News Feature | October 30, 2014

Novartis Divests Flu Vaccine Business To CSL For $275M

By Estel Grace Masangkay

Novartis announced that it has agreed to divest its influenza vaccines business to Australian firm CSL Limited, the largest blood products company in the world, for $275 million.

As part of the agreement, Novartis’ flu vaccines unit will be integrated into CSL’s subsidiary bioCSL. The merged business unit will establish manufacturing plants in the U.S., U.K., Australia, and Germany and offer a product portfolio centered around pre-pandemic and pandemic franchises. The acquisition will make CSL the second-largest player in the $4 billion worldwide flu vaccine industry.

Joseph Jimenez, CEO of Novartis, said, “In CSL, we have found not only an owner for the influenza business that shares our commitment to protecting public health, but also a strong growth platform for the business and our associates.”

Novartis’ flu vaccines unit has delivered almost a billion doses of seasonal and pandemic flu vaccines over the last three decades. The company said it will continue to honor agreements made with clients in its flu vaccine business until the transition is completed. This also includes research and development as well as product launches for flu vaccines.

While Novartis’ flu vaccines business has lost $138 million in 2013, CSL says that it is confident a turnaround will occur in two to three years’ time. “The combined business will have a strong growth profile and is expected to achieve sales approaching $1 billion per annum over the next 3 to 5 years,” CSL said according to The Australian Business Review. The Australian company will fund the acquisition with its surplus cash. The company also reported an estimate of $100 million in integration costs.

The transaction between Novartis and CSL is expected to be completed in the second half of 2015.

Novartis’ announcement follows an earlier asset exchange agreement made in April with GlaxoSmithKline. Novartis agreed to divest its non-influenza business to GSK while acquiring the latter’s oncology products. GSK declared that it will acquire Novartis’ global vaccines business for an initial consideration of $5.25 billion in cash.