Long-running speculation about the future of Novartis' ($NVS) struggling vaccine business now appears to be nearing an end. One way or another, Novartis CEO Joe Jimenez expects the future of the unit to be settled in the coming months.
Exactly what will happen to the business is still unclear, though. Speaking to the Financial Times ahead of a company investor day, Jimenez revealed Novartis is willing to spend $5 billion on bolt-on acquisitions to turn the vaccine and consumer health units from also-rans into market leaders. In this scenario, Novartis would keep the vaccine unit and try, once again, to build the business it envisaged when it bought Chiron for $5.4 billion in 2006.
However, while Jimenez is willing to spend on the vaccine business, he doubts there is anything to buy. Potential acquisition targets are "embedded" in larger companies, Jimenez said, and buying them would be expensive. If Novartis is unable to grow the business through acquisition, it will push ahead with plans to sell or partner the unit. Even in this scenario, there are multiple possibilities, some of which could see Novartis keep a toehold in the vaccine game.
"I wouldn't rule anything out. We would consider any option that would allow us to participate in the growing of a business that could significantly increase its performance if it were a good financial proposition for the company and if it was right for that business," Jimenez told investors. The CEO listed joint ventures, in which Novartis could hold a significant or minor stake, as possibilities for the struggling units.
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Seven of the 16 participants still are living, with length of survival ranging from 60.7 to 82.7 months after diagnosis. Six of the patients also were "progression free" for more than five years, meaning the tumors did not return or require more treatment during that time. Four participants still remain free of disease with good quality of life at lengths ranging from 65.1 to 82.7 months following diagnosis. One patient who remained free of brain cancer for five years died of leukemia.
Sentiment: Strong Buy
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