Novartis confirmed it will spin-off its eye care division, Alcon, to shareholders and complete a share buyback of up to US$5 billion by the end of 2019, funded mainly by selling its stake in its consumer health joint venture, to focus on its prescription drug business.
“Our strategic review examined all options for Alcon ranging from retention, sale and IPO to spin-off,” said Dr Joerg Reinhardt, Novartis chairman, in a statement. “The review concluded that a spin-off would be in the best interests of Novartis shareholders, and the Board of Directors intends to seek shareholder approval for a spin-off at the 2019 AGM. This transaction would allow our shareholders to benefit from potential future successes of a more focused Novartis and a standalone Alcon, which would become a publicly traded global medtech leader based here in Switzerland.”
When Novartis acquired Alcon in 2011, the eye care business included surgical, vision care and ophthalmic pharmaceuticals. In January 2016, Novartis began the process of creating two businesses with the transfer of Alcon’s ophthalmic pharmaceuticals to the Novartis Innovative Medicines Division. The ophthalmology pharmaceuticals business will continue to be developed as part of Novartis, with 2017 sales of US$4.6 billion and the potentially significant medicine RTH258 (brolucizumab) in development for neovascular AMD and diabetic macular oedema. The Alcon division is now fully-focused on surgical and vision care, and eye care devices.
“We continue to execute our strategy to focus Novartis as a leading medicines company,” said Dr Vas Narasimhan, CEO of Novartis. “Alcon has returned to a position of strength and it is time to give the business more flexibility to pursue its own growth strategy as the world’s leading eye care devices company. We will work to ensure a smooth transition for Alcon and Novartis associates while preparing for the launch of RTH258 and building our leading ophthalmology pharmaceuticals business.”
For Novartis shareholders, this should be seen as a win, commented Andy Smith, analyst at Edison Investment Research. “Actually, two wins, with the share buyback.”
