthen one of its three big units.

"For the smaller units, there can also be bolt-on buys, but they would be smaller," he said.

The Basel-based company is in the middle of a broad review of operations following the departure of veteran chairman and one-time CEO Daniel Vasella. It took the first step last month by selling its blood transfusion testing unit to Spain's Grifols SA for $1.7 billion.

Jimenez said at the group's investor day three weeks ago he would be "disappointed" if a portfolio review was not complete within a year and repeated Novartis was considering all options for its subscale businesses. He was silent about any future plans to sell off or bulk up its business.

Asked whether he shared Novartis board member Pierre Landolt's view that a merger of Novartis and cross-town rival Roche would make sense, Jimenez said in the interview, "I believe Switzerland is benefitting from the fact that it has two very successful pharma companies."

He said Roche and Novartis had very different strategies, with Roche being a pure pharma player and Novartis being much more diversified.

Vasella's exit at Novartis had fuelled speculation that it might sell its multi-bilion dollar stake in Roche.

Jimenez also told the newspaper that a possible free trade agreement between Switzerland and India should absolutely include clauses on protecting intellectual property rights.

Drug groups face competition from cheaper Indian generics.

View the article at Reuters



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