Novartis to spinoff Alcon eye care business

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Novartis to spinoff Alcon eye care business

By Antoinette Alexander - 06/29/2018
Novartis announced on Friday its intention to spinoff its eye care division, Alcon, into a separately traded standalone company.

The planned spinoff would enable Novartis and Alcon to focus fully on their respective growth strategies. Completion of the transaction is subject to general market conditions, tax rulings and opinions, final board of directors endorsement and shareholder approval at the 2019 AGM in line with Swiss corporate law.

"Our strategic review examined all options for Alcon ranging from retention, sale, IPO to spinoff. The review concluded that a spinoff would be in the best interests of Novartis shareholders and the board of directors intends to seek shareholder approval for a spinoff 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, said Joerg Reinhardt, chairman of Novartis.

Novartis also announced that it will initiate a share buyback of up to $5 billion to be executed by the end of 2019, which will largely be funded through the proceeds of the divestment to GSK of the consumer health joint venture stake, net of the AveXis acquisition payments.

When Novartis acquired Alcon in 2011, the 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 develop as part of Novartis, with 2017 sales of $4.6 billion and the potential blockbuster medicine RTH258 (brolucizumab) in development for neovascular AMD and diabetic macular edema. The Alcon division is now fully focused on surgical and vision care.

Added Vas Narasimhan, CEO of Novartis, "We continue to execute our strategy to focus Novartis as a leading medicines company. 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."

Commenting on the share buyback, Narasimhan said, "The share buyback is fully aligned with our strategic capital allocation priorities, reflects our strict financial discipline and our confidence in future top line growth and margin expansion."

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