Novartis (NVS) continues to strengthen its Vaccines franchise. The company divested its blood transfusion diagnostics unit to Grifols S.A., for approximately $1.7 billion in cash in Jan 2014. Following this divestiture, the segment now consists of only Vaccines.
Novartis meningococcal franchise is expected to be the growth engine of the Vaccines Division. As per estimates by Novartis, meningococcal disease causes approximately 50,000 deaths every year on a global basis.
Novartis recently announced that its meningitis vaccine Bexsero received a clinical recommendation for routine use to help protect against meningitis B in infants and adolescents in Australia.
The Australian Technical Advisory Group on Immunisation (:ATAGI), Australia's advisory body dealing with immunization, has also recommended Bexsero for all young Australians, particularly infants and children.
We note that Bexsero received approval in Europe in Jan 2013. Bexsero is one of the three meningococcal vaccines that Novartis has in its portfolio, the other two being Menjugate and Menveo.
Novartis also has five influenza vaccines in its portfolio- Agrippal, Fluad, Fluvirin, Optaflu, and Flucelvax. The Vaccines and Diagnostics division generated revenues of $2.0 billion, accounting for 3% of total Novartis’ sales in 2013.
We believe the divestment of the diagnostics unit is a step in the right direction as Novartis can invest resources to further strengthen its vaccines franchise.
Novartis currently carries a Zacks Rank #3 (Hold). Investors looking for better-ranked stocks may consider companies like Gilead Sciences Inc. (GILD), Shire (SHPG) and Questcor Pharmaceuticals Inc. (QCOR), all of which carry a Zacks Rank #1 (Strong Buy).