Novartis to Divest Flu Vaccine Business to CSLBy
Novartis has agreed to divest its influenza vaccines business to CSL Limited for $275 million. This transaction requires regulatory approvals and is expected to close in the second half of 2015. Upon closing, the Novartis influenza vaccines unit will be combined with CSL’s subsidiary, bioCSL .
The deal follows Novartis’ announcement in April 2014 that it was divesting its vaccine business (excluding influenza) to GlaxoSmithKline (GSK) as part of three-part transaction, which also included the formation of a joint venture between Novartis and GSK for their consumer healthcare businesses, the divestment of GSK’s oncology products to Novartis, and divestment of Novartis’ Animal-Health Division to Eli Lilly. The Lilly transaction is expected to close in the first quarter of 2015, and the GSK transaction is expected to close in the first half of 2015.
With respect to its pending divestment of its influenza business to CSL, Novartis says its remains committed to the influenza business during the transition period to closing, including honoring agreements with customers, research and development for influenza vaccines, and product launches. The Novartis influenza vaccines business produces both seasonal and pandemic influenza vaccines. The company uses two production technologies, egg-based vaccines for seasonal, pandemic and pre-pandemic use, and cell-culture-based for pandemic use. The business also has access to a proprietary adjuvant platform and expertise in pandemic preparedness.
As part of the transaction, international financial reporting standards require a separate valuation of the company’s influenza vaccines assets. This immediately triggers the recognition of an exceptional impairment charge of approximately $1.1 billion (pre-tax) as the book value of the influenza vaccines assets are above the selling price. This charge is a non-cash accounting impact and will be excluded from the company’s core results. Upon closing the deal with GSK for the remaining non-influenza vaccines business, Novartis expects to record a substantial one-time, non-cash operating income gain, which would more than compensate for the impairment charge associated with the influenza vaccines transaction, according to Novartis. .
CSL has more than 40 years of experience in the influenza vaccines business and operates in 27 countries with more than 13,000 employees worldwide. In addition to vaccines, CSL has established businesses in plasma-driven therapies, pharmaceuticals, antivenoms, and immunohemotology.