GENEVA — Swiss pharmaceutical giant Novartis AG announced a series of multibillion-dollar deals Tuesday with other major pharmaceutical companies that it said would reduce sales but boost profitability, while affecting some 15,000 of its employees globally.
Among those affected will be several hundred of the company’s employees at its flu plant in Holly Springs, which Novartis plans to sell.
The Basel, Switzerland-based company said it has agreed to buy GlaxoSmithKline’s cancer-drug business for $14.5 billion, plus up to $1.5 billion more if certain milestones are met, and to divest most of its vaccines business to GSK for $7.1 billion, plus royalties.
The two drugmakers also are creating a new consumer health care business through a joint venture. It combines Novartis’ over-the-counter drug business with GSK’s consumer business to create a new entity that would generate $10 billion a year in revenue. Novartis would own 36.5 percent of the new business, focusing on pain management, coughs and colds and dermatology.
All the deals between Novartis and GSK are timed to close simultaneously.
GSK employs about 4,500 people at its North American headquarters in Research Triangle Park, plus another 450 at its manufacturing facility in Zebulon. The company’s vaccines, oncology and consumer healthcare operations are all based outside of North Carolina.
GSK spokeswoman Mary Anne Rhyne said the immediate impact on the company’s Triangle operations would be minimal.
GSK’s respiratory business has a large presence in RTP, and Rhyne said that group is only likely to increase in importance as a result of the deal. There are no details as of yet on whether the transaction will increase manufacturing at the plant in Zebulon, she said.
Separately, Novartis said it will sell off its animal health division to U.S.-based Eli Lilly & Co. for about $5.4 billion. The sale includes Novartis’ animal health division site in Greensboro.
In a statement, Novartis CEO Joseph Jimenez said the deals mark “a transformational moment” for the company by refocusing its business around three core strengths: innovative drugs, eye care and generics.
“They also improve our financial strength, and are expected to add to our growth rates and margins immediately,” he said.
The oncology business that Novartis is picking up from GSK had revenue of $1.6 billion and a 20 percent growth rate last year, Jimenez told reporters in a conference call.
And the Swiss company said its flu business, which is not part of the sale to U.K.-based GSK, would be divested in another pending deal, but it did not provide more specifics.
That deal will include Novartis’ flu vaccine plant in Holly Springs that has more than 500 employees and contractors. Novartis has a contract to develop and manufacture vaccines at the plant for a U.S. Department of Health and Human Services chemical and biological threat response program.
Taken together, the deals will reduce Novartis’ sales by about $4 billion, from $60 billion down to $56 billion, Jimenez said, but the company’s “absolute profit goes up and that’s partly because we’re acquiring the oncology products and we are divesting products that have lower profit.”
The transactions affect some 15,000 of the company’s 135,000 employees globally, he said, and “they will move with the divestitures or into that joint venture.”
Jimenez, however, said Novartis won’t fire anyone. All Novartis employees whose units are being sold off “will be fully transferred to the new owners,” he said.
Staff writer David Bracken contributed.