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Big pharma braces for M&A wave

Tuesday, April 22, 2014 - 02:07

April 22 - Big pharma on the move as Novartis boss, Joe Jimenez, tells Reuters about plans to transform his company via an asset exchange with GSK, and Astra Zeneca shares surge on speculation that Pfizer is looking for a takeover. Joanna Partridge reports.

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A flurry of pharma activity - and rumour. Confirmed - deals between Novartis, GlaxoSmithKline and Eli Lilly. The Swiss drugmaker's transforming its business by exchanging some assets with GSK, and divesting its animal health business to Eli Lilly - in deals worth billions. Novartis is paying $14.5 billion for GSK's oncology products and sold GSK its business of vaccines, except flu, for over $7 billion. Novartis CEO Joe Jimenez says focussing on pharma, eye care and generics will make the drugmaker fighting fit. SOUNDBITE: Joe Jimenez, Chief Executive Officer, Novartis, saying (English): "If you look to the future, we have said that our M&A strategy is to continue to do bolt on acquisitions to strengthen the core and now that we have those three very important core businesses, I think you can expect that to continue in the years ahead." Novartis' revamp is the result of a strategic review. The news sent Novartis' stock higher, and GSK's shares also rose over 5%. Other pharma stocks also jumped on rumours of other possible takeovers. Britain's AstraZeneca's shares surged 7% after reports in the Sunday Times it had been approached by U.S. pharmaceutical giant Pfizer. Pfizer has reportedly proposed a $101 billion takeover. Neither company wanted to comment. AstraZeneca's been considered a takeover target for some time, as it works out how to deal with the patent expiring on a number of best-selling drugs, leaving its future growth uncertain. Many pharma firms are looking how to protect themselves in future, says Mike Ingram from BGC Partners. SOUNDBITE: Mike Ingram, Market Analyst, BGC Partners, saying (English): "Drug-fuelled merger mania madness today. Yes, it's positive news for shareholders, clearly what's going on big picture is these companies are trying to rationalise their portfolios, they're trying to do less, better. Scale, critical mass and better pipeline are absolutely important." Pharma is just the latest sector to see a burst of M&A activity as the economy recovers from the financial crisis. Several deals among some of the world's biggest drugmakers may may yet lead to more consolidation.